Try this; take a sheet of paper and draw a line across it. Write “instant access” at the left side, and “long term bond” on the right. Don’t worry too much for now about what these terms mean if you’re not used to them.

Then have a good think about what you want your savings account to do for you. Ask yourself how often you’re going to make withdrawals from it, and any other sources of cash or savings that you want to use as well. If you treat your savings account as a way of either providing you with an income, or sometimes topping up your income, then you’ll need to invest in an account that always allows you access to your money and doesn’t penalise you too heavily for making withdrawals. You’re at or near the left hand side.  But if you have some cash that you’re pretty confident you won’t need in the fairly short term it’ll probably make sense to invest in an account gives you more interest if you commit to having some restrictions on what happens if you want to take your money out. No surprises to know that puts you at the right hand side.

There’s no magic behind why banks and building societies offer savings accounts, they need your money so that they can lend that money in the form of loans, mortgages and credit cards. As a rule of thumb the more you’re prepared to lend to them, and the longer you’re prepared to lend it to them the more interest you’ll earn. Keep this point in mind and check what you’re being offered against this idea.

Once you’ve worked through this initial part you can start to think about whether you want, for example an account that encourages you to save regularly, or if having an account that pays you more interest once you have saved more than a certain amount is for you. Obviously you’ll also want to have an account that suits your lifestyle – if it’s not convenient for you to go to a local bank to get money then you’ll need an account that allows you to move money to a current account over the internet.

Remember to go back to basics if you get stuck.

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Instant access savings accounts

These are ideal for money you may need in a hurry. Your emergency fund should be in this type of account so that you can immediately meet any unexpected costs.

Some instant access accounts come with a cash machine card so you can get at your money 24 hours a day. There will probably be a limit on how much you can take out but it should be enough to cope with financial emergencies.

If your account is with a bank with branches you can withdraw all your cash in a hurry from your local branch. But many of the best instant access accounts are with internet-only banks. You access your savings account by transferring from a nominated current account. Transfers can take anything from three to seven working days.

The right account will normally be the one which pays the most interest but remember that while some high-interest telephone and internet-based accounts claim to offer instant access, you may have to wait a few days while a cheque is sent out or a transfer is made to your current account if you want to withdraw all your cash.

To ensure you get the best return on your savings, keep an eye on our independent best buy tables and switch cash when necessary. It’s wise to check your rate at least every three months.

Notice accounts

Traditionally, your savings earn a better rate of interest if you agree to lock them away for some time. The trade-off is that you cannot get at your money immediately.

With notice accounts, you can only get your cash by giving notice of your intention to withdraw it. For example, with a 90-day notice account you would have to wait three months to get your money. You pay a penalty to get at it earlier.

Many instant access accounts these days offer rates that are as good, if not better, than notice accounts so you may not need to tie up your money.

Cash Isas

Cash Individual Savings Accounts (Isas) are savings accounts where you earn tax-free interest. However there are limits on how much you can deposit each tax year.

While cash Isas do not always offer the highest rates of interest in the savings account market, after tax you will find the best ones easily beat the higher-paying ordinary savings accounts.

To compare rates, look at the gross rate paid on a cash Isa with the net rate you will receive on a standard savings account.

If you are a non-taxpayer then you should opt for the highest paying savings account, regardless of whether it is an Isa, as you are entitled to receive your interest tax-free anyway. Use our savings rate converter to see how much interest you will get depending on whether you pay basic or high rate tax.

Regular savings accounts

Regular savings accounts are deisgned for people who want to put a regular amount of money into their savings each month.

Often banks will only offer high-rate regular savings accounts to customers who have a current account with them, as an incentive to build loyalty. These accounts can pay very high rates, but they often have conditions attached to them, which if broken will lead to a loss of interest.

Some regular savings accounts also offer an annual bonus on top of their interest rate. Again, if you fail to make the required deposits you will lose the annual bonus.

Some simply pay an impressive basic savings rates – but limit the amount you can put in each month.

Most of these accounts limit the number of withdrawals you can make each year so they aren’t much good for emergency cash but they are an ideal way of getting into the savings habit and you can start a regular savings account with as little as £5 a month.

National Savings accounts

The Government-run National Savings department offers a range of accounts and bonds. National Savings might not offer a solution to all your savings problems but there are few safer places for your money.

All products are capital secure – investors will get their money back whatever happens. Some pay returns free of all tax, others pay interest gross but savers have to declare it on their tax returns, while fixed rate savings bonds pay interest after the deduction of 20% tax, which cannot be reclaimed.

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