Put your money where the interest is during the recession

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Put your money where the interest is during the recession

The onset of recession has made Brits think twice about almost every aspect of their finances - whether that be their outgoings, earnings, cutting back on luxuries, how much to contribute to pensions and, of course, where exactly to put their savings.

As they attempt to recoup the losses made during the credit crunch of last summer, British banks may have their minds on issues other than generating competition.

However, this is not to say that high street and supermarket banks have stopped offering savings accounts, bonds and ISAs with competitive rates for those anxious about the fate of their savings during such a turbulent period.

Perhaps one of the most talked-about savings accounts to be offered of late is that from a relatively new face on the British lending landscape - Santander.

Having acquired Bradford & Bingley, Abbey National and Alliance & Leicester (A&L), it is safe to say that Santander will be a more common sight on the UK's high streets following the completion of rebranding next year.

At the present time, however, Abbey's Super Fixed-Rate Monthly Saver and A&L's Premier Monthly Saver go where other banks dare not to - both offering six per cent AER.

However, access to these packages is subject to the opening of either Abbey's Reward or Preferred In Credit Rate Current Account, or A&L's Premier Direct or Premier 50 Current Account.

Those who want less commitment for their interest could consider the Halifax Regular Saver, which is ideal for those hoping to save between £25 and £500 a month at a fixed rate of five per cent AER.

Additionally, the Lloyds TSB Monthly Saver Account is paying a five per cent fixed-rate AER on deposits between £25 and £250, while Sainsbury's Internet Saver currently offers a variable rate of 2.9 per cent AER on deposits between £1,000 and £500,000 for a period of 12 months.

As for ISAs, savers may have noticed that National Savings and Investments has raised the interest rate of its standard savings account from 1.2 per cent to 2.5 per cent - almost double the original figure.

Perhaps equally attractive is Standard Life's Cash ISA - which allows customers to enjoy 2.65 per cent variable tax-free interest per annum or AER. Savers choosing this option can put aside up to £3,600 each year tax-free, as well as enjoying no penalties for withdrawals.

Some savers may be considering their options when it comes to bonds - which could be a good move when opening an account for a child, according to lovemoney.com writer Ally Hunt.

If this is the case, Leeds Building Society could be the place to turn, as last week, it launched a three-year postal bond with a 4.3 per cent return, or a monthly interest rate option of 4.11 per cent AER - which could be attractive for those relying upon it as a source of income.

Another financial services provider to turn to for savings bonds could be Barnsley Building Society. Although withdrawals and early closure are excluded from the deal, savers could capitalise on its offer of a guaranteed fixed rate of interest during the term and, again, monthly or annual interest options.

For a five-year bond, customers can access a gross per annum or AER of 5.4 per cent, while for the three-year package, this figure stands at 5.15 per cent. Two and four-year bonds are also an option and all are available to those wishing to invest between £100 and £500,000.

So, as Brits who have been doing their homework on savings may have discovered, there are still a range of ways in which to capitalise on hard-earned nest eggs, despite a loss of confidence among consumers during the course of the economic downturn.

In fact, even though the base rate is at an all-time low and VAT has been temporarily dropped, Brits could use the recession as an excuse to shop around even more scrupulously for the best ways to make their savings grow.

Those considering these issues at present may like to take heed of Kevin Mountford of MoneySupermarket.com, who explained recently that "being able to earn more than three per cent on your money when the base rate is just 0.5 per cent is an opportunity not to be missed".

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