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Does your account have the X Factor?

Does your account have the X Factor?

Category: Savings

Updated: 02/01/2013
First Published: 15/11/2012

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Love it or hate it, millions of us have been swept along with the drama and exploits of the X Factor over the past few weeks.

When it comes to savings accounts, however, today's rates certainly appear to be struggling to make the grade. Various rate reductions have squeezed choice in the market, leaving savers perplexed as to where they should invest their money.

Amid the doom and gloom there are still some gems to be found for savers with various savings needs.

If you are bored with languishing on a poor rate of return, check out our tips to achieving a star-studded savings account!

Fixed rate bonds

If you are prepared to lock up your money and leave it untouched for a specific period, then a fixed rate bond account may be for you.

Offering some of the best rates in the savings market and with terms ranging from six months to five years, these accounts may be best if you do not require immediate access to your funds.

Currently at the top of the one-year fixed rate tree is the 1 Year Fixed Rate Bond 22 from FirstSave.

Requiring a minimum deposit of £1,000, this online account pays a market-leading rate of 3.00%. A monthly interest option is also available at 2.96%, although you must be willing to invest at least £5,000.

If you are looking to invest over a longer period, then the State Bank of India's Hi Return Fixed Deposit pays 4.20% over a five-year term.

This account requires a minimum deposit of £1,000, although you must open or have an existing savings or current account with the provider.

Easy access accounts

Often regarded as the most popular type of savings account, easy access, or no-notice accounts, allow you to withdraw your money at the drop of a hat.

The Goal Saver (Issue 5) from Saffron Building Society features at the top of the best buy tables with a variable annual rate of 2.50%. Investments range from £10 up to a hefty £2 million.

This online account is designed to encourage you to save for a specific 'goal', such as a wedding or holiday, so you must let the provider know what your ultimate savings goal is when you open the account.

The rate paid on this account does not include an introductory bonus, so you won't have to worry about reverting to a lower rate of return after the initial twelve months.

Notice accounts

If you prefer to keep your money safely out of temptation's reach, then a notice account may be up your savings street.

Paying variable rates of interest, these accounts require you to give advance notice to your provider before accessing your cash. Failure to do so will often result in a penalty such as loss of interest.

Sitting at the top of the notice account market is the 120 Day Notice Tracker Account Issue 1 from Secure Trust Bank paying a quarterly rate of 2.97% and requiring 120 days' notice to access funds.

Investments range between £1,000 and £1 million and a maximum of three capital withdrawals are permitted per calendar year, whilst up to four interest withdrawals are allowed in the same period.

Cash ISAs

Cash ISAs allow you to invest up to £5,640 in the 2012/13 tax year in the knowledge that any interest accrued is safe from the taxman's grasp.

If this sounds like your kind of savings account there are a host of deals to choose from, offering variable and fixed interest.

The current top variable cash ISA is offered by Coventry Building Society, with its 60 Day Notice ISA paying a competitive 3.25% on its anniversary, including a 0.50% bonus for twelve months.

A minimum deposit of just £1 is required and you must give 60 days' notice to access funds. Accessing your money without giving prior notice will result in a 60 day loss of interest penalty.

Transfers in are not accepted with this account.

If you are looking for a fixed term ISA, then krbs's Flexible Fixed Rate ISA One Year Issue 7 may appeal to you with its market-leading rate of 3.00%.

This account requires a minimum deposit of £1,000, accepts transfers in and offers a monthly interest rate of 2.96%.

Accessing your money early will result in a 100 day loss of interest penalty, so you must be prepared to tie your money up for the one-year term.

Regular savings

Often carrying strict terms and conditions, regular savings accounts are best suited to savers who are disciplined with their finances.

These accounts tend to require a particular deposit to be invested each month and have restrictions on withdrawing money. Despite this, regular savings accounts can pay some great rates in return.

Saffron Building Society pays a fixed rate of 4.00% on its 12 Month Fixed Rate Regular Saver (Issue 2). Between £10 and £250 can be invested and twelve deposits are required per year.

Unlike many regular savings accounts, this deal allows unlimited notice and penalty free withdrawals.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.