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Top 5 places to stash your cash

Top 5 places to stash your cash

Category: Savings

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 It is now over 6 months old so the content may be out of date.

Saving should be a core part of money management, helping you to build an emergency fund as well as a valuable nest egg for life's big events. But just where should you stash your cash?

Forget the mattress – we've highlighted the top 5 places to put your hard-earned money to really make the most of it.

  1. ISA - An ISA should be the first port of call for anyone wanting to get into the savings habit. It's the most tax-efficient form of saving possible, letting you earn interest without a chunk of it being given to the taxman, and if you choose an inflation-beating account you'll be able to get real returns on your money. Of course, you're constrained to the current annual limit (£11,880, of which £5,940 can be saved in cash), but when the NISA limit of £15,000 comes into play in July you have the potential to benefit even more.
  1. Instant access account - Even with an ISA the best rates of interest will be found in fixed rate versions where withdrawals will be costly, but chances are you want an account that will let you dip into your savings if needed. An instant access account is the perfect choice for those building up an emergency fund – you wouldn't want to give notice if you had a sudden financial outlay, after all – or for those who perhaps aren't sure how much they can reasonably afford to put aside, allowing them to withdraw the money as necessary. Instant access ISAs can be found (currently the top pick comes from Cheshire Building Society with a rate of 1.60%) but remember you're restricted to an overall limit, and if you've already got a fixed rate ISA you won't be able to have another one. That means you'll want to consider a traditional easy access account too, such as the HiSAVE Remittance account from ICICI Bank which pays a market-leading 1.50%.
  1. Fixed rate bond - If you're saving up for something big, such as that first home, a wedding or a once-in-a-lifetime holiday, you might want to tie your money away in a fixed rate bond. These accounts offer much higher rates of interest than their easy access counterparts on the provision that you leave your money locked up for the full term, and there are plenty of different options to choose from. Even tying your money up for two years could give you a return of 2.40% with Close Brothers Savings, but if you want the best rates you'll have to go longer – the top pick comes from FirstSave, with its 7 Year account paying 3.50%. It's worth bearing in mind that most fixed bonds won't allow further additions so you'll need to tie up a significant amount from the start to get the best return, and you'll need to be totally comfortable with it as withdrawals either won't be allowed or will come with a hefty interest penalty.
  1. Regular savings account - Let's say you wanted to put money aside each month for the next year, perhaps to fund your 2015 summer holiday or to save up for that new car. Well, a regular savings account could be ideal. These often pay great rates of interest and you won't have to tie your money up for the long term, and because you're able to make regular monthly payments you won't need to put a lump sum in either. It could be a great way to meet a short-term savings goal, and with impressive rates available – Saffron Building Society and Kent Reliance both offer regular savers paying 4.00% – it's certainly worth considering.
  1. Current account - Think a current account is only good for everyday spending? Think again! A lot can double up as highly beneficial savings solutions, with some offering far more interest on in-credit balances than you could get from a traditional savings account. Take the TSB Classic Plus account, for example, paying a whopping 5.00% – it's only applicable on balances up to £2,000, but for that level of saving you can't go wrong.

As you can see, there are plenty of places you can stash your cash depending on your savings goals, and you could soon watch the interest stack up. One final word, however: if you've got a credit card or overdraft you absolutely want to put your spare cash towards paying those off first, as the interest you'd earn from a savings account will be nothing compared to what you're spending on credit. But, as long as you've got that sorted, make sure to consider all the options and you can find a great home for your money.

What Next?

Find a home for your 2014-15 cash ISA allowance

Compare the best savings rates for your investment

Earn up to 5% with your current account

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.