Where’s the best home for your cash?

With interest rates refusing to budge, finding a savings account to grow your money seems almost impossible. Tim Bennett looks at the best options.

The government seems bent on hammering savers in a bid to get everyone borrowing and spending again. So if you are trying to set cash aside for a rainy day, where are the best places to put it?

In an attempt to kick-start borrowing, the government is offering banks cheap finance under its Funding for Lending scheme. This feeds cheap money into our banks so they can offer more competitive loans to individuals and businesses. And sure enough, mortgage rates have been dropping a bit lately.

But banks have also taken the opportunity to cut savings rates why attract money from the likes of you and me when they can get it cheaper from the government? So they are battling each other not to be at the top of the best-buy tables when it comes to savings products.

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The second blow is that the government's own best savings products, issued through the National Savings and Investment bank (NS&I), were withdrawn some time ago and show no signs of returning. You used to be able to save money tax-free via the NS&I index-linked certificates and get an inflation-beating return. But not any more. What are your best options now?

One constant annoyance for savers is they have to watch the best-buy tables like a hawk and be prepared to grab the best short-term interest rate before moving money on again as soon as it expires. Wouldn't it be lovely if someone else took away this hassle?

That's exactly what Governor Money, an online bank, used to do, but it has now stopped taking deposits. The nearest alternative is Jonathan Fry's Dynamic Cash Management service (tel: 01748-825971), which hunts for the best rate for your cash, moving it from a "hub account" to and from banks and building societies on your behalf.

Its indicative rate for a 12-month term is 2.37% and the management fee is 0.3% per annum subject to a minimum fee of £150 per quarter. As such it only makes sense for those with a decent sum to invest. Anyone else needs to keep an eye on the best deals and be prepared to do the legwork when they expire. A site such as Moneyfacts.co.uk can give you the best rates.

If you have not yet used this year's cash Isa allowance of £5,640, the current best buy is the Coventry Building Society 60-day notice account. This pays 2.8% with a 0.6% bonus for the first 12 months. Otherwise, the best offer on an easy-access account is 2.3% from the West Bromwich building society in a WeBSave Plus 3 account.

If you can lock your money up for 18 months, then try Metro Bank at 2.5% for an 18 month bond. Sadly, with retail price index(RPI) inflation running at 3.1%, none of these rates will have savers celebrating.

Tim graduated with a history degree from Cambridge University in 1989 and, after a year of travelling, joined the financial services firm Ernst and Young in 1990, qualifying as a chartered accountant in 1994.

He then moved into financial markets training, designing and running a variety of courses at graduate level and beyond for a range of organisations including the Securities and Investment Institute and UBS. He joined MoneyWeek in 2007.