The best savings accounts

Savers have something to cheer about at last some accounts now offer 5% or more if you lock up your money. But should you?

"Volatility in the money markets is prompting providers to turn to their savings book to fund their lending activities," says Michelle Slade of Moneyfacts.co.uk in The Times. So, to bring in new customer deposits, banks and building societies are offering increasingly attractive rates of interest.

The best deal on the market is from Yorkshire Building Society. It offers 5.4% on a fixed-rate bond that will mature in September 2014. But while this is an attractive rate, you have to lock up your money for five years. And that's risky. "We have a base rate at a record low, which means interest rates are only going to go one way. If you go for a five-year account, you may find, a couple of years in, that your rate is looking uncompetitive as others shoot up," says Andrew Hagger of Moneynet.co.uk in The Times.

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However, some shorter-term, fixed-rate accounts offering attractive savings rates are worth a look. Aldermore the relaunched Ruffer Bank offers a tempting 4.43% AER on its two-year, fixed-rate bond. Inflation and interest rates are unlikely to spike far enough to make this uncompetitive within two years. But the account is only for those with plenty to save the minimum deposit is £10,000.

Those with more modest savings could turn to the AA. It is offering a two-year fixed-rate bond with a 4.35% AER. The minimum investment is just £100.

If you want to save, but don't want to lock your money away for long, there are plenty of options available. Instant access accounts offer the lowest interest rates the 2.76% AER from Scarborough Investments Direct is the best of the bunch. So these are best avoided unless you must have access to your cash at the drop of a hat. Otherwise you'll do better with a notice account. If you can give three months' notice before you need your money then United National Bank will pay you a 3.53% AER. Or if you haven't yet used up your Individual Savings Account (Isa) allowance for this year, Manchester Building Society pays 3.26% AER on its 45-day notice account.

If you don't have a big lump sum to invest, but want to start building one up, then opt for a regular savings account. These don't accept single large deposits. Instead, you tuck away a smaller amount each month. Halifax is at the top of the tables with a 5% AER rate on monthly deposits minimum £25 and maximum £500. But to get that rate you can't make withdrawals for 12 months from the date of opening the account.