How to pick a savings account

With all the complicated savings products on the market, it's easy to hanker after the days when saving simply meant slipping money under the mattress.

But with interest rates so low, it's more important than ever to make sure your money is working for you as hard as it can. We look at some of the different types of product on the market.

Help to buy ISA
The help to buy ISA is available to people saving to buy their first property. You can deposit up to £1,200 in the first month, and up to £200 per month thereafter - and the government will give you a 25% tax-free bonus on everything you save when you use the money to buy your first home. It's worth mentioning here because the bonus is so generous, although clearly not everyone will qualify for one, and you cannot open a Help to Buy ISA in the same year as a cash ISA.

Cash ISAs
With a cash ISA, you can save up to £15,240 a year tax-free - and you don't, as many people believe, have to tie up your money. While they've become less attractive to some with the introduction of the new personal savings allowance, a rise in interest rates could tip the balance back.

They are also good for people paying higher-rate tax - or those who think they might do so in future - and have better interest rates than ordinary easy-access savings accounts.

Instant access savings accounts
These offer great flexibility to save and spend your cash when you need to, but tend to come at the cost of lower interest rates than less flexible alternatives. With interest rates at rock bottom, they are looking particularly disappointing at the moment. However, on the plus side, the new personal savings allowance means basic rate taxpayers don't pay tax on the first £1,000 of interest on their savings (and higher-rate taxpayers don't pay tax on the first £500).

Fixed-rate bonds
If you're prepared to tie your money up for a while, fixed-rate bonds can give better rates of interest. Interest can usually be paid monthly, annually or at the end of the term. However, you need to be able to tie your money up for at least a year (and as long as five years), and there's always the risk that interest rates will rise while your money is locked away, so you need to weigh this up against the extra interest.

Current account
It's probably the last place you'd think of putting your savings, but many current accounts offer a great rate of interest in turn for a monthly fee. Whether or not these deals make sense for you will depend largely on how much money you're likely to have in the account at any one time, and how much the interest on it is offset by the fee.

Of course, even once you've decided on the type of savings account you're after, there's a dizzying number of individual products on the market - and they're changing all the time.

Your best bet is to go to a comparison website such as MoneySupermarket or MoneySavingExpert and compare rates and terms and conditions.

You'll need to consider how much you're likely to be able to save, and whether it will be the same every month. You'll also have to ask yourself whether or not you can afford to lock the money away, and if so, for how long.

But remember that you don't have to put all your savings in one place: there's no reason you can't save for your property deposit in one account, and your next holiday in another.