Are the days of saving money behind us?

With the Bank of England keeping the base interest rate at 0.5%, Britain's savers are being hit as they struggle to find savings accounts that provide a decent return. That, coupled with high inflation, means it's a struggle to achieve any real growth on your cash.

All this comes at a time when many of us feel the need to save, perhaps to build up for a deposit for a house, or to pay for a child's university fees in the future. Yet diminishing returns may make many of us wonder if it's worth putting our money into a savings account at all.

The reality is that we should all have some savings tucked away but the problem is that many people have forgotten how to save money. Whether the money is being put aside to cushion against the possibility of unemployment, to save for a big-value item like a holiday or car, or as regular savings to help pay for Christmas or sudden, unexpected bills, it's vital to have some money in the bank.

The trick is to make your savings work as hard for you as they can in the current climate, and there are a few things you can do to get the best possible returns.

Firstly, if you haven't already done so, it's worth reviewing all your existing savings accounts to check what rates of interest are being paid. Don't assume that the bank or building society you have loyally given your custom to for years will have the best rates or offer you the best money saving vehicle. Always shop around. You will need to use a price comparison website to find the accounts which pay the top rates of interest. There are some savings accounts currently paying more than 4%. The site will easily identify the best rates and clearly set out any conditions attached to the account.

In today's busy savings account market, there are a whole host of different accounts available, and you need to look beyond the headline grabbing top rates and be prepared to manage your money rather than just deposit it and leave it. You need to look out for accounts where the interest rate includes an attractive bonus. By all means open the account if it's suitable but remember that once the bonus expires the rate will plummet. You need to take a note of when the bonus period ends and make sure you transfer your money to a new product. Don't leave it to languish in a savings account with a miserly rate.

Consider what access you need to your money. You can probably secure a more attractive rate if you are prepared to tie your cash up for a fixed period of time but this could be risky unless you can be sure you won't need it. There could be a hefty penalty to get it out before the period ends and you also risk tying up your money in a savings account where the rate won't rise even if the base rate does start to go up.

If you are a taxpayer, use an ISA to build up savings that are exempt from being taxed. This is especially worthwhile if you are a top rate taxpayer. ISA accounts, just like ordinary savings accounts, can have bonus rates, minimum deposit requirements or penalties for withdrawing your money, so check the accounts carefully before you sign, and again use a comparison site to find the top rates.

If you don't pay tax, always make sure that you fill in the Inland Revenue's R85 form and hand it in to your bank or building society to ensure they pay you gross interest, otherwise they will automatically tax the interest you have earned.

Savings accounts can be better than stuffing your cash under the mattress. Just make sure you research the market thoroughly and be active about moving your money around so it's always earning the best interest rates available.

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