'Keep a close eye' on savings

There can be little doubt that in these turbulent economic times fewer people are choosing to put away cash for the future. Indeed, a recent survey by Nationwide indicated that less than half of British people are actually saving regularly. As financial problems continue to take hold on personal levels, many may be more concerned with paying off their debt.

Philip Stevenson of Ark Financial Planning certainly believes this to be the case, as he observed a change in the mood and a "trend away" from saving. He suggested that a culture has developed over the last decade that sees people think: "Debt is good."

According to Mr Stevenson, that is now changing, as people attempt to reduce what they owe in order to avoid high interest charges. "I think we are in a position now where people are more concerned with paying off debt rather than saving," he said.

However, those who are in a position to add to their savings, as well as investments, will still need to identify the best options available to them. This week Abbey has found that a quarter of Brits intend to increase the amount they save over the next three to six months, with 11 per cent already putting away more than at this time last year.

The bank revealed that 62 per cent of people have an instant access savings account, while 43 per cent have a cash individual savings account (Isa). Director of savings and investments Reza Attar-Zadeh suggested that taxpayers should focus on the latter in particular, in order to maximise their returns.

Other options available to those with cash to stash include income bonds from the government-owned National Savings and Investments, interest rates on which were increased by one percentage point this week. It means that sums between £500 and £25,000 earn 1.7 per cent, while two per cent is paid on greater amounts.

However, many savers will have found that their returns have been shrinking of late and for this reason Moneyfacts.co.uk has recommended that a close eye be kept on accounts, with consumers advised to look for the best savings rates.

Analyst at the price comparison site Michelle Slade explained that nearly a third of the variable rate accounts currently on the market pay 0.1 per cent interest - or even less. She urged new customers to compare savings accounts before making a decision, but also noted that many people are unaware their money is earning so little.

And for these her advice was simple: "It is worth regularly keeping an eye on your savings and the rates that you are getting and making sure that actually you are getting a competitive rate compared to the rest of the market at that particular time."

For all your unbiased comparison needs visit Moneyfacts.co.uk