Good home sought

Savers looking for the best 'home' for their money will be reviewing the situation after base rates were kept on hold at 6 per cent last Thursday.

With the average instant access account paying 1.72 per cent, according to research organisation MoneyFacts, you need to box clever if you want your savings to work for you. Many strategies are open to savers now, but the most important aspects for them to consider are the range of products and their own particular circumstances.

On products, the market is far more varied than it was even two years ago. At the more cautious end of the market are National Savings, guaranteed income bonds, fixed rates and trackers, which guarantee to offer no less than a certain amount below the base rate. Riskier, less predictable accounts are the variable-rate accounts, some of which are operated via the Internet or by post.

Financial advisers are warning against buying National Savings at the moment - 'Rates are appalling,' says Colin Jackson of Baronworth - and also against locking into fixes because of an expected rate rise in the next few months.

'We're not quite at the top yet,' says Janine Starks of Chase de Vere. 'We could have another couple of rises by the end of the year. Being in a variable-rate account is a good place to be.'

Jackson advises smaller savers not to 'lock in for more than one or two years'. 'We'll see an interest rate increase of at least 0.25 or 0.5 per cent by the end of the year,' he said.

Many fixed-rate products, including guaranteed interest-rate bonds (GIBs) and National Savings, are offering lower rates over five years than over one or two years, a strong indication that the market expects interest rates to rise and fall slightly in that period. Chase de Vere warns savers looking for guarantees that many banks and building societies are offering guarantees with an attractive-sounding bonus, but often the bonus disappears in a short time.

Northern Rock, for example, has a 0.75 per cent bonus for £10,000 deposits on its 90-day notice account; this disappears on 1 October. Bristol & West's Call One Postal 50 account has a lower guarantee - that the rate will not go more than 0.33 per cent lower than base, but that lasts until 5 May 2004. The rate being paid now is 5.92 per cent.