Now is a particularly good time to start saving as rates have become extremely attractive as banks and building societies compete to attract retail funds in the wake of the global credit crunch. International banks are currently balking at lending to each other until the fallout from the credit crisis clears meaning that banks and building societies are increasingly turning to UK savers to raise funds.

So, providing you don’t have a considerable mortgage but do have money to invest, then the credit squeeze could in the long term prove very profitable for you. Due to fierce competition amongst financial institutions, deposit account interest rates are set to continue to offer outstanding investment value - which is good news for savers.

But, to make sure you get the best deal, first consider a number of factors. To begin, don’t be tempted into opening savings accounts and putting money into those that could be better used paying off debt. Second, be realistic about how long you can leave your savings without needing to touch them. That’s because the longer notice you can give to access your account the higher the interest rate you can expect to receive; some interest rates can be around 2.5% above base rate, providing both a comfortable cushion against inflation and an impressive return.

That particularly applies if you can get easy access to the internet, as online offers are often better

than those on offer in branches. Indeed, online savings accounts tend to pay more favourable rates than accounts available through the high street bank and building society branches. This is because the internet is a far cheaper medium to maintain and therefore some of that cost saving can be passed on to the customer in the form of higher interest rates.

Also, banks are eager to encourage more new online accounts as it is the least expensive way to attract new business in these times of reduced margins and difficult trading conditions. So, if you are in a position to save, now would be a good time to do so.

If you are saving for a house, you will need to accumulate a larger deposit than in previous years as lending criteria have been tightened in the wake of the credit crisis. But, whether you are saving for a house deposit, a new car or any other significant purchase you will usually get the best rate and therefore reach your goal quicker with online savings. However, do your homework before committing yourself to any new account and make sure you get an account that suits your needs.

Disclaimer: This article has been written for information and interest purposes only. The information contained within this article is the opinion of the author only, and should not be construed as advice or used to make financial decisions. Expert financial advice should always be sought and any links contained within this article are included for information purposes only.