SO JUST WHERE SHOULD WE PUT OUR MONEY?

WAITING for your bank to pass on the savings rate increase is increasingly a mug’s game. As HSBC openly admitted yesterday, the big banks are awash with cash. That means they have no incentive to chase deposits from savers by offering better rates. In fact, the reverse is true: over the past few years big firms have slashed returns to rock bottom to put off prospective customers.

For savers eager to boost their returns, the key is taking matters into your own hands. That means finding a bank or building society that does want your money.

Typically, you’ll need to be prepared to put your trust in a company that you may not have heard of. The best rates now come from small building societies and relatively new banks that are desperate to lure customers away from their bigger rivals.

For example, whereas Lloyds, NatWest and HSBC pay between 0.05 per cent and 0.2 per cent on their main easy access accounts, you can earn as much as 1.4 per cent if you shop around.

This top rate is offered by Coventry BS on its Limited Access Saver – but you have to agree to just three withdrawals a year. Paragon Savings Bank, one of the newer banks competing for customers, offers 1.31 per cent on its easy-access cash Isa.

For a more flexible deal on savings held outside an Isa, you could try the Birmingham Midshires Internet Saver Account, which pays 1.35 per cent for a year. After 12 months the rate drops to 0.2 per cent, so you’ll have to shop around again then. Tesco Bank offers 1.34 per cent (including an initial bonus for a year) and Paragon pays 1.31 per cent. Apart from the Coventry BS deal, all these accounts require access to the internet.

SAvERS who are uncomfortable with banking online could try virgin Money’s Easy Access Saver, which pays 1.01 per cent, and is available in old Northern Rock branches. The alternative is taking a little bit more risk with your cash. This has traditionally meant investing in stocks and shares Isas. You can put up to £20,000 a year in these accounts and all returns are tax-free. But this type of investing is suitable only if you are prepared to leave your money alone for at least five years. You also need to be comfortable watching the value of your savings rise and fall as the stock market moves. That can make share investing too much of a gamble for pensioners who expect to dip into smaller savings pots in old age.

For a middle ground between a bank savings account and a stocks and shares Isa you could try so-called peer-to-peer lending.

Websites such as RateSetter, Zopa or Funding Circle pay between 3.5 per cent and 7 per cent. The cash you invest goes out on loan to individual borrowers. The peerto-peer company takes a small cut.

There are risks, however. For example, should a peer-to-peer firm go bust you could lose some or all of your investment.