Banks and building societies offer a vast range of products with different interest rates and a mind-boggling list of options and terms and conditions. The current environment also means that interest rates are pretty paltry, making shopping around for the right account particularly important to make the most of your money. Some things to consider include:

• Whether you are able to save regularly
• When you need the money by
• Whether you need quick access to the money, and
• Whether or not you have to pay tax on any interest your savings earn

So where do you start?

If you're starting to save for the first time, whether it's for something specific such as a big trip or just to start to get some money behind you, it's important to get into the habit of saving on a regular basis. If you set up a standing order to transfer money to your account every week or month, it gives you the discipline to save regularly and removes the temptation to fritter your cash away.

As a good first step, check out www.moneyfacts.co.uk, www.moneysupermarket.com and www.defaqto.com for a list of the different types of accounts and best rates on the market.

Cash ISAs

There are a couple of options for any savings you might need access to - although a cash ISA with instant access would normally be your first choice. Banks and building societies will usually deduct tax from the interest paid on savings accounts - although if you're a student you may qualify as a non-taxpayer and so avoid this. Higher rate taxpayers may find they have to pay the most tax to cover their overall tax liability. However, ISAs are tax-efficient accounts allowing you to earn interest without tax being deducted. The limit for the amount you can invest in an ISA changes every year, so make sure you check the limits with your bank or with a reputable website registered with the Financial Services Authority. You can pick from easy access variable ISAs, or ones with fixed terms and rates, but as a starting point for your savings they're a good bet whatever your situation.

Regular savings accounts

These accounts are good for people who can save a set amount each month. However, check the withdrawal allowances as sometimes there are restrictions. Some only allow one or two withdrawals a year. Also, some offer a bonus - this boosts the rate for a specific period, after which it will sink and you might need to switch accounts.

Notice accounts

If you pay money into a notice account you have to give a certain number of days notice before you can take money out. If you have to withdraw money immediately you can usually do so, but you lose the number of days interest equivalent to the notice period.

These accounts usually pay slightly better rates of interest to compensate you for the inconvenience of having to give notice, so you should expect a better interest rate the more notice you have to give before withdrawing your money.

Fixed-rate bonds

These are longer-term savings accounts. Unfortunately, some people assume a fixed-rate bond is some sort of complex equity-based investment, as opposed to a simple savings account. As you don't have access to your cash for the term of the bond (anything from six months to five years) the provider compensates you with a higher rate of interest than you'd receive on an easy access savings account.

Ideal savings scenario

The ideal situation is to have a savings portfolio consisting of an emergency fund in an easy access account, some tax-free savings in a variable or fixed rate ISA, and some longer-term savings where your funds are tied up but where you receive a higher return. Of course, this will take time to establish.

Check the terms and conditions

Among other catches, such as bonuses or withdrawal restrictions, most savings account nowadays have tiered rates. These accounts pay higher amounts of interest depending on how much money you have in the account. Obviously the more money you have saved the higher amount of interest you earn, but check carefully the differences between the tiers. Some have a difference of over £2000 between interest levels.

Finally, your choice may depend on whether you want access to your account over the internet, by post or phone. So check this before jumping for the highest rate.

Updated: 17/10/2011