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How to start saving and find the best rates

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There is no time like the present if you have made a resolution to start saving.

But, with interest rates tumbling, savers have to become even smarter if they are to get the most out of their money.

Using our guide, first-time savers and those looking to understand how to build up a nest egg with the best return, can navigate the savings minefield, locate the best individual option and ultimately end up richer.

Small steps: This Is Money's tips on the best ways to save

Save regularly and save often

Even if you only have a small amount to save, it is worth getting into the habit of putting aside something every week - or after every time you get paid.

Once you get into a good savings routine you will notice that every little bit adds up!

It may sound simple, but one of the best savings tricks is to set up a regular direct debit from your current account as soon as you get paid. Not only does this mean you will be putting aside something every month - it also substantially removes the temptation to spend your hard-earned cash before you can get it into your savings pot.

Have you got a savings trick, or want to find out other people's? Visit the savings tricks thread.

Tax-free saving: The first step is to make sure you get an Isa SAVINGS DOS AND DON'TSDO ditch and switch after introductory bonus rates

DO watch out for rate changes - some banks suck you in with a high rate and try to flog another, similarly-named, account which offers less interest.

DO know your account's exact name and the interest rate it pays.

DON'T get caught out by penalties - avoid charges for exceeding withdrawal limits or not giving notice enough notice when you want to take out cash - you could end up forfeiting interest on the whole account for that month

DO factor in the tax you'll pay on savings - banks quote one of two different interest rates. The gross rate is the flat amount paid while the Annual Equivalent Rate (AER) takes into account interest compounded over the year.

If you are in a stable relationship DO consider which name your account is in if one person earns less and is in a lower tax bracket. There are no laws against this.

The first port of call for savers should always be a cash Individual Savings Account (Isa) because of the tax-free benefits.

Unlike a normal savings account, Isa interest does not incur tax and that means an extra 20 per cent or 40 per cent in your nest egg. (We explain Isas below)

But, because many providers pay out rates as low as 0.1 per cent on Isas, it's important to do your homework.

For the best rates on Isas, visit our savings rates tables, which are comprehensive and independently compiled.

You should also read and bookmark the following page to stay up-to-date with This is Money's favourite Isa deals. This is our saving expert Lee Boyce's round-up of the top tax-free savings around, which explains in detail why these accounts beat all others.

Five of the best Cash Isas for 2013.

How do Isas work?

Basic rate taxpayers must hand over 20 per cent of their savings interest to the taxman and higher rate taxpayers 40 per cent - but this can be avoided with an Isa.

There are a variety of cash Isas available, such as instant access, fixed rate, and accounts with base rate guarantees.

An Isa can be used by anyone aged 16 or older for their tax-free savings allowance each tax year. In the 6 April 2012 to 5 April 2013 tax year the cash Isa allowance was £5,640. From April 6 2013, this has increased to £5,760.

You can withdraw cash whenever you want, subject to individual accounts' conditions. However, once the money has been taken out, you cannot get that bit of your tax-free allowance back.

This is because you can only pay in that set amount every year to a cash Isa, even if you take some of it back out. So if you do think that you will hit the annual cash Isa savings limit, think carefully before you withdraw money.

Remember: In April, savers are given a fresh Isa allowance that qualifies for tax-free interest. This means each year you have the opportunity to either add to an existing Isa, or open up a new account, you should also make sure that you transfer an old Isa for better returns. Here's a quick guide to Isa saving.

  Long-term savings Monthly savings plan

Find out how much a regular monthly savings scheme could make.

Monthly payment: £ Duration: (years) Interest rate: (annually) % Calculate Results Your investment will be worth: £ Or lump sum investments

Calculate how much a lump sum investment could be worth.



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