Build up an emergency savings pot
Choose the right type of account
First and foremost you need to choose the right type of account for your emergency savings fund. It may sound obvious, but make sure you choose a home which offers full easy access to your cash.
That means you should avoid notice accounts – there's no use in waiting 30 or 60 days for your money to arrive if you need it today. Also say no to fixed rate bonds. You may earn better rates in a bond, but your money will be locked away often with no permitted withdrawals.
Avoid regular savings accounts
Also think twice about putting your money in a regular savings account. These accounts are very tempting with very generous rates, but you'll usually find that you'll lose some interest whenever you take money out. And if you fail to make a deposit in any month, you'll almost certainly be penalised. Regular savers are quite restrictive and may not be the best place for your emergency savings.
Find the best easy access account
The best way to make the most of your emergency savings is to put them in the most competitive easy access savings account you can find. Choosing a best buy account with a market-leading rate will boost the overall return on your cash.
Search the entire market
To do that all you need to do is compare savings accounts at the lovemoney.com savings centre. This will enable you to hunt down the very best rates quickly and easily.
Keep an eye on your rate
But you'll need to keep an eye on the rate you're earning on your savings. The top accounts tend to offer really eye catching rates when they first launch to lure savers in. But you'll probably find that the return is gradually reduced over time. So what once started out as a great account has become really uncompetitive when compared with the rest of the market.
To guard against this make sure you review your savings account at least every six months. If you find the rate has deteriorated, switch your savings fast to the new best buy.