The best savings accounts for your emergency stash

Serena Cowdy rounds up the best easy access accounts out there.

Turn on the TV or open a newspaper these days and you're likely to find that more major job cuts have been announced.

Here at lovemoney.com, we've been banging on about that emergency savings pot for ages. In the current economic mess, each of us should ideally have savings to tide us over for at least six months, in case we lose our jobs or face other unexpected financial emergencies.

Are you prepared to face the spectre of unemployment? This recent vidcast shows just how unprepared many of us are - with some people admitting their savings would tide them over for just a few days if anything went wrong.

If you haven't started squirreling yet, now is the time to start. Even a month's worth of savings could make the difference between spiraling into debt and coming out of the recession in one piece.

Emergency access

The savings accounts that pay the highest rates of interest are usually those that require you to lock your money away. At the moment, for example, there are several fixed rate bonds which pay interest of 4% plus - if you're in the position to put a lump sum away for two years or more.

However, if you're setting up an emergency fund, the clue's in the title; you'll need to be able to access your stash immediately if you do fall upon hard times.

That's why an instant access account (also known as an easy access account) is the right choice for you, despite the relatively poor interest rates on offer.

A true instant access account should allow you to get your hands on your cash straight away, without inflicting any financial penalties.

My top picks

Here are my five top instant access account picks:

Account	Interest rate (AER)	Minimum deposit	Interest paid	Need to know
Intelligent Finance iSaver	2.85% variable	£1	Yearly	Rate guaranteed to be at least 1% above base rate until 31 December 2009. Internet only, mobile phone required to set up online banking.
Principality BS eSaver Issue 2	2.85% variable	£1	Yearly	Includes a 1.2% fixed bonus for twelve months. Internet only.
Scarborough Investments Direct Access	2.76% variable	£1,000	Yearly	Rate guaranteed to be at least 1.26% above base rate until 31 May 2010. Telephone only. Scarborough Direct is now under the umbrella of Skipton BS. Call 0845 458 4522 to open account. Minimum additional deposits of £500.
ING Direct (UK) Savings Account	2.75% variable	£1	Monthly	Includes a 2.22% fixed bonus for twelve months. After this you'll be dumped onto their variable rate, currently 0.5% AER.After the bonus period, existing customers can enjoy our variable rate, currently 0.5% AER. After the bonus period, existing customers can enjoy our variable rate, currently 0.5% AER. Telephone or internet.
Sainsbury's Finance Internet Saver	2.6% variable	£1	Yearly	You're allowed three penalty-free withdrawals per year; any more and you'll be dumped onto the standard Internet Saver rate (currently 0.75%). Internet only. Rate offer ends 30 June.

What it all means

Which of these accounts is right for you completely depends on your personal circumstances.

The iSaver account from Intelligent Finance and the eSaver Issue 2 from Principality Building Society take joint first place when it comes to rates: Both pay interest of 2.85% (variable), on minimum deposits of just £1.

Just be aware of the strange caveat attached to the iSaver account: The Intelligent Finance website states that you'll need a mobile phone to set up a payment instruction using online banking.

If you're looking for peace of mind, the ING Direct (UK) Savings Account may be your best bet. Although its rate of 2.75% (variable) doesn't top the table, the account does provide the best guaranteed rate - a fixed bonus of 2.22% for twelve months.

If you're not comfortable with online banking, you'd be better off with either the Scarborough Investments Direct Access account, operated by telephone only - or the ING Direct (UK) Savings Account, which you can operate by phone or via the internet.

And again, a weird limitation to be aware of: As well as a minimum initial deposit of £1,000, the Scarborough account requires minimum additional deposits of £500. This makes it unsuitable if you want to squirrel small amounts away as and when.

Sainsbury's Finance Internet Saver is the only account listed that doesn't offer any sort of fixed bonus or rate guarantee. This means that theoretically, the 2.6% rate could plummet unchecked at any time.

Although it offers you some flexibility, it's also the only one that's not completely easy access; make more than three withdrawals per year and you'll be dumped onto the standard Internet Saver rate (currently 0.75%).

What's been left out and why

I've focused on the accounts that make it genuinely easy to withdraw your money immediately and without penalty (at least the first few times). That's why I've excluded certain accounts despite their high rates and the fact they're marketed as 'instant access' options.

One example is Ulster Bank's e-Savings Plus account, which pays an impressive 3.46% AER (including a 0.5% bonus for six months). Unfortunately to get this rate, you need an enormous £10,000 in the account.

And although no notice is required for withdrawals, no interest will be paid in any month where a withdrawal is made. If a withdrawal is made in any of the six months after the account is open, only the bonus rate of 0.50% will be paid for that month.

Not a brilliant 'instant access' solution, eh?

Compare savings accounts with lovemoney.com.

More: Get a better return on your savings | Savers are benefiting from the recession