You are generally more likely to earn the most competitive high rates of interest if you agree to tie up your money for a certain period of time. Once the initial deposit has been made you cannot usually add to the savings account. If you're planning to open a fixed term account you need to be aware that most providers do not allow access to the funds in the specified periods. Those that do allow withdrawals tend to carry penalties which can result in some or all of the interest you accrued being docked. This is why it's best to look at your options based on your financial state before choosing an account. These accounts are ideal for people who have spare money and can afford to lock the money up for a fixed period of time.

Another issue with interest rates paid on fixed term bonds is that they are fixed for the specified period. Therefore if the Bank of England base rate interest were to significantly increase within that time the rate offered on these accounts would not change to reflect this. However, this can also work the other way, and if the base rate was to drop which could occur in order to stimulate the economy, the rates will again stay fixed.

The most important thing when choosing between savings accounts is to save with providers covered by the Financial Services Compensation Scheme (FSCS), an independent fund coordinated by the FSA (Financial Services Authority).
This scheme protects your money providing compensation in the case of a collapse. This means that current and saving accounts and cash ISAs held with banks and building societies are protected.
Under the FSCS your first £50,000 is protected (£100,000 on a joint account). However, it is important you are aware that this amount applies to your savings per bank as opposed to per account so it may be advisable to spread your savings around. One thing to note here is that many financial mergers have taken place in the past, which means that some banks, while marketed as independent, actually fall under the same financial institution, For example Bank of Scotland, Halifax and Birmingham Midshires all belong to the HBOS institution. The FSCS will therefore only cover your first £50,000 within any of these banks in the unlikely case of its collapse.