Earn £235 more on your savings this year!

It's going to be a challenging year for savers - so find out how to get the best rates and make your money work harder in 2010!

The base rate is predicted to remain low in 2010. That's bad news for savers who face another year of pitiful rates on their cash.

Savings rates really deteriorated during 2009. At the start of last year, the base rate stood at 3%, and the average easy access savings account paid a return of 1.48%. This year, the base rate stands at 0.50%, and the average savings account pays a pathetic 0.80%.

Just take a look at the table below which shows exactly how much rates have changed for different types of savings accounts over the last 12 months:

Savings rates during 2009

Source: Moneyfacts

With the exception of longer-term fixed rate bonds, where average returns actually improved in 2009, all other types of savings accounts have deteriorated markedly over the year. 

It's enough to put you off saving altogether, isn't it?

Easy access accounts

Having said that, we all need a cash cushion so it makes sense to earn the best rates you can on your savings, even in today's low interest environment. You may be surprised by the difference it makes.

Let's imagine you put £10,000 in an average easy access savings account. At a rate of 0.80% you'll earn just £80 in interest over the year. But if you chose a best buy account instead - such as the AA Internet Extra account or the Birmingham Midshires Telephone Extra account - your rate would shoot up from 0.80% to 3.15%. That means you could earn £315 by the end of 2010 - or an extra £235.

This is equivalent to almost four times as much interest which I think is a pretty good reward in return for the very simple task of switching to a market-leading savings account.

Notice accounts

Savers with a large quantity of cash to stash away can still earn highly competitive rates with the Investec Bank High 5 account. The return you'll get is always the average of the five savings accounts which are paying the highest rates (including instant access and notice accounts), making it one of the most generous accounts on the market.

The rate is recalculated each week to ensure it stays competitive so you don't have to continually chase the latest best buys. This week the rate is 3.32% which puts it ahead of the best buy easy access accounts.

Bear in mind that you'll need at least £25,000 to open the account and you'll need to give three months notice for withdrawals. If you deposited the minimum amount, you would earn around £830 in interest in year one.

By comparison the average notice account pays just 1.14%. This rate would provide a return of £285 by the end of 2010 - that's a whopping £545 less than the return from the Investec Bank High 5 account.

So you get the picture. Even though rates are still low historically, it's still worth picking a best buy over a bog standard account - especially if you have a decent amount to put away.

Earn 7.5 times more interest!

You could up your savings rate even further by choosing a high interest current account, rather than a traditional savings account. For example, Santander brands Abbey and Alliance & Leicester offer a range of current accounts which pay an impressive 6% on in credit balances.

These accounts are a fantastic way of boosting your return as long as you meet the minimum funding requirements. To qualify for the Alliance & Leicester account you must pay in at least £500 per month while the Abbey and Santander accounts require £1000 plus per month. But, unlike with a regular savings account, you can immediately withdraw the cash you deposit or even set up a standing order to automatically transfer the cash to another account.

In particular, check out the Alliance & Leicester Premier Direct current account, the Abbey Preferred In Credit current account and the new Santander Zero current account. All these accounts pay a whopping 6% on the first £2,500 - and better still, this rate is fixed for a year.

So how much wealthier might you be, if you took out one of these accounts? If you kept a constant balance of £2,500 in any of these accounts for the next 12 months, you would earn £150 in interest guaranteed. Compare that with the pathetic £20 in interest earned in an average easy access account with a rate of 0.80%, and you would be seven-and-a-half times better off, earning an extra £130!

It's a no-brainer really. Just remember, balances over £2,500 earn just 0.1%, so don't bother to deposit more than this sum. The fixed rate also dwindles from 6% to 1% after a year so you'll need to find a new home for your savings at this point too.

Now you know how to multiply your return, you can go one step further by joining our Build up your savings goal where we'll guide you through all the steps you should take to maximise your savings. And for extra help why not ask other lovemoney.com for all their top tips on Q&A?

Compare savings accounts at lovemoney.com

More: Beware of these 5 terrible savings traps | Get into the savings habit in 2010