Have you been saving for something but don't trust the banks anymore? You are not alone. Maybe you want to spruce up the garden or simply add to your bonsai collection, but are worried about putting the money you do have to spare into a savings account?

According to the executive director of banking at the Bank of England, the UK public are hoarding money at home instead of putting into a savings account. Andrew Bailey claimed that the value of £50 notes in circulation had increased from £7 billion to £9 billion since 2007 and the total value of banknotes as a percentage of GDP has risen from 2.4% in the 1990s to 3.2% today.

This has largely been fuelled by low-interest rates introduced by the BoE to encourage spending in an effort to pull the UK out of recession. However, although there are signs that consumer confidence is growing as department stores chain John Lewis surpassed all previous sales figures last month and the housing market is beginning to show signs of recovery, consumers are still reluctant to trust banks.

As the news was filled with stories of massive bonuses for bankers whilst the rest of the country was in the grips of recession, consumers began to change their perception of banks. So now, more so than ever, banks are fiercely fighting to win back valued consumers, without whom they could not function.

High-street banks are now fighting back with attractive savings packages and tailor-made service, but also imposing (through measures taken by the BoE and FSA) tougher restrictions on lending. There is now a plethora of savings accounts on offer from ISAs to Instant Access and Fixed-Rate Bonds to Online-Only accounts, so knowing what to choose can be tricky.

Bonds mean you can't take your money out during the agreed term, which can be anything from a year up to five years.

ISAs are individual savings accounts that the Government introduced to encourage us all to save more. They are tax-free and the amount you can invest is limited.

Instant access means you can withdraw money from your savings account at any time; however, you are usually limited to a couple of 'free' withdrawals per month.

Interest can be fixed or variable. So fluctuating accounts are more risky, but if interest rates increase above the fixed rate then they are worth it. However, if the year looks set to bring low interest rates, then a fixed rate account might work better.

Alliance and Leicester has a wide range of savings accounts on offer that can earn you up to 4% gross interest per annum. They also come as recommended for mortgages, and have a useful mortgage calculator on their website.

Also see...

• Newstead Bonsai Award
• Bonsai Classes & Workshops at the Bonsai School >>
• John Hanby Bonsai School Study Group >>