What's it take for a bit on the side?

The Bank of England's decision this week not to raise interest rates will be welcomed by mortgage holders, but will disappoint people hoping for a rise to boost the returns on their savings.

There has been little in the way of encouragement for savers of late. It doesn't help that the Chancellor confirmed in the Budget that the tax-free cash Isa limit will be reduced from £3,000 a year to just £1,000 from 2006, or that permanently low interest rates mean incentives to save are few and far between.

Meanwhile, consumers are racking up debts on credit cards like it's going out of fashion with seemingly scant regard for the importance of regularly squirreling something away for a rainy day.

Research this week from IFA Promotion, the trade body for independent financial advisers, found that 13m UK adults save nothing at all. And it also found that of those that do put something away, two thirds say there is no way they can increase the amount.

The research also concluded that even though people weren't saving, they still thought of themselves as savers. This "reality gap", says IFA Promotion, means most people are burying their head in the sand and ignoring the importance of putting something away, be it for a rainy day or for a pension.

David Elms, chief executive of the firm, says: "It seems we are unable to deny ourselves purchases even when we know we can't afford them. Debt is no longer a last resort, it's become an easy option, while at the same time millions are putting their long-term saving provision on the never never."

There is some positive news though. For a start, this month's last-minute rush for cash Isas far outstripped last year, while research from National Savings and Investments revealed a population that is extremely savvy when it comes to choosing where to save their hard-earned cash.

Plus, the voracious appetite for the Halifax Regular Saver account - prompted by its headline grabbing rate of 6% - has demonstrated that with the right incentive, people will bite the bullet and try to save something monthly.

The account has restrictions, but even these haven't stopped people queueing up around the block to open one. Some 200,000 people have signed up in the first five weeks and other high street operators will now be plotting tactics for how they can get a piece of the action.

Ray Milne, head of Halifax Financial Services, says there is growing evidence of more positive attitudes to saving and that this has been helped along by new accounts coming on to the market.

He says: "We have seen already this year that there is an appetite to save among adults in the UK with the fantastic success of our Regular Saver account with the average monthly amount saved being over £190."

But there is more to getting into the savings habit than signing up to the highest rate. The Halifax account won't suit everyone with its limited flexibility. Not everyone wants a minimum monthly deposit or to be compelled to pay into the account for 12 consecutive months without a break.

So what to do? There is no shortage of accounts with reasonable rates, even with out an interest rate rise. Anyone with a bit of spare cash has no reason to keep it (no matter how small the amount), languishing in a low interest account.

For example, in the Moneyfacts best buy tables all the top five no notice accounts are paying interest over 4% and three of them require a deposit of just £1 - ideal for someone starting to save but who can't commit to regular deposits and who wants easy access to their money.

And if internet access is feasible, the rates paid on the best of these accounts are not to be laughed at. Northern Rock and Egg have rates of 4.76% and 4.75% respectively with a £1 deposit required.

The tax-free option of mini cash Isas is always good and should be a first port of call, and many accounts are paying over 4.5 per cent with instant access.