The widespread credit crunch cannot stop the savings war as banks battle it out to take your money. An increasing number of foreign banks are entering the UK market with high interest rates providing a stark contrast to the so-called homegrown banks and the poor comparative rates which they offer. The savings section provides recommendations of the top offerings which are currently available.

UK Banks

The risk of a UK bank collapsing is low but the credit crunch has turned the traditional logic on its head. All regulated financial organisations are protected. The first £35,000 saved in an institution is protected. Note that any debts you have with the bank will be deducted from your savings prior to you being able to reclaim your investment.

You may be unable to withdraw or access your cash if the bank runs into problems. Stick with the protected cash level of £35, 000 to ensure you don’t run into any financial problems.

The Treasury stated in May 2008 that in the event of any bank running into difficulties it has £4billion which it can immediately call on. However, this fund would only cover the UK's 26th biggest bank collapsing – and does not even begin to cover the funds which would be needed if the big high street banks were to collapse.

Foreign Banks

A high number of foreign banks have entered the UK market. These banks can offer such high rates as they are not based in the UK and thus the recent credit crunch and consequent implications have no effect on their offerings.

Most of the foreign banks mentioned in the savings section - is Kaupthing, FirstSave and ICICI are regulated by the Financial Services Authority.

The four key foreign banks are FSA regulated and all comply with the voluntary banking code, meaning that the first £35,000 of any investment is guaranteed in the  event that anything would happen to the bank and your money. If you are unsure of a bank's credibility, or don’t recognize the bank's name, fsa.gov.uk has information on all banks and details unauthorized bank accounts.

Not all foreign banks are regulated by Financial Services, so if anything was to happen to the bank, there is a risk that you could lose all of your savings.