Gathering funds for a dream holiday

The beautiful Durack Lakes, Palmerston, are located in the Northern Territories of Australia.

From here it is possible to explore some of Australia's most fascinating sights, such as Lichfield National Park - an untamed wilderness at the foot of the red sandstone Tabletop Range, a timeless landscape topped with dry woodlands and crystal clear springs spilling into gorges.

Territory Wildlife Park and Howard Springs, a tourist park with its monsoon forest and spring-fed pool, and Yarrawonga Park Zoo, are just a short drive away, too. Coming here promises to be the holiday of a lifetime.

This, of course, means having to get the funds to travel to Australia. Few people can afford to just up and go, so money will have to be put aside for it. There is nothing like saving for a dream, is there?

With this comes the problem of having to find savings accounts that can be opened and maintained on a small budget. The real snag is to actually know where to start. Banks are swamping the market with a myriad of fancy offers. The average customer rarely knows where to start or how to find the best deal.

Some offers sound tempting, but are they maybe too good to be true? The only way to make an informed choice is to very carefully compare savings accounts, their features, the rates they're offering and the conditions attached to those rates.

This may seem like an impossible task, but with comparison sites where several options can be seen side by side, it becomes much less of a minefield and decisions will be made somewhat clearer and better informed.

The best way to start is to look for the deals offering the best savings rates. This should be done with great care, as many deals are currently offering bonus rates. Though these figures are without doubt tempting, care is advised. Many of these offers only apply for a comparatively short time, after which they drop down to often disappointing standard AERs.

Savings interest rates vary significantly between the many available options, but it can be safely said that the best possible rates can be found on individual savings accounts, more commonly known as ISAs.

These deals have a variety of advantages over other similar choices. To begin with, they are available in a range of variations. The most basic variation is the flexible or instant access ISA. This type allows consumers instant access to their funds as and when required.

As most of them can be started with minimal initial investment, these are a good option to start with. It should, though, be noted that even here many deals include a bonus which will stop after a year. This is fair enough if the individual is prepared to move on to a better option after 12 months.

This in itself is not actually a bad idea as it allows the gradual build-up of enough capital to start with a higher interest, higher initial deposit the following year. In any case, maximum savings in these types of accounts are restricted, as this will allow them to remain tax-free.

The fixed rate ISA variations come in the shape of short term, or one-year agreements; the so-called medium term, or two-year options, and the long-term savings opportunities, usually taken out for three or more years.

Again, there is a multiple choice of possible deals. Initial deposits on the one-year options vary mostly between £500 and a quite high £1,000, with similar amounts, as well as a few choices of £100 or £3,000 deposits on the two-year deals. Three-year deals tend to gravitate towards the initial £500 or £1,000 minimum investments.

Some of the best ISAs available to consumers are within the long-term, three or more year group. These market-leading deals may have the higher investment requirement of £1,000, but they do offer an AER of four per cent, something that is only rivalled by comparable savings bonds.

Though savings bonds are an alternative worth looking into, the fact that savings and accrued interest are tax-free with ISAs does make them more attractive in the long run.

Potential customers should, though, be aware that these high rate options do not allow them to withdraw any of their funds until the term is completed. For someone who is saving for a dream holiday this is a great idea, unless they would like to have access to their funds just in case of emergencies.

Other good investments can be made through savings for children. If the idea is to save towards the higher education of one's offspring, there are some possible options where money is locked away until the child reaches the age of 18. The starting capital is minimal at £1 and there are some good AERs attached.

To introduce a child to saving in general or maybe to save for their holiday spending money, many deals offer exceptional rates and instant access at starting deposits of £1. Others are fixed for a year or three years, but these usually require regular saving - in other words, a certain amount, often £10, has to be deposited each month.

Whatever the ultimate choice of deal will be naturally depends on each individual's circumstances and will be subject to a lot of careful consideration and comparison.

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