Millions of people are failing to save because they think it simply isn't worthwhile when interest rates are at record lows.

Millions of people are failing to save because they think it simply isn’t worthwhile when interest rates are at record lows.  

But everyone needs to have an emergency fund - and not all accounts pay equally badly.

Almost a third of UK adults don't put money away, and interest rates are partly to blame, according to MoneySupermarket.com. While many say they simply can't afford to save, more than 2.5 million people believe it is pointless in the current economic climate.

Today's best easy access account pays 1.5 per cent, but Moneyfacts.co.uk says that three years ago providers were offering twice this.

Rachel Springall, the comparison site's finance expert, said: "What is shocking is that 146 savings accounts on the market pay 0.5 per cent or less, while the best buy easy access account pays three times as much."

No one can predict the future, which means everybody ought to have a savings cushion to cover unexpected bills and other financial emergencies.

Kevin Mountford, head of banking at MoneySupermarket.com, said: "Although Isas, easy access accounts and fixed-rate bonds might not be providing massive returns, saving a little amount of money is far better than saving none at all.

"Isas come with tax-free benefits, so it is worth stashing some cash away, even if the interest isn't quite what you'd hope for.

"In addition, Isa rates have slowly begun to creep up, and hopefully we'll see this continue and providers will start ramping up their offerings as a result."

An instant access Isa, or individual savings account, is a good home for funds you might need to draw on at short notice.

Over-16s can open a new one each financial year and save up to the annual tax-free limit, which is £15,240 for 2015-16. Unlike ordinary savings and current accounts, where, depending on your tax bracket, at least 20 per cent of the interest goes to the Revenue, there is nothing to pay on Isa interest.

NS&I currently pays 1.5 per cent on its instant access Isa, which can be opened online or by phone. For a basic rate taxpayer, this is equivalent to earning almost 1.9 per cent, but NS&I doesn't accept transfers in from existing Isas.

Virgin Money's online Defined Access Isa, which also allows penalty-free withdrawals, pays 1.4 per cent and it will take transfers.

If you can afford to wait for your cash, Al Rayan Bank's 120-day notice Isa expects to pay 1.8 per cent and its one-year Isa bond aims to offer 1.9 per cent. It too accepts transfers, and accounts can be opened online or by post.

Al Rayan, which was commended for its 120-day account in the recent Moneyfacts Awards, is Sharia compliant, so instead of paying interest its returns are based on investment performance. However, in 11 years of operation, it has never failed to pay the expected rate.

Chief executive Sultan Choudhury said: "The fact that more than half of new customers who have opened a 120-day notice account since January 2014 are thought to be non-Muslim clearly demonstrates our commitment to providing competitive, innovative products."

If you can leave your cash untouched even longer, Nationwide and the Post Office have two-year Isa bonds paying 1.8 per cent, with minimum investments of £1 and £500 respectively.

State Bank of India has a five-year online bond paying 2.5 per cent, but the minimum investment is £15,000. Coventry and Skipton building societies have five-year bonds offering 2.3 per cent, Coventry's with a minimum investment of £1, Skipton's £500.

Anyone who has used up their Isa allowance could consider the easy access online Freedom account from RCI Bank, owned by car maker Renault, which pays 1.5 per cent, worth 1.2 per cent after basic rate tax.

This week another newcomer, Atom, joined the ranks of the so-called challenger banks - three of which have just raised their rates on bonds.

Charter Savings Bank has a one-year fixed rate bond paying 2 per cent on a minimum £1,000, while Shawbrook Bank pays 2.1 per cent on a two-year bond and 1.85per cent on an Isa version which accepts transfers, though both need a minimum £5,000. and Vanquis Bank has one to five-year bonds paying 1.86per cent to 3.02 per cent.

United Trust Bank has the highest-paying 18 month bond on the market, paying 2 per cent on a minimum of £500, and offering the option to open by post as well as online.

Anna Bowes, director at independent adviser Savingschampion.co.uk, says "The challenger banks have stepped up the competition. With almost 90per cent of the best fixed rates bonds currently being offered by challenger banks, it's clear to see these providers want savers and are willing to pay competitive rates to get them."

Another option is to open a Santander 123 current account. This costs £2 a month and requires a monthly pay-in of £500 and use of at least two direct debits. But, in exchange, as well as giving 1 to 3 per cent cashback on selected household bills, 123 pays 3 per cent interest on balances between £3,000 and £20,000.

For someone keeping at least £20,000 in the account, this would be worth £456 a year after basic rate tax and the monthly fee.

Wherever you choose to put your money, remember to keep an eye on what rival providers are offering and be prepared to move it if something significantly better comes along.

Ms Springall said: "Switching is the most effective thing that savers can do to boost their returns in this environment, so they must review their current deal regularly and chase down the best offers."