According to the latest BM Savings’ Saving Britain Report, during the first quarter of 2011 Britons have been saving on average £14 less than they did in the previous three months, but this has been outweighed by the fact that 52% of Brits are taking less money out of their savings accounts. According to the report, the amount people take out of their savings accounts has dropped by £123 from £1873 to £1750.

So what has prompted this shift? Most people are blaming rising inflation, which is slowly eroding much of their savings. The current inflation rate as recorded by the Bank of England is now 4.5%, which is 2.5% above the target rate, however, this is a slight reduction on the near 5% rate at the start of the year.

Inflation means that our money can buy us less, it effetely erodes our purchasing power and in terms of savings, it erodes the value of our savings in real times. To deal with this you need to find an interest rate of over the rate of inflation, and to actually make money, you need to find a rate that is over and above the rate of inflation by some margin.

This is just not possible right not as the Bank of England’s base interest rate level is just 0.5% and has been since the recession in a bid to induce spending. So what options do you have in terms of savings accounts?

One of the best ways to save is with an ISA. An ISA is an Individual Savings Account put in place by the government back in the late 1990s to encourage people to save. So why is it so good? The main benefit of an ISA is that any interest you make is completely tax free thanks to a government imposed tax wrapper surrounding all ISA products.

So although most ISA rates are currently around three and a half percent, you can actually still benefit and make saving worthwhile as every penny you earn, you get to keep. There are some rules and stipulations however. Firstly, you can only save a total of £10,680 and only up to 50% of this can be invested in a cash ISA. You can invest up to 100% in a stocks and shares ISA which has the potential to make you more money, but of course, at greater risk.

Check out the wide range of Santander savings options including a flexible ISA which tracks well above the Bank of England’s base rate.