We have £16,000 saved in a Sainsbury’s bank account. The interest rate is a pathetic 0.45 per cent. Could we be doing better? These are long-term savings we won’t need to touch for at least ten years. How about premium bonds?

Yes you most certainly could be doing better and you should look to move your money.

Unfortunately with inflation so high the value of your savings is going to be eroded, as no account pays more than the current 9.4 per cent rate of inflation.

Historically, investing in the stock market has offered a better hedge against inflation, but this carries the risk of losing more of your capital if markets are down when you need to take your money out.

Premium bonds are a way to have a bit of fun with your money but I would not recommend them if you want a guaranteed return. Like a lottery they offer the chance to win up to £1 million a month tax free in a prize draw. But unlike a lottery you keep the value of your “bet”.

Savings are from £25 to £50,000 and you can get your savings out penalty free at any time for the amount you paid. The current “interest rate” is 1.4 per cent, meaning National Savings and Investments (NS&I) estimates you will win prizes equivalent to this return each year — but there are no guarantees.

Interest rates are on the rise and it seems likely the Bank of England’s Monetary Policy Committee (MPC) will raise the base rate again, by a predicted 0.5 per cent, when it meets on 4 August. It may be worth hanging on a week before you move your cash to see what new rates become available.

If you don’t want to wait, the current top rate for a five-year fixed-rate account is 3.45 per cent from PCF Bank on deposits of £1,000 plus. It is opened online but can be run online or by phone or post.

Next best is Hodge Bank at 3.31 per cent on £1,000 plus. Again it is opened online and can then be run by phone as well as online.

You cannot make withdrawals during the fixed-rate period. It’s also worth noting that PCF Bank pays interest into a nominated bank account rather than its savings account where you would get the benefit of compounding — when interest is paid on interest received previously, not just the initial amount invested. Hodge gives savers the option to reinvest or receive the interest monthly or annually.

If you want to invest for a shorter period, Aldermore is paying 3.15 per cent on its three-year fixed-rate bond.

The account can be opened with £1,000 and is open and run online. If you want to manage the account by phone, PCF is paying 3.1 per cent for three years on the same terms as its five-year bond. Aldermore offers the option of either receiving or reinvesting the interest.

Alternatively a three-year fixed-rate ISA from Aldermore is paying a tax-free 2.75 per cent.

Rosanna Spero has been writing about money, property, and small businesses for more than 30 years. She has worked for a range of magazines and newspapers, with much of her working life on the Money Mail section of the Daily Mail. She has also written a number of books on the subject. Email her with your questions at rspero@thejc.com