High street banks Barclays, HSBC, Lloyds and NatWest continue to pay savers as little as 0.50 percent on some accounts, MPs warned last week.

With inflation at 10.5 percent in the year to December, this is ravaging the spending power of people’s money.

Somebody who put £10,000 into a savings account paying 0.50 percent at the start of 2022 saw its value fall to £9,000 in real terms.

It is possible to get much more interest from a challenger bank, which offer savers better value.

For example, this one-year fixed rate bond pays a market-leading 4.17 percent, while Ford Money pays a fixed rate of 4.40 percent a year for five years.

Yet there is another way of making your money work a lot harder, without taking out a savings account at all.

If you owe money, you are likely to pay a far higher rate of interest than you will ever generate on cash or even the stock market. 

For example, credit card companies routinely charge APRs of more than 20 percent a year.

Sainsbury’s Bank charges typical APRs of 22.9 percent once any introductory rate has expired, while M&S Bank charges 23.9 percent and the American Express Platinum Cashback Everyday card charges a thumping 28.1 percent.

It you have debts focus your firepower on paying them down before building up your savings, says Myron Jobson, senior personal finance analyst at Interactive Investor.

When tackling multiple debts, prioritise those with the highest interest and charges, then move onto the next most costly, then the next, he adds.

Remember to keep servicing all of your debts, such as your mortgage, to avoid missed payment penalties or worse.

Homeowners who have paid off all their expensive short-term debts may consider paying down their mortgage, too.

Most loans now allow you to overpay 10 percent of your outstanding debt each year, and this can pay off.

Somebody who owed £150,000 on a mortgage charging four percent a year over a 25-year term who overpaid by just £100 a month would cut four years and four months off their mortgage term.

They would also save a staggering £17,082 worth of interest.

Mortgages are the cheapest form of debt and some who took out their home loan several years ago might still be paying less than two percent. In this case, their money may work harder in the bank.

In most cases, it won't.

As the cost-of-living crisis drags on, debt is a growing worry. If concerned, seek free help from charities such as StepChange, Citizens Advice or National Debtline.