IN THE era of the internet, consumers are accustomed to instant results at the click of a mouse. To a generation at home with internet banking, the worldwide web has revolutionised savings.

Ten years ago, the best rates were reserved for savers who were willing to tie up their cash in accounts that demand a lengthy notice period. But these notice accounts are looking increasingly antiquated in the face of the online competition.

A recent egg/Datamonitor report showed that the margins on bank and building society notice accounts have increased fourfold since 1993. Easy access accounts, by contrast, have become less profitable and, by extension, better value for the customer.

Internet accounts continue to dominate the best-buy tables. The best, offered by Alliance & Leicester, pays an annual equivalent rate (AER) of 5.35 per cent.

There are some savings accounts that pay better rates — the odd notice Isa and regular savings account. But the internet option looks increasingly attractive when compared with run-of-the-mill notice accounts.

Internet accounts are a relatively new phenomenon. Online banking took off in the late 1990s and has gone from strength to strength. The most recent figures from the British Banker’s Association (BBA) show that there are now almost 17 million consumers with bank and savings accounts that can be accessed over the internet.

There are advantages to both consumers and product providers. The banks and building societies save on paperwork and on the huge costs associated with branch banking. They do not even need as many people to take calls from customers. For customers, that means better rates, but it also means easier access. With more than five million people now enjoying broadband internet access, according to the latest figures from Ofcom, the communications regulator, it is becoming easier to check balances or make payments.

The internet is also eclipsing telephone banking. Although there are 35 million telephone bank accounts out there, BBA figures show that there were only 162 million account balance requests put through telephone banking services in 2003, against 361 million balance requests from the 17 million internet accounts. More people paid bills over the internet and more people made payments to other bank accounts too. It is much easier to make payments and keep track of your balance on the internet.

However, the facilities offered by the internet accounts do vary. Some of them will have post and telephone banking facilities, but you are unlikely to get branch banking. They will require you to have some kind of current account to transfer money to and from because you will not be able to take out money in the usual branch-based way, using a cash machine, for instance.

Ben Willis, of Chartwell Investment Management, the independent financial adviser, says that internet accounts are not for everyone: “Some people like to go in and talk and get a personal answer on their accounts. They may feel more comfortable with that.”

He says that for bigger decisions, such as pensions or mortgages, personal questions may be necessary. But he adds: “For simple decisions on bank accounts and savings accounts, the internet is the way forward. No one wants to queue at lunchtime just to do something simple such as transferring money.”

Some people may be concerned about internet security. At the moment, the greatest threat seems to be “phishing”, where fraudsters send e-mails that look like they are from your bank. These e-mails ask you to reply with your account details to update their records. No genuine bank or building society would ever ask for your details in this way.

As far as the accounts themselves are concerned, there is one number in the best-buy tables that should command your attention — the AER. Some accounts offer a higher gross rate, reflecting an introductory bonus. The AER is the rate you will receive, assuming interest rates stay at the same level for a whole year.

There is another point to remember about internet accounts: they are no substitute for a cash mini-Isa if you are a taxpayer. Isas pay similar interest rates to the online accounts, but their tax-free status makes a substantial difference to the overall return.

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