Millions of savers can now break free from their building society accounts and the battle for their cash is heating up.

Until recently savers with building societies planning to turn themselves into banks have been trapped in low-paying accounts while conversion plans were thrashed out.

Members of the Halifax, for example, have been stuck in their accounts since November 1994 waiting for the society to complete the conversion process. And Alliance & Leicester customers have been marooned since the end of 1995.

Now the way is clear for savers to take their money and run. Alliance & Leicester savers are totally in the clear - qualifying customers have now received their shares and are free to move their savings to other more lucrative savings accounts if they choose.

Halifax customers need to be a little more careful. They can move the bulk of their savings if they choose, but they must make sure that they don't actually close an account.

''Savings accounts must remain open until June 2, the date the society becomes a bank,'' says the Halifax. ''But customers need to keep only #1 in their accounts to maintain their membership.

''Anyone who is coming up to the end of their mortgage needs to keep a balance of #125 with us to be sure of their shares.''

Building societies, banks - including the new-style supermarket banking operations - and insurance companies are all fighting for a slice of money. Hardly a day goes past without another new interest rate being announced, designed to persuade the customers of converting building societies to take their money and run.

When you're comparing all the different offers it's important to compare like with like.

These days banks and building societies quote their savings rates ''gross'' - that is, before any tax has been taken off. Most taxpayers need to knock off 20% to see what they'll receive after tax. That deduction applies even if income tax on your earnings is at the basic rate of 23%.

But insurance companies quote the returns on their fixed interest bonds after a deduction for basic rate tax. Remember that while non-taxpayers can claim back any tax knocked off their building society and bank interest - or avoid losing tax altogether by completing the Inland Revenue form IR85 - they cannot reclaim the tax knocked off insurance company bonds.

If your money has been stuck in a society for a couple of years while you wait for your free shares you might now appreciate the chance to have more flexibility with your cash. And if you don't want to tie your savings up again long term there are some juicy returns on offer.

Top of the pile must be the new Instant Access account from Sainsbury's Bank. This joint venture with the Bank of Scotland has signed up an astonishing 100,000 new customers since its launch eight weeks ago - which isn't too surprising when you start to compare interest rates.

Savers can open a Sainsbury's Instant Access account for just #1 and earn an interest rate of 5.75%. That compares with a rate of just 0.5% from the Halifax's instant access account and an even more derisory 0.25% at the Alliance.

Until this week Sainsbury's nearest rival in the instant access stakes was the Scottish Widows Bank although savers need a minimum of #500 to earn the 5.25% return. But more familiar named are fighting back. C&G has launched its Instant Transfer account paying 6% if you invest at least #1000. Money can be transferred to and from your own bank or society account to the C&G account by telephone.

With even more to invest savers can earn over 6% before tax. On a balance of #10,000 for instance Bristol & West's instant access postal account pays 6.4% while Northern Rock's pays 6.35%. Both societies are set to become banks later this year - the Bristol & West as part of the Bank of Ireland - but savers signing up now won't qualify for any shares or cash handouts.

Another reason for only committing yourself short term to a new savings account is that pressure is growing for UK interest rates to rise. An increase in rates after the election was already widely expected. And, this week, the influential International Monetary Fund said a rise should come sooner rather than later.

So while it may be worth tucking your cash away for a year or two it may not be so sensible to lock it into a fixed rate account for longer.

The Nationwide, which is committed to remaining a mutual building society, has a one-year, fixed rate bond paying 7% for a minimum investment of just #1000. To get the same fixed return from the Halifax you need to invest #10,000. Nationwide also has the best return over two years - 7.5% for an investment of only #500.

If you really want the security of knowing what rate you'll be earning in five years take a look at escalator bonds where rates are guaranteed to rise each year. One of the best is on offer at the Newcastle Building Society. Its Escalate Direct account (minimum #5000) pays 6.25% in year one, rising each year to 10.75% in year five.

And there's an outside chance of windfall gains in the future if the Newcastle joins in the conversion fun.

SAVINGS SELECTION

MinimumRate

investment #gross #

Instant Access:

Sainsbury's Bank (0500 405060)15.75

Scottish Widows (0345 829829)5005.25

C&G (0800 742437)10006.00

Fixed Rate:

One year Nationwide (0800 302010)10007.00

Two years Nationwide5007.30

Escalator Bonds:

Min1st2nd3rd4th5th

invyearyearyearyearyear

Newcastle (0191 244 2244)#%%%%%

--Escalate Direct50006.256.507.008.5010.75

Source: MONEYFACTS