Santander’s decision to halve the interest on its popular 123 current account from 3% to 1.5% adds to the misery for savers who’ve struggled to see their money grow since the financial crisis. This means those with the maximum £20,000 of eligible savings will receive £300 rather than £600 every year from November. The cashback on direct debits will remain but so too will the monthly £5 fee for this account.

Both Lloyds (LSE: LLOY) and Halifax have already declared that they’re reviewing the rates offered on all of their accounts. In the same way that the major energy firms drop and raise prices en masse, expect further rate cuts from most of the UK’s biggest banks in the near future.

Having a proportion of your wealth in cash is no bad thing. A reasonably-sized reserve will help you to respond to life’s difficulties. Holding a substantial pile for no reason, however, makes little sense in the current low-rate world. To get the best from your money, make it work for you. And the best place for this to happen? The stock market, of course.

Dividends galore

Right now, 45 of the companies in the FTSE 100 offer dividends above the 3% rate offered (for now) by Santander. If the latter were to drop to 1.5% today, this number jumps to 81. Oil giant Shell (LSE: RDSB), for example, offers a pretty compelling dividend yield of almost 7.5%. Shares in one of the aforementioned energy firms, SSE (LSE: SSE), come with a 5.8% yield attached. Those that can endure some post-Brexit turbulence may also be interested in the 4.8% payout offered by low-cost carrier easyJet (LSE: EZJ). All three companies are sufficiently large and robust enough to withstand periods of uncertainty such as the one we’re currently in. 

And let’s not forget the banks themselves. Rather ironically, shares in some of our biggest banks now offer substantially better returns than those offered by their own savings and current accounts. Shares in Lloyds, for example, offer a dividend yield close to 6%. In contrast, their popular Club Lloyds account offers (for now) an interest rate of 4% but only for balances of £4,000-£5,000. HSBC‘s (LSE: HSBA) Online Bonus Saver comes with an pitifully low interest rate of just 0.5% and yet owning shares in the bank itself will generate a yield of over 7%.

Better rates, higher risk

Before moving your cash into a stocks and shares ISA straight away, it’s vital to remember that investing rather than saving puts your capital at risk. There’s no guarantee that a company will always be able to reward shareholders with their much-cherished dividends. During tough economic times, these bi-annual or quarterly payouts are among the first things to be shelved. That’s why it’s so important to look for companies that are in decent financial shape rather than simply seeking out the biggest yields you can find.

So, in addition to checking that dividends are covered by current earnings, you’re also looking for evidence that these payouts are consistently growing. A company able to raise its payout year after year, such as FTSE100 stalwart, Bunzl (LSE: BNZL) is an excellent sign. But why stop at the biggest index? The FTSE 250 also contains a large number of dependable payers, including health and safety equipment supplier, Halma (LSE: HLMA) which has grown its dividend by 5% or more every year for the past 37 years.

Don't just sit there

While Santander's account may continue to be the best of a bad bunch even after the rate cut, those concerned with building their wealth over the long term need to think hard about whether staying in cash is the best option.  For me, the stock market is by far a better home for your hard-earned cash, especially if you've already managed to build an emergency fund to cushion the pain of an unexpected bill or worse, a brief period of unemployment.  

The likelihood of inflation rising over time also needs to be considered. Anyone with a significant number of years in front of them will see the buying power of their cash fall thanks to the inflation's eroding effects. 

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Paul Summers owns shares in easyJet, Royal Dutch Shell B, Halma and Bunzl. The Motley Fool UK has recommended Royal Dutch Shell B. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.