But rising share prices can leave savers wondering if their money might not be better invested in the stock

But rising share prices can leave savers wondering if their money might not be better invested in the stock market rather than sitting safely in a boring Tessa. These work just like any other Tessas but instead of the provider deciding how much interest you earn, returns are linked to the performance of the stock market. "The main advantage of these Tessas is that you can potentially earn higher rates of interest," says Mark Dixon, head of product development at HSBC. One way to get the best of both worlds is to invest in an equity-linked Tessa. Stephen Bullock, the chief executive of Chorley & District building society, says: "The absence of shareholders has meant that building societies could improve rates by 0.4 per cent over their plc counterparts."Mr McAteer says that the larger societies, which offer poorer value on the Tessa side, have keener rates on mortgages in general. Mr Bullock believes smaller societies can pay better rates because they are more specialist.

Big societies such as Bradford & Bingley have diversified into a broader range of products.Mark Hamilton, of the Nationwide, agrees with this. He says: "Tessas are the smaller societies' flagship products."q Contacts: Cheshire BS, 0800 243278; Chorley & District BS, 01257 279373; Coventry BS, 0345 665522; Halifax, 0345 263646; Investec, 0171 283 9111; 'MoneyFacts', 01692 500765; National Counties BS, 01372 747771: Norwich & Peterborough BS, 01733 372222; Skipton BS, 0345 171777; Yorkshire BS, 0800 378836.q Dido Sandler writes for 'Financial Adviser'.Past winnersTop 20 performing variable rate Tessas (assuming investment of the pounds 9,000 maximum over five years)Institution Payout valueChorley & District BS pounds 11,602Julian Hodge Bank pounds 11,600Investec Bank (UK) pounds 11,593Norwich & Peterborough BS pounds 11,576Buckinghamshire BS pounds 11,565Tipton & Coseley BS pounds 11,564Cheshire BS pounds 11,564Holmesdale BS pounds 11,559Dunfermline BS pounds 11,547National Counties BS pounds 11,534Hinkley & Rugby BS pounds 11,531Dudley BS pounds 11,525TSB pounds 11,509Loughborough BS pounds 11,505Cambridge BS pounds 11,501Melton Mowbray BS pounds 11,496Monmouthshire BS pounds 11,493Principality BS pounds 11,493Earl Shilton BS pounds 11,477Kent Reliance BS pounds 11,475Source: MoneyFacts. Mick McAteer, senior policy researcher at the association, says 40 per cent of the banks' post- tax profits were paid in dividends. Bradford & Bingley's "High Return" product came 47th, Britannia BS was 57th and Nationwide came 62nd. The Consumers' Association says building societies were ahead of the banks in general because the banks need to make bigger margins to satisfy shareholders.

Halifax is the next big player but is well down the list at 25.The rest of the nation's big hitters languish near the bottom end. Of the 92 Tessas monitored, NatWest came in at 73, Lloyds at 74, Midland and First Direct at 75 and 76, while Barclays' offerings were at 59 and 86.Eight of the top 10 providers to January 1998 are building societies that have retained their mutual status. National Counties, at number 10, has just one branch.Of the other top performers, Buckinghamshire, Tipton & Coseley and Holmesdale building societies, at five, six and eight respectively, are so tiny that they refuse to accept savers from outside their localities.The largest mutuals, however, have failed to keep up with their smaller brethren. Vicky Burn, deputy editor of MoneyFacts, a financial data magazine, says the big bank Goliaths were beaten hands down by the tiny building society Davids in its annual round-up of Tessa payout values. The lucky saver who put pounds 9,000 into the top-performing Tessa from the Chorley & District building society in January 1993 would have reaped pounds 618 more than in the poorest one provided by Cater Allen Bank.The magazine's performance chart shows that for Tessas taken out five years ago only one of the high street lenders comes in the top 20 This was with TSB. AVOID high street banks and most mainstream savings institutions when you are looking for a top-performing Tessa. For the best deals you will have to check out the lesser known smaller building societies.

These pay a higher rate of interest the longer you stick with the account and the more money you put in. One of the most popular escalator Tessas is the Abbey National's. It begins with a 6.7 per cent return in the first year rising to 7.65 in year five if the full pounds 9,000 has been invested.Another choice for the investor is a "guaranteed" Tessa. Birmingham Midshires, for example, promises to pay at least 3 per cent above the rate of inflation, thereby guaranteeing your money grows in real terms.Another option is the fixed-rate Tessa. These guarantee a particular rate of interest over the full five years. Current fixed-rate deals range from 7.7 to 7.45 per cent a year.

These are appropriate for any investor who believes that interest rates are likely to fall in the longer term, which is by no means a certainty.Another type of account has also become more popular - the stock market- linked Tessa. This spices up your investment by linking the rate of return to the performance of the stock market. The main providers include Abbey National, Bristol & West and HSBC.. As one independent financial adviser says: "I tend to go for the small, mutual building societies because they have to be more competitive and, also, you never know what might happen in the future."The headline rate of interest on offer, however, does not always tell the whole story Some banks and building societies offer escalator Tessas. IN THE past years Tessas have grown in number and now range from simple deposit accounts to sophisticated stock market-linked investments.