Here's a quickie tutorial I put together on how to effectively hide knots and make your closed seams pretty!
Tuck in your seam allowance.
Use a ladder stitch to close the seam. When you tug the thread the stitches disappear!
When you finish closing your seam knot your thread and place the needle into the same place your thread came out.
Push the needle through to the other side and gently tug the thread until you hear the knot pop through. You've successfully hidden your knot!
If you're using minky, take a needle and carefully brush the fur out of the seam. When you're finished you should have a nice pretty seam that's barely visible!