More than 30 banks and building societies have cut the rates on their savings accounts since interest rates were cut, giving customers worse returns than before.
Last Thursday (6 February) the Bank of England cut interest rates from 4.75 per cent to 4.5 per cent.
In response, figures from Moneyfacts show that more than 30 lenders have now reduced rates on at least one of their products, with some doing so multiple times.
Whether you should get a cash ISA - and the alternatives that could be better
Read MoreThere are more cuts to come, with Barclays announcing on Tuesday that it would cut rates on two of its accounts later this week.
From Thursday, its Everyday Saver will drop from 1.5 per cent to 1.25 per cent on balances up to £10,000, while the Rainy Day Saver will fall from 5 per cent to 4.76 per cent on balances below £5,000.
Leeds Building Society and Skipton Building Society are among others reducing their rates.
With a £5,000 deposit, a customer would earn £250 per year in interest if they were being paid a rate of 5 per cent, but at 4.76 per cent this would drop to £238.
Experts are urging savers to shop around for the best rates.
Alastair Douglas, CEO of TotallyMoney said: “When shopping around, it’s important to consider smaller and newer banks, as they’ll be more likely to be offering more competitive rates and better service to win your custom.
“A handful of providers are offering easy access savings accounts with rates of more than 4 per cent, meaning you can earn money, and make withdrawals when you like.”
It may also be worth locking in fixed rates now to beat inflation.
The Bank of England said last week it expects inflation to reach 3.7 per cent by the middle of next year. With rates falling down and inflation increasing, if savers are on deals below or near inflation when it rises, their real rate of return will be minimal.
The best rates as of Tuesday (11 February) can be seen below, but the top providers are changing daily, so it is worth checking before locking away your cash.
Currently, the best deal is with Trading212 on its cash ISA which is offering 5.03 per cent.
The best easy access deal is with Coventry Building Society with a rate of 4.85 per cent.
Returns on savings tend to fall as the base rate does. The last time the base rate was cut – November 2024 – average savings rates on accounts dropped too.
Mortgage rates falling too
In better news for consumers, some mortgages rates have also fallen since the Bank cut interest rates last week.
Those on variable mortgages see immediate reductions, but fixed mortgage prices are starting to drop a little too.
When setting these rates, lenders take multiple elements into account, including their service levels and overall market conditions.
NatWest has become the latest big provider to announce that it is cutting fixed rates.
It has said that from Wednesday it will be slashing rates on multiple mortgages by up to 0.36 percentage points, though there are still cheaper deals available on the market.
MPowered has also made cuts to its fixed-rate mortgage range, with two-year fixes now starting at 4.34 per cent for those with 40 per cent deposit or equity with a £999 fee, or 4.59 per cent with no fee.
Some of the best deals can be seen below.
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