10% of savings providers cut rates by more than 0.5%

On the eve of what could be the lowest rate in the Bank of England's 315 year history, savers continue to suffer as providers cut rates by as much as 1%. New research from uSwitch.com shows that just four days into March and 41 providers have already cut rates by an average of 0.50%. These latest changes have hacked the average variable savings rate down to just 1.08% AER. Already, Newcastle Building Society and Ulster Bank are offering rates of just 0.01%, paying a miserly return of 0.28p a year for the average saver.

If the Bank of England does cut the base rate by a further 0.5% tomorrow, the average savings rate will drop again to just 0.58%. This means that savers with the average balance of £2,813 will earn just £16.32 before tax in the next 12 months.

ISA accounts have been spared slightly with average cuts of just 0.47%. However, with 4.3 million consumers planning to ditch their ISA accounts, further reduction could just be a catalyst for the mass exodus which is set to lose banks £9.5 billion in ISA savings.

Four biggest decreases:

Chesham Building Society - selected variable rates reduced by up to 1%
Hinckley and Rugby Building Society - selected variable rates reduced by up to 0.75%
Kent Reliance Building Society - selected variable rates reduced by up to 0.75%
Loughborough Building Society - personal variable rates reduced by up to 0.75%

Rumina Hassam, personal finance expert at uSwitch.com, comments: "There is no doubt about it, savings rates really are hitting rock bottom. However, in this economic climate cashing in your nest egg really isn't the right thing to do as a savings account is a safe place to keep your money if nothing else. If you're not happy with your existing savings account the best thing to do is find a better one. There are still some good deals around and if you can afford to fix this really is the best option.

"Whatever you decide to do, don't be tempted to keep your savings in the house. Most home insurance policies offer cover an average of £561 of cash in event of a burglary. With a 4% increase in domestic burglaries already reported this year, these consumers could risk losing their life savings altogether."

For people that cannot afford to lock their money away for a year, there are still some good deals available paying 3.35% AER. The Egg internet savings account currently offers 3.35% AER, which on the average savings amount of £2,813, consumers could earn £94 if rates remain the same. However, all variable rates could be subject to change in the event of further base rate decreases.