Savers punished for doing it by the book

Customers who insist on a passbook with their savings account are suffering the most as rates are slashed in response to Bank of England base rate cuts, according to analysis by MoneyExpert.com.

The number of passbook accounts - which are traditionally popular with pensioners - paying less than one per cent has rocketed with more than 44 per cent now offering less than one per cent.

And they're being paid average interest rates of 1.23 per cent which is 0.22 per cent lower than the average paid on all instant access accounts.

Last year just nine passbook accounts paid rates of less than one per cent - now it is 290 out of a total of 646 accounts on the market.

And the number of accounts offering passbooks has dropped significantly in the past year from 810 to 646 - a decrease of 20 per cent.

The cuts in rates and the drop in the number of accounts is further evidence of a drive to reduce costs and cut customer choice, MoneyExpert.com believes.

Sean Gardner, director of MoneyExpert.com, said: "Many older savers like and value the security and certainty offered by a passbook with their savings account.

"When there is genuine concern about the safety and security of banks and building societies with internet operations such as IceSave going bust it is no surprise that people want proof in black and white that their money is there.

"But for banks and building societies there is a cost in providing passbooks and they prefer to deal over the internet or phone. Unfortunately it is savers who are paying the price which at a time when interest rates are being slashed is not a price worth paying.

"Savers who genuinely value having a passbook need to search the market and find the best deals. There are some out there although increasingly it is the case that you earn more without a passbook."