Rate is king once more

With Bank of England decisions dragging down interest rates, British savers are back hunting the best rates again - rather than being obsessed with perceived security of savings.

Forty-four per cent of those polled by moneysupermarket.com say they have already moved, or are looking to move, to a higher paying savings account.

Equally significantly, 21 per cent say they have given up saving and are using any excess cash to overpay on their mortgage or pay off debts.

Kevin Mountford, head of banking at moneysupermarket.com, said: "Savers are being punished for the mistakes of others. And that so many are looking to find better rates at a time when you would imagine security and service would be paramount, shows just how badly savers are being squeezed.

"Gone for now are the days when numerous accounts were returning over seven per cent. Now, you are doing remarkably well to find an account paying four per cent.

"Savers are clearly being shocked into ensuring their hard earned money is working hard for them.

"Making sure your account is paying a competitive rate is always important - and needs to be balanced with ensuring savings are protected.

"It has been interesting to see in our forums that savers are once again looking at overseas banks for better deals - and indeed a number of the top deals do belong to these banks.

"Tumbling savings rates mean that more and more people are likely to be attracted to deals from abroad, especially in light of the success of the UK compensation scheme in returning money to savers in Icesave."