Isa savers bear the brunt of rate cuts

Barclays, Cheltenham & Gloucester, Halifax and Nationwide are among the leading players that have cut rates on some of their savings accounts by more than April's 0.25% bank base rate cut.

And in many cases it's cash Isa savers who have borne the brunt of their hacking and slashing.

Many savers will conclude that some institutions kept their Isa rates high early this year to lure in as many people as possible during the peak Isa-buying season - then, as soon as they could, they pushed the rates right down.

One of the biggest culprits is Barclays, which this week cut the rate on its Isa for those with £3,000 invested by 0.5%, just two months after it imposed a 0.75% cut. That means its cash Isa now pays 5.5% on £3,000 compared with the 6.75% it was paying at the start of this year.

Melanie Stewart, at financial data provider Moneyfacts, says virtually every institution has now changed its savings rates. Among those that have chopped them by more than 0.25% are Nationwide, whose instant access Isa now pays 5.8% (down from 6.2%) and whose popular online e-Savings account has seen its rate cut again, from 6.3% to 5.9%. Little more than two months ago it was 6.7%.

Alliance & Leicester's cash Isa rate has fallen by 0.35% - from 6.15% to 5.8% - while C&G has imposed a larger cut: its cash Isa now pays 6%, down from 6.45%.

With some economists this week predicting one or two more 0.25% base rate cuts to come, savers looking for a safe haven and who don't mind tying up their loot for a while might want to consider a fixed-rate savings bond.

According to Moneyfacts, Coventry building society is offering the best rate - 6.1% fixed until January 31 2002. Minimum deposit is £1,000 and you have to apply online.

The best rates on instant access-style accounts include phone and internet bank Intelligent Finance and Capital One Bank -both paying from 5.75% on balances of at least £1.