Rates down again

Banks and building societies have embarked on a fresh round of savings rate reductions following the quarter-point bank base rate cut earlier this month.

Egg, NatWest and Standard Life Bank are among the players that have been quick to pass on the rate cut to their savers. The reductions coincide with new research which claims that apathy is costing the UK's savers billions of pounds in lost interest a year.

Egg this week trimmed its rates yet again, with the standard savings account and internet-only account now paying 5% and 5.75% respectively (they previously paid 5.25% and 6%). Its recently-launched Investor account has suffered a bigger hack - it now pays 6.5% on balances from £1 to £25,000, down from 7% before.

A spokesman says the cuts "reflect market conditions". But he points out that unlike many of its rivals Egg has put in place a number of base rate-linked guarantees which promise that the account rates will not fall below specified levels this year.

NatWest has reduced rates on a number of its accounts by a typical 0.25%. So its Savings Direct phone and postal account sees the rate for balances of between £1 and £4,999 fall from 4.5% to 4.25%. For balances of £5,000-£9,999 the new rate is 4.4% (from 4.65%), and for balances of £10,000-£24,999 savers will receive 4.7% (from 4.95%).

NatWest's Diamond Reserve and Reward Reserve accounts also see their rates for balances of £2,000-plus fall by 0.25%.

Standard Life Bank has opted to lop 0.3% off its personal savings rates. So its popular Direct Access account sees its rate for balances of between £1 and £4,999 fall from 5.55% to 5.25%, while for balances of £5,000-£11,999 the rate drops to 5.3% from 5.6%.

A new survey from Yorkshire Bank shows that Brits will happily leave a total of £3.4bn languishing in their current accounts at the end of this month, just as they do every month, where it generally earns next to nothing in interest. Yet people could earn 5%-plus interest if they moved some of this money to one of the decent-paying savings accounts still out there.

This figure is based on its calcuation that 90% of people regularly have at least £75 left by the time they get their next pay cheque, and a quarter of the population have more than £200 left over at the end of each month.

The researchers also found that 68% of people have no idea what rate of interest their savings are earning, and almost a third (29%) haven't checked the interest rate they are receiving since the day they opened their account.

So where can you go to get a fairly decent rate of interest? According to financial data provider Moneyfacts, the best rates on instant access-style accounts are currently being offered by, among others, internet and phone bank Intelligent Finance (6% from £1), Scottish Widows Bank (5.65% from £100, though this rate includes a 0.5% bonus for six months - account operated by post or phone), and Sun Bank (5.55% from £500, account operated by post).

On mini cash Isas, internet bank Smile is offering 6.5% from £1, while Northern Rock is paying 6.55% from £1, though this product is a 30-day notice account and the rate includes a 0.55% bonus for the first six months. Chelsea building society is offering 6.5% from £10, though this rate includes a 1% bonus for the first year. Cheltenham & Gloucester is paying 6.45% though the minimum balance is £100.

Looking at internet-only accounts, Bristol & West and Newcastle building society are each paying a hefty 6.6%, though to get this rate you would have to have at least £1,000 and £10,000 invested with them respectively. The Newcastle Net Savings account pays 6.10% from £1,000 to £9,999.

•These rates were correct this week but could change.