More than a third of all savings accounts offer an interest rate of 0.5 per cent or less, new research from uSwitch.com has revealed.

The low returns account for 329 savings accounts across the market, 23 of which pay as little as 0.05 per cent AER – equivalent to 12p a month on an average savings balance of £2,813.

The news comes as Brits rush to squirrel away their cash during the recession, bringing the total bank deposits to £4billion at the end of 2008.

However, as the Bank of England recently found that the average savings account rate is 0.81 per cent, it has never been more important to shop around and compare savings account rates.

Louise Bond, personal finance manager at uSwitch.com said: “Base rate decreases really do represent a double edged sword for consumers. Tracker mortgage customers are ‘quids in’ but savers are being penalised. Savings rates will continue to drop in line with the base rate so it’s unlikely the situation will improve in the next few months.

However, there are still some competitive rates available, including the Alliance & Leicester eSaver with a rate of 3.6 per cent, and the ICICI Hisave account offering a return of 3.55 per cent.

Ms Bond added: “While returns on savings accounts are so low, people may be tempted to look for other places to put their money as there are several options. This could involve dabbling on the stock market, offsetting savings against a mortgage or simply overpaying a mortgage.

“Before making any drastic moves or taking any big financial risks people should speak to a financial adviser to avoid a knee jerk reaction which could result in financial loss.”

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