The average interest rate on instant access deposit accounts fell to just 0.17 per cent in February, the latest Bank of England statistics have revealed.

The rate is a new record low, and does not account for any further savings account interest rate cuts as a result of the latest base rate drop to 0.5 per cent.

The Bank figures also show that branch based notice savings accounts are also giving little in return for savers’ cash, with an average rate of 0.18 per cent.

And, as interest rates fall to such dramatic lows, research from moneysupermarket.com has found that savers are on the hunt for higher returns, which have overtaken safety when it comes to priorities.

The study found that 45 per cent of savers have already moved, or are looking to move their cash into a higher paying savings account. Meanwhile, more than 20 per cent of people polled said they do not see much point in saving as a result of low interest rates, so are choosing to use spare cash to pay off their mortgage or other debts.

Commenting, 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.

“Savers are clearly being shocked into ensuring their hard earned money is working hard for them,” he added.

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

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