Britain's worst savings accounts!

With the base rate stuck at 0.5%, times are tough for savers. Even so, these 60 savings accounts are a disgrace and savers should scarper at once!

In my view, the past twelve months have been the worst in history for savers. Last September, when the Bank of England's base rate stood at 5%, it was possible to find best buy savings accounts paying the thick end of 6% a year.

The great rate slump

In response to the growing financial crisis, the Bank of England took an axe to its base rate, cutting it six times in a row between October 2008 and March 2009. For six months, the base rate has stuck firmly at 0.5% and shows no signs of going anywhere until 2010 at the earliest.

Of course, when the Bank lowers its base rate, savings providers rush to follow suit. Hence, over the past year, savings interest rates have collapsed to levels not seen for generations. In fact, with the base rate at a 315-year low, we could have the lowest savings rates seen since the founding of the Bank in 1694.

Savers are being swindled

To show you how bad things have become for British savers, I asked lovemoney.com partner Moneyfacts, to find me the UK's lowest-paying savings accounts. At first, I asked for a list of all savings accounts paying a gross rate (before tax) of 0.25% a year or less on a balance of £1,000.

Alas, this produced an unwieldy list of 307 poor-paying accounts, so I had to lower the bar. In order to chop my dataset down to size, I removed 247 accounts paying gross interest rates of between 0.1% and 0.25% a year. Although these are awful accounts, there are even worse offenders.

This left me with 60 accounts, all of which pay less than 0.1% a year before tax on a balance of £1,000. To put this into context, a rate of 0.1% on £1,000 comes to one measly quid in interest per year. After savings tax of 20%, this drops to just 80p (or 60p for higher-rate taxpayers).

Now it's time to reveal the ten lowest-paying savings accounts in the UK. The remaining 50 are shown in a second table at the end of the article:

The ten most shocking savings accounts

(all pay under 0.1% a year on a balance of £1,000)

As you can see, the four accounts at the top of our list pay no interest whatsoever on a balance of £1,000. Frankly, that's a disgrace - and begs the question whether they can honestly be called savings accounts at all.

The remaining 56 accounts pay yearly rates of between 0.001% (that's 1p a year on £1,000) to 0.075%. Most of these accounts give you instant access to your money, in some cases via a passbook or cash card. Even so, this is no excuse for paying such paltry rates of interest, as the best easy-access accounts put the above accounts to shame.

What I find breath-taking is that some of these accounts add insult to injury by restricting your access to your cash. For example, Bank of China (UK)'s 30 Day Notice Deposit account pays no interest and yet you have to give 30 days' notice to withdraw your money. This is sheer madness!

I'm going to let one provider from this Hall of Shame off the hook, because it is a special case. Triodos Bank - shown in the table below - is an ethical provider which supports charities and sustainable businesses. Hence, savers put their money with Triodos for moral reasons without worrying so much about interest rates.

On the other hand, all the other banks and building societies above deserve a big slap from their savers. What particularly disappoints me is that building societies feature so prominently in my tables. The building-society movement has been the traditional home for our savings since Victorian times. It saddens me to see so many awful accounts being promoted by these organisations.

What should savers do?

When you take tax and inflation (rising prices) into account, the cash inside these accounts is worth less with every passing day. Alas, there's no doubt in my mind that billions of pounds could be rotting away in these poor-paying accounts.

Of course, there's absolutely no point in staying loyal to one provider if it's costing you a sizeable sum each year. Therefore, my advice to savers is simple: it's time to ditch and switch. By shopping around for a new savings account, you could earn a table-topping rate of 3% or more - and enjoy easy access, too.

For instance with the current market-leader - Citibank Flexible Issue Saver 6 - you'll earn a rate of 3.30% and you can make withdrawals whenever you like. So, don't delay -- shop around and switch today!

50 more shocking savings accounts

Compare savings accounts at lovemoney.com.

More: Switch your savings account today | Protect your savings from inflation | Five money-making tips for the over-50s