Savings rates go from hero to zero

By JO THORNHILL
Updated: 05:18 EST, 14 September 2009

The list of bank and building society accounts paying zero, or virtually zero, interest is growing.

Falling fast: traditionally attractive accounts are now not even paying pennies.

Most worrying is the number of savings accounts paying nothing, as savers would usually expect a better-than-average return from these.

Astonishingly, these even include some notice accounts.

Cater Allen, the private bank owned by Spain's Santander, pays 0% on balances up to £10,000 on its Sovereign 30-day notice savings account. Bank of China's seven-day and 30-day notice savings accounts also pay no interest.

Accounts paying next to nothing include Bank of Ireland's Telephone Saver and Card Saver.

Nor is it only the banks. Certain deals from Cumberland, Newcastle, Dudley and Progressive building societies also pay tiny fractions of 1%.

Joss Harwood, a director at Eldon Financial Planning in Bishop Auckland, County Durham, says savers who have not reviewed their accounts in a while should check that they still have a competitive rate.

'While interest rates are very low it is still possible to get accounts paying in excess of 3%, for example with Tesco and ING Direct,' she says.

The Bank of England held the base rate at 0.5% last week, the level it has been at since March 5. Barclays student and young persons accounts next week join the list of current accounts that pay no interest, which includes Cater Allen, First Direct, HSBC, Nationwide Building Society, Co-operative Bank and Yorkshire Bank.

Most of these had typically paid 0.1% on current accounts in the black. But Nationwide's FlexAccount had been one of the best on the market - it was paying 3.5% this time last year.