Savings rates cut to the bone

Savings rates offered to new customers have reached a fresh low, after banks implemented further cuts.

The Bank of England said that the average new instant access savings account was paying just 0.48% in December, while rates being offered for new tax-free cash ISAs had fallen to 0.85%.

It's not long ago that ISA's were paying more than two and a half per cent.

National Savings cut its Direct ISA rate in November and High Street banks have followed its lead.

Financial experts say banks aren't competing to attract savings in. Instead they are concentrating on winning current account customers by paying them better interest instead.

Halifax, Lloyds, and Nationwide were among those cutting ISA rates last month.

Santander and HSBC have given notice that they'll be reducing them too.

Savers have suffered ever since the Bank's base interest rate was cut to a record low of one half of one per cent in 2009, but in recent months returns have been cut to the bone.