Hundreds of thousands of savers who opened best-buy accounts over the past two years are now earning well below the current top-paying rates, a MoneySavingExpert.com investigation shows.

In the worst case, the Kaupthing Edge account that paid 6.55% before tax in May 2008 (now run by ING) has nose-dived to 0.5% for some customers. The 6.05 percentage point drop compares to a 4.5 percentage point fall in Bank of England base rate over that period.

Savers who pay basic rate tax with £5,000 deposited would now earn £20 a year interest instead of £262 a year.

This highlights the need to constantly review your savings rate and switch, where necessary (see the Top Savings Accounts and Top Cash Isa Transfers guides).

The rate drops are partly due to falls in the Bank of England base rate which means the top accounts pay a lot less than they did two years ago.

However, rates have also fallen due to bank and building society cuts in addition to base rate drops, and also where bonuses, that usually last a year, have expired.

MSE investigation

We reviewed a selection of the best-buy easy access savings accounts and tax-free cash Isas we highlighted in our free weekly email over the past two years to see what they're paying now.

Of the six cash Isas sampled, four are paying below the top Isa transfer rate of 2.75% you could get by switching. Of the 15 normal savings accounts, 10 of 16 are paying less than the current 2.83% best buy.

Here is the table of our findings:

What the best buys pay now
Launch date
Provider / product
Launch rate (bonus in brackets)
Current rate (i)
Base rate drop since launch (ii)
Account rate drop since launch (ii)
Apr '10 Halifax / Websaver 2.8% 2.6% 0% 0.2%
Apr '10 Santander / Flexible Isa 3.2% (2.7%) 3.2% 0% 0%
Mar '10 AA / Internet Extra Issue 3 2.8% (2.3%) 2.8% 0% 0%
Feb '10 First Direct / e-Isa 2.75% 2.75% 0% 0%
Jan '10 Coventry BS / 1st Class Postal 3.3% (1.3%) 3.3% 0% 0%
Sept '09 CitiBank / Flexisaver Issue 6 3.3% (2.25%) 3.04% 0% 0.26%
Sept '09 Egg / Internet Saver 3.25% (2%) 3.25% 0% 0%
July '09 Manchester BS / Premier 45 3.26% (0.8%) 2.46% 0% 0.8%
Jun '09 Intelligent Finance / iSaver 2.85% 2.49% 0% 0.36%
Apr '09 Santander / Isa 3% (2%) 1% 0% 2%
Apr '09 National Counties BS / Guaranteed Cash Isa 3.26% 1.81% 0% 1.45%
Apr '09 ING / Savings Account 2.75% (2.25%) 0.5% 0% 2.25%
Mar '09 Barclays / Golden Isa 3.61% (1.03%) 2.58% 0% 1.03%
Feb '09 Ulster Bank / e-Saving 4% (0.5%) 1.49% 0.5% 2.51%
Dec '08 Investec / High 5 5.24% 3.05% 1.5% 2.19%
Nov '08 Northern Rock / e-Saver 5.15% 2.5% 2.5% 2.65%
Oct '08 Tesco / Internet Saver 6.5% (1.5%) 3% 4% 3.5%
Sept '08 A&L / Online Saver 6.6% 2.36% 4.5% 4.24%
Sept '08 Natwest / Cash Isa 6.67% (2%) 2% 4.5% 4.67%
May '08 ING (ex Kaupthing) / Instant Access 6.55% 0.5% / 0.8% (iii) 4.5% 6.05%
May '08 Birmingham Midshires / e-Saver 6.5% 2% 4.5% 4.5%
Where rate includes bonus, it will have disappeared after a year. (i) if you opened account on its launch day, (ii) The '%' sign is used due to space limitations but the drop refers to percentage point drops, (iii) depending which option you chose after ING rescued savers following Kaupthing Edge's collapse in 2008.

How to find your rate

One problem savers have is that providers make it incredibly difficult to find your rate as they are not published on most statements.

Therefore, you often have to search through tedious booklets and internet pages, and even then, many banks use similar names to label their accounts which makes locating the correct figure a challenge.

As a result, both MoneySavingExpert.com and press officers for the providers concerned encountered delays locating accurate rates during this investigation.

Ensuring savings rates are clear on your statement is a campaign we have run for many months.

Last year, we sent over 15,000 e-signatures to Downing Street asking for saving rates to be more transparent to customers (see Thousands Demand Banks Come Clean news story).

We asked the Treasury whether the new administration would support such moves but a spokeswoman said it couldn't comment.

Rate change rules

Under Financial Services Authority (FSA) rules, banks and building societies must inform you "in good time", in writing, when a rate drops by more than 0.25 percentage points or by 0.25 percentage points more than a base rate drop. But only if you have at least £500 saved.

Otherwise, they are not compelled to tell you. The industry is currently deciding exactly the precise time frame in which providers must inform you.

Further reading/Key links

Best rates: Top Savings, Top Fixed Savings, Top Cash Isas, Top Cash Isa Transfers
Stay safe: Safe Savings

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