CONSUMERS have been warned that a ‘two tier’ savings market has emerged during the credit crunch as banks seek to pull in new business but leave loyal customers earning derisory rates.

Savvy savers who are prepared to switch are being offered rates between 6 and 7 per cent on savings and some current accounts, but existing customers are paying the price.

The average credit interest rate on all current accounts has risen to nearly 2 per cent from 1.6 per cent a year ago, according to Moneyexpert.com. Lloyds has even raised the rate on its Plus account from 4 to 6 per cent.

However, more than two out of five accounts still pay below 1 per cent when you’re in the black.

Sean Gardner, director of MoneyExpert.com, said: “It’s encouraging to see banks getting their houses in order and offering better interest rates for customers with positive balances.

“But let’s be honest – almost half of all accounts reward customers who are in the black with less than one per cent annual interest. That’s an appalling return. Given there are accounts out there offering ten times that amount of interest, customers should not settle for a raw deal.”

It is the same picture in the savings market. Aggressive new entrants such as Nigerian bank First Save and Icelandic banks Icesave and Kaupthing are offering more than 7 per cent on fixed deals. First Save pays 7.1 per cent on balances of at least £1,000.

However the savings bonanza has not prevented banks hitting loyal customers with their old tricks.

The number of savings accounts using ‘bonus’ rates to attract new customers has increased by 30 per cent since October 2007, according to Investec Private Bank .

Furthermore, the average lifespan of the bonus has shortened from 284 days in October 2007 to 265 days. As a result, many customers will be left languishing in underperforming accounts once their bonus has expired.

Linda McBain, head of banking at Investec Private Bank, said: “Banks are more frequently boosting their headline savings rates using appealing short-term bonuses. While these can seem attractive, the reality is that savers need to take a long-term view. It is imperative that savers find an account that offers not only a competitive rate but also guarantees consistency.”

The Investec High 5 account pays the average of the five best-buy accounts as chosen by the independent financial product research company Moneyfacts - currently 6.51 per cent.

Separate research by Sainsbury’s Finance found that out of 10 best-buy savings accounts three years ago, seven are now paying less than Bank rate.

In February 2005, the accounts were paying an average of 5.23 per cent interest - 0.48 per cent above the Bank of England base rate at the time. The average rate for the seven accounts in February 2008 was 4.63 per cent - 0.37 per cent below Bank rate.

The three best-buy accounts reviewed that are still paying above the base rate since February 2005 are the Sainsbury’s Internet Saver (5.50%), the Yorkshire Building Society e-Saver account (5.50%) and the Bradford & Bingley eSavings account (5.30%).

Neil Cameron of Sainsbury’s Finance said: “Rates on savings accounts move frequently so it’s important to keep an eye on them and ensure that you are receiving a fair and competitive return. Savers should be aware that an account that features in today’s best buys will not necessarily be such a great deal tomorrow.”