SAVERS are being penalised as banks and building societies embark on a wave of interest-rate cuts — even though the Bank of England base rate has remained unchanged at 4.5% since August last year.

Official figures showed last week that flows into deposit accounts are at their highest for at least four years. Adrian Coles, director-general of the Building Societies Association, said: “This looks like a reaction to over-indebtedness.”

So more than 30 providers have reduced their savings rate this year, according to Moneyfacts, a comparison service, and the Abbey online bank Cahoot is the latest to join the club. The rate on its savings account,which was only launched in January, was slashed from 4.85% to 4.55% last Friday.

Some big names, including Nationwide and Halifax, were among the first to cut some of their savings rates at the beginning of the year, and this seems to have encouraged others to follow suit.

Cahoot said: “We have reviewed our rates and where we stand in the market. Even though the rate on our savings account has been reduced we feel that, at 4.55%, it is still one of the best rates available.”

In a letter Intelligent Finance has sent to customers following its decision to cut the rate on its savings account from 4.5% to 4.4%, it stated: “Due to recent competitor interest-rate moves, we have taken the decision to move the interest rate on our direct access savings account.”

However, advisers and industry analysts are not impressed. Anna Bowes at Chase de Vere, an adviser, said: “It is very clear that providers now seem to think that it is acceptable to drop rates just because competitors are doing it. Savers do not expect this to happen when base rate hasn’t changed.”

Some savers may not even be aware that the rate on their account has been cut. Under the terms of the Banking Code, banks and building societies only have to notify their customers if they have cut their savings rate by 0.5 percentage points or more within a 12-month period. Savers should therefore keep an eye on their rate and move their savings to a different account if necessary.

Stuart Glendinning at Moneysupermarket.com, a comparison website, said: “Some of the most competitive providers have lowered their rates in recent weeks. First Direct has cut the rate on its E-savings account from 5% to 4.75% and Cahoot’s rate has dropped from 4.85% to 4.55%, but these still look attractive. What you really have to watch out for are the providers that launch deals to get them into the best-buy tables, then the rate drops significantly.”

You therefore need to look out for accounts that have short-term bonuses attached. Northern Rock’s Tracker Online, for example, is paying 5.01%, but this includes a bonus of 0.71 percentage points that runs for only six months, so it will fall to 4.3%. Customers should then look round for the best deal available, which may not be Northern Rock’s.

Another warning sign is an issue number on the account. Providers that use this tactic tend to replace the original account with a new best-buy deal after a few months. In this way they do not have to pay the high rate to all their customers.

Birmingham Midshires is one of a number of providers that regularly uses both ruses. Its Internet Easy Access Account (Issue 6), with a rate of 4.95%, is one of the top-paying accounts. However, the rate includes a 12-month bonus of 0.65 percentage points for the first year, so the rate will then fall to 4.3% — assuming the Bank of England does not cut base rate between now and then.

These accounts are therefore best suited to people who are happy to keep moving their savings round to the most competitive deals. People who do not want that hassle should consider accounts that have consistently paid a good rate of return: Sunday Times Money’s savings tables on page 9 identify some of these accounts.

Alternatively, they could go for an account with a guarantee. Capital One recently launched the Base Beater account, which guarantees to pay more than base rate until July 2010. The rate is now 4.55%.

Egg’s savings account, paying 4.5%, also has a guarantee. It will pay at least base rate until December 31, 2007. And, although Cahoot has just cut the rate on its savings account, the rate is unlikely to fall further unless we see a reduction in base rate, as it guarantees to match or be higher than base rate until the end of this year.

Another option for those who do not want to worry about keeping a close eye on their savings rate is a fixed-rate bond. The advantage of this type of account is that, unlike the variable-rate deals mentioned, the rate is set for a certain length of time. The disadvantage is that you cannot usually touch your money during that period.

The best one-year fixed-rate bond is from Anglo Irish bank. The rate is 5%, with a minimum deposit of £500. Nottingham building society has the best two-year deal at 5.1%, although savers must invest at least £1,000. And the best three-year deal is from Heritable Bank at 5.16%, minimum £2,000. Halifax has a three-year bond with a £1,000 minimum, paying 5.1%.

Advisers tend not to recommend that you fix your savings for longer than three years in case interest rates rise, leaving you stuck on an uncompetitive rate.