An unkind cut for savers at Barclays

Borrowers might be reassured by the "steady as she goes" message in recent Bank of England base rate decisions, but savers should not assume that the interest they earn sails on the same tranquil waters.

Since 1 June, people putting money away in Barclays' mini cash indi- vidual savings account, as well as the mini cash ISA offered by its Woolwich subsidiary, have seen the interest cut by up to 0.45 percentage points.

Rates are tiered according to how much you have saved but both accounts now pay just 4 per cent - a whole half percentage point below the Bank of England base rate - on balances below £12,000.

The wielding of the axe hasn't stopped at tax-free products. Elsewhere, the bank has reduced the rate paid on its e-savings account by up to 0.12 percentage points, and that on its Woolwich card saver account by up to 0.3 percentage points.

Barclays spokesman Andrew Jones says the cuts are only in line with those imposed by its rivals. "Most of our main competitors have already changed their rates, and we have taken the opportunity to review ours."

From tomorrow, HSBC is also cutting the rates on a range of savings products - including that on its cash ISA, which will fall from 4.65 to 4.22 per cent. A spokesman says the changes are part of an "ongoing review of our products".

But savings specialists are not convinced. "Given that there has been no movement in the base rate - and the next move, when it comes, is expected to be up - there is just no excuse," says Anna Bowes of independent financial adviser Chase de Vere.

Rachel Thrussell of the financial analyst Moneyfacts adds: "We have seen more than 40 providers reduce their rates since the start of the year. Base rates have been on hold for some time now, so it's [really] a case of providers looking to improve margins."

It's worth noting that, under the banking code, your bank or building society has a duty to write to inform you only if it is cutting rates "significantly". That means to more than 0.5 per cent below base rate in any one year.

"You need to keep an eye on your savings accounts," stresses Ms Thrussell.

For those looking to save tax-free money, she picks out the Direct ISA from National Savings & Investments, paying 5.05 per cent on an investment of at least £1,000, and Bradford & Bingley's eSavings ISA, offering 5 per cent on the same amount.

For smaller balances, Kent Reliance building society pays 4.96 per cent on £1.