So how long will savers have to wait?

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The Independent Online

The Bank of England's Monetary Policy Committee surprised no one with last week's decision to raise interest rates by a quarter point to 5 per cent.

A base rate increase usually heralds good news for millions of savers with variable-rate accounts, who should benefit from higher returns. But they may be shocked to discover just how long it takes their provider to pass this rate rise on.

After last Thursday's announcement, just a smattering of savings institutions announced increases within hours, while the majority remained silent.

If past experience is anything to go by, many will leave their customers hanging on for weeks before they make changes.

Among the providers quickest off the mark last week were the AA, M&S Money, the Post Office and new provider Icesave - all of which immediately announced that they would pass on the full 0.25 percentage point increase.

But while the improved returns for M&S savers actually came into effect the following day, AA customers will have to wait until 1 December to feel the benefit, and Post Office customers until 6 December.

It is likely that many other providers will employ their own stalling tactics, holding off from making any announcement - or introducing any increases - for as long as possible.

A full week after the last 0.25 percentage point rise back in August, only around a quarter of the 100 onshore providers in Britain had announced plans to increase their rates, according to financial analyst Moneyfacts. Many savers heard nothing from their reticent providers until nearly a month later.

Sue Hannums of independent financial adviser AWD Chase de Vere warns savers to watch out for those institutions that crow about a new rise in rates when they have recently brought them down.

"After the August rise, Abbey, Alliance & Leicester, the Halifax and Nationwide building society were all quick to pass on [an] increase," she says.

"But all these providers had cut their rates in previous months - despite the fact there had been no Bank of England cut for a year [before that] - widening their own profit margins."

This, she adds, meant some savers were simply returned to where they started. Ultimately, therefore, they missed out on a real increase.

Watch out also for those that fail to pass on the full quarter percentage point to savers - or that announce interest rises only on selected products.

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