Surge in saving accounts paying poor rates

Tens of thousands of savers are receiving 0.4% return after tax or less following a rise in accounts paying derisory rates.

Research from Which? revealed the number of accounts paying these low rates has increased by nearly two-thirds in the past 12 months, according to the Daily Mail.

The rise is the result of banks and building societies launching a string of accounts with headline-grabbing rates of 2.4% after tax (3 % before) or more. Meanwhile, they close existing accounts to new savers and the rate drops sharply.

Which? researched 1,727 savings accounts that have been superseded by newer versions to find 546 paid 0.4% or less, 341 more than last year.

Of these, 307 pay 0.08% or less - up by more than half on 2010.

Halifax Liquid Gold, HSBC Flexible Saver, Manchester Premier Instant, West Bromwich Acorn and Darlington Premier Sentinel 30 are among those paying just 0.04% - or 40p after tax on each £1,000.

The problem could get worse if banks and building societies seeking to attract new money continue to launch a stream of accounts.

A total of 142 new easy-access accounts have appeared in the first ten months of this year, figures from data analysts Defaqto revealed. This is nearly three times higher than the 51 in the same period last year.