Base rate rise 'may not pass through to savings'

The Bank of England's monetary policy committee increased interest rates to 5.5 per cent today, but many savers may not see the benefit, new research indicates.

According to the Post Office, consumers are missing out on millions of pounds in interest by staying with savings accounts that do not pass on rate increases.

Among those whose savings plans are suffering are customers of some of the biggest banks and building societies on the high street, the firm claims.

Post Office head of savings Richard Norman said that interest rates have risen sharply over the last year, with some experts believing more increases are yet to come.

He added that with people tightening their belts due to rising mortgage payments, they should make sure any money that they have in savings is working as hard as it can for them.

"It's easy to become a base rate loser when account providers fail to pass on interest rate rises in full to their customers, leaving people hugely out of pocket," he commented.

Research carried out for the BBC News website in December revealed that savings account providers passed on 0.42 per cent of the 0.5 per cent of base rate rise between August and November 2006.