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By Rachel Jones
Know Your Money Editor

The recent Bank of England interest rate cut has taken the base rate down to just one per cent, a decline from the more than five per cent it stood at in 2007. Once again, the move was heralded by customers on tracker mortgages, especially those at Cheltenham and Gloucester. Britons on the organisation's tracker mortgages could find themselves forking out just 8p a month in interest repayments because the rate is set at minus 1.01 per cent of the Bank of England base rate. Indeed, while this means that customers should technically be paying out next to nothing, the firm's computer system cannot cope with a zero per cent rate and therefore many people may pay out just a few pence. While individuals on tracker mortgages and those facing hefty loan repayments may be pleased to hear such news, it could be said to be another blow for savers. Britons who have carefully stashed their cash away face little returns, which could lead some to wonder if there is any point in saving during the credit crunch.

Despite this, now is the time to save

Nationwide has urged Britons to continue to save their hard-earned cash during the economic downturn. Savings director at the high street building society Andy McQueen says that although interest rates on savings accounts may be low, it is still important to put money aside for a rainy day.

"We are concerned about the number of consumers who are not saving at the moment, as a proportion think that now is a bad time to save. We understand that as household finances are stretched, saving can be a challenge, but it's never been more important to build up savings to act as a buffer in uncertain times," he states.

Recent research from Nationwide reveals that just 46 per cent of consumers admit that they save regularly, while 23 per cent put away nothing at all. Furthermore, more than half of those questioned believe that government policy discourages people from saving. Nationwide urges individuals to search the market for the best deals for them, whether they are individual savings accounts (Isas), regular savings accounts or online accounts. But those who do save are being more careful about when and why they dip into their cash pots.

According to a new poll by Birmingham Midshires, customers realise the importance of having an economic shelter and, as such, are only using their savings to pay for emergency repairs and sky-high energy bills. Over the last three months, the amount that Britons have raided from their shored-up cash has fallen by £204, compared with the same time last year. The financial services provider also reveals that there has been a 77 per cent drop in the number of savers who have dipped into their accounts to pay for life's little luxuries.

Commenting on the findings, Andrew Hagger, of Moneynet.co.uk, says: "Even though interest rates have fallen sharply, people's attitude towards saving has shifted as the difficult economic conditions start to bite. Savers are adopting a more responsible attitude and even though rates of return are lower, they are more cautious with their savings balances. Many now view their nest egg as a safety net to protect themselves against the growing threat of unemployment."

Are there any savings accounts that could help?

Many financial commentators claim that the Bank of England could further drop the interest rate to zero per cent next month as a final attempt to support the UK's economy during the continuing credit crunch. However, this could plummet returns to a next-to-nothing level for savvy savers. Pensioners, in particular, rely on their savings to live off and many financial experts have argued that they are possibly the hardest to be hit by the declining interest rate. As such, consumers may want to research the best savings accounts on the market in an effort to stem the flow of dwindling benefits of stashing money.

The one-year fixed-rate bond from FirstSave currently has an annual equivalent rate (AER) of 3.6 per cent and the account can be accessed via the telephone or internet. The minimum balance must stand at £1,000 but the fixed rate is competitive. Furthermore, FirstSave notice accounts are currently paying out a 3.5 per cent AER although the minimum balance for this stands at just £100. These products can be compared to the Halifax International fixed-rate web saver, which has an AER of between 2.5 and three per cent. Furthermore, the Alliance and Leicester eSaver has an AER of 3.1 per cent.

Cash-strapped individuals should make the most of their Isa allowance, although they need to act fast because the April 6th deadline is approaching. It may also be worthwhile for Britons to transfer some of their cash to a fixed-rate bond - such as the one from FirstSave - because these savings vehicles often have a favourable interest rate. Whatever deals people choose, they may want to act fast in order to store their money before a possible further interest rate cut next month.

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