However, the silver lining in this cloud is the savings war that is currently being fought out between providers. With banks and building societies still struggling to raise money for loans and mortgages on the wholesale markets, they're looking to our cash to help plug the funding gap.
The Bank of England base rate is at 0.50% and the average savings account is paying even less than that, but savers can literally boost their returns by hundreds of pounds a year by moving their money to a higher-paying account.
Over the last few months we've been highlighting some of the fantastic savings deals on offer and in July moneysupermarket.com launched a campaign to encourage all savers to take advantage of the great rates currently available. We calculated that, as a nation, Britain's savers were losing out on £7.7billion in interest. The good news is that nearly 150,000 people took action and moved their money. As a result, they will earn an extra £28.8m over the next 12 months.
But that means an awful lot are still missing out.
Don't put it off any longer - move your money now
Kevin Mountford, head of banking at moneysupermarket.com, said: "I think the perception among a lot of people is that savings rates are so low that there's no point in moving your money.
"In many ways that's understandable - you could earn around 6% this time a year ago on an easy access account. The leading deals now are paying just over 3%, so the perception among many is that things are much worse for savers. But it's important to remember, base rate was 5% and inflation was 4.8%."
This week it emerged that the consumer price index (CPI) measure of inflation had bucked predictions it would fall and remained at 1.8% in July, while the wider retail price index (RPI) had risen slightly from -1.6% to -1.4%.
Kevin added: "The RPI is still in negative figures which can only serve to help to protect people's hard earned cash from the erosive effects of inflation... Inflation has plummeted over the past 12 months, meaning savers don't have to worry about the value of their returns being eaten away by the effects of rising prices.
"In August 2008 when the RPI was running at 4.8%, a standard rate taxpayer needed a savings rate of 6.0% just to break even."
So where should you move your money to?
If you want to retain access to your savings, Coventry Building Society's 1st Class Postal Account is still available paying 3.30%. However, it does have more restrictions than many easy access accounts: you can only make four penalty-free withdrawals a year, and the minimum withdrawal is £1,000.
If you'd prefer a more flexible option, Egg's Savings Account is paying 3.25%, while Alliance & Leicester's Online Saver Issue 5 and Birmingham Midshires' Telephone Extra Account both have a rate of 3.15%. These products allow unlimited penalty-free withdrawals.
There are actually a whole host of accounts paying around 3.0% - Citibank's Flexible Saver Issue 5 is paying 3.10%, Leeds Building Society's Online Access Account has a rate of 3.05%, the ING Direct Savings Account is paying 3.00% and Sainsbury's Internet Saver is offering a rate of 2.90% - sign up for this account before August 22 and you'll also receive 1,000 Nectar points.
The main point to note about all of these deals, however, is that they include introductory bonuses, so you should be prepared to move your money again once that ends.
It's possible to earn an even higher rate if you have money you can afford to lock away for a few years.
Skipton Building Society has the highest rate at 5.50% but you must lock your money away for ten years. West Bromwich Building Society's E Bond 32 is paying 5.45% but even with this account your money is tied up until July 31, 2014. The danger of locking your money away for so long is that interest rates will start rising again at some point and you could find yourself stuck in a deal that becomes uncompetitive. Also, circumstances could change within that time and you may need to access your savings - but most fixed rate bonds charge a penalty for early withdrawal.
Many savings analysts are therefore recommending that if you want to fix your rate, you go for a shorter-term deal.
Barnsley Building Society's three-year Online Bond is paying 5.00% on balances of just £100 or more (many fixed rate deals have higher minimum investments). Alternatively, West Bromwich's E Bond 31 is a three-year account which has a rate of 4.75%, while ICICI Bank's three-year Fixed Rate HiSave account is paying 4.60%.
Among the two-year products, West Brom again leads the way - its E Bond 30 has a rate of 4.45% (fixed until July 31 2011), while The AA's Internet two-year Fixed Rate Bond is paying 4.35% and Aldermore Bank's two-year account is paying 4.21%.
There are also some fixed accounts with even shorter terms which are worth considering if you have a lump sum you won't need to access in the next year or so. If you have £25,000 or more to invest, Cahoot has an 18-month bond at 4.00%, while the Post Office's One Year Growth Bond is paying 3.85% - the minimum investment on this account is significantly lower at just £500.
Switch now - don't delay any longer
With so many accounts paying rates significantly higher than the base rate, the environment for savers is the best it's been for years, so don't miss out.
Disclaimer: Please note that any rates or deals mentioned in this article were available at the time of writing. Products underlined can be applied for directly.
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