EVEN before a London couple admitted that a £300,000 mortgage cost them monthly repayments of only 1p, many savers must have been wondering why they bothered to salt their spare money away.

Plunging interest rates have slashed income on savings and, as investment trust Alliance Trust points out, inflation is higher the older you are.

Over-75s, a group heavily reliant on savings, face an annual inflation rate of 4.9 per cent, as they read that the Government is alarmed by the spectre of deflation.

However, as I realised when opening a Nationwide Building Society 2008-9 ISA before the April 5 deadline, savers’ returns improve with a little homework.

A check of previous ISAs with Nationwide found two, both several years old, earning a wretched 0.7 per cent. I had hoped both were growing steadily to eventually top up my pension income.

It was pointed out to me that both could be re-invested, as two-year ISA bonds at three per cent.

My wife had three ISAs, also earning 0.7 per cent, and in the next few days, will also go into a Nationwide branch for an upgrade.

With ISA income tax-free, our old ISAs might have earned about £110 a year if left alone, against the £600-plus a year they could produce in new accounts.

Over two years, if rates stay on the floor, we could be about £1,000 better off.

Michelle Slade at Money facts.co.uk says my experience is a common one – as is my laziness.

“Accounts closed to new business go off the radar,” she says. “We don’t monitor them, and nor does anyone else. Best rates are used to draw new customers.

“Halifax Liquid Gold account is a classic example. In early days, it hit a barnstorming six per cent, and now it’s 0.1 per cent. Customers just don’t bother to switch to better accounts.”

Since September last year, carnage on the ISA front has been bloody, says Ms Slade.

Chesham BS slashed its cash ISA rate from 5.35 per cent to one per cent; Nationwide BS trimmed its Instant Access ISA from 4.3 per cent to 0.50 per cent and West Bromwich BS Easy Access ISA tumbled from 4.85 per cent to 0.10 per cent.

“None of these accounts made a cut after the last base rate reduction early in March, so they could fall even lower,” she says.

At finance website Moneysupermarket.com, head of banking Kevin Mountford says switching cash ISAs has been a cumbersome business for far too long.

He urges providers to follow Lloyds Banking Group – with a quarter of the ISA market – along with fellow big players Abbey and RBS Group in allowing electronic transfers to speed things up.

Mountford thinks many ISA holders might like a switch to NatWest’s eISA account, paying 3.25 per cent, if it isn’t too much hassle.

It could be late next year before rates return to sensible levels. Until then, savers are losing serious money by failing to update old accounts.

● This month sees the fourth anniversary of the Child Trust Fund (CTF), given to all children born on or after September 1, 2002. The fund is likely to give the luckier ones a five-figure sum at age 18 from September 2020 onwards.

All received an initial Government voucher worth £250 and in September, the oldest recipients get another £250 on their seventh birthday. For low-income households claiming full child tax credit, each voucher is worth £500.

The plan is that family and friends top up the Government hand-out on a regular basis as the fund grows tax-free.

More than four million CTFs have been opened so far.

About three-quarters of parents choose provider and product, while the rest do nothing – and the taxman opens an account on their child’s behalf.

CTFs can be held entirely in cash, with Hanley Economic BS – a good payer among building societies – offering five per cent, tax-free. The typical rate for a cash ISA is about three per cent and some pay barely two per cent.

The most popular type of CTF is a stakeholder fund, with most of the money invested in shares and charges capped.

Non-stakeholder CTFs invest only in shares, with higher charges for more active management.

Despite recent alarms, performance tables show some equity-based CTFs performing well – over 60 months, Family Investments Ethical CTF boasts a 53.41 per cent return, with Children’s Mutual CTF just under 49 per cent.