Savers are being urged to shop around for the top deals after the Bank of England base rate cut, with warnings that “loyalty is seldom rewarded”.

The decision to cut the rate from 5.25% to 5% marks a turning point for the Bank, which had not implemented a reduction since the onset of the coronavirus pandemic in 2020.

Ele Clark, senior money editor at Which? said: “Firms may respond to today’s decision by lowering their rates, which means savers get a lower return on their cash.

“When it comes to savings, loyalty is seldom rewarded. Which? research has consistently found that challenger banks and building societies offer better rates than high street banks, so if you’re unhappy with the returns you’re getting, now’s the time to consider switching.”

Rachel Springall, a finance expert at Moneyfactscompare.co.uk, said: “It’s wise to look beyond the more familiar big banks.”

Mark Hicks, head of active savings, Hargreaves Lansdown said a rate cut “is never going to be music to the ears of savers, but this shouldn’t do too much damage”.

He added: “The market was split on whether we were going to get a cut, so decisive action from the Bank of England is going to mean some banks bring rates down slightly, especially among easy access accounts, but we’re not expecting massive movements.

“However, what really matters for fixed rates, both now and in the coming months, is what happens around expectations of rate cuts in the future.

“If the Bank of England decides to cut rates twice and then pause, we should see minimal disruption to the savings market. More consistent rate cutting of four or more would drive greater savings rate change.

“Longer-term savings rates give the clearest indication of where the market expects things to settle, and with three-year and five-year fixed savings rates at 4-4.5%, the market is currently not predicting any significant falls below these levels.

“At the moment, the highest easy access rate and one-year fixed rate accounts still pay over 5%, so savers can still beat inflation by an impressive margin.”

A consumer duty, which reached its one-year milestone on Wednesday, requires financial firms to put consumers at the heart of what they do, including demonstrating that their rates offer fair value.

Sheldon Mills, executive director of consumers and competition at the Financial Conduct Authority (FCA), which oversees the duty, said in a speech on Wednesday: “In our cash savings work, following our market review, we’ve seen firms act more quickly to increase rates following base rate increases. The base rate rose by 0.25 (percentage points) between July 2023 and February 2024.

“During this time, firms, on average, increased rates for easy access deposits by 0.45 (percentage points).

“We estimate consumers will get around an additional £4 billion in interest payments per year – money they can save or reinvest, use to pay down any debt, or that might boost spending in the wider economy.”