Households across the UK are putting away less of their income than they have for more than 50 years. Although some Scots are bucking the trend, many feel that poor returns mean saving is no longer worthwhile, leaving them financially vulnerable.

Everyone should set money aside to cover unexpected bills and build a nest egg for the future. But while the Bank of England’s base rate has been steady at a historic low of 0.5 per cent for seven years, The Money Charity says the amount of interest received by savers has been falling.

Excluding bonuses, in 2015, the average deposit account paid just 0.39 per cent, meaning there has never been less incentive to save. As a result, between October and December, households put away just 3.8 per cent of their income.

This is down from a high of almost 10 per cent in 2012 and is the smallest percentage since the Bank of England began to collect data in 1963.

Michelle Highman, the charity’s chief executive, said: “It might have seemed like there is not much reward for doing the right thing recently. But there is still a lot to gain from putting something aside, even if there is little interest you’ll get on it. Besides, things do change, and when interest rates rise, you’ll thank yourself for having saved.”

A significant number of Scots share her attitude. According to Scottish Widows, 44 per cent of savers north of the Border are putting away more now than two years ago, compared with a UK average of 41 per cent.

However, the investment provider calculates that 45 per cent of Scots women and 36 per cent of men aren’t setting aside enough to meet their long-term needs, while 26 per cent of all adults aren’t saving at all.

Earlier this month, in an effort to encourage people, the UK government introduced a new personal savings allowance. Interest is now paid gross (without the deduction of tax) and basic rate taxpayers can earn £1000 a year before owing anything on it, while higher rate payers have an allowance of £500.

A further change means that anyone earning below £17,000, including interest, no longer has to pay any tax on their savings income, even if it exceeds the £1,000 limit.

The Government says that under this system, 95 per cent of people will no longer pay any savings tax. The minority who do will have it collected through the self-assessment system or via a PAYE tax code adjustment.

But even with an incentive like this, it isn’t difficult to see why many people are not making the effort to save. In March, Moneyfacts.co.uk recorded just 18 savings rate rises and 123 cuts.

Rachel Springall, finance expert at the comparison site, said: “This time of year usually sees savers turn to Isas (tax-free Individual Savings Accounts) to act as a safe haven for their cash, but even these have not been left unscathed by rate decreases, with 40 over the last month, compared with just two rate rises.

“However, these vehicles are still a great addition to any saver’s portfolio due to their flexible nature, particularly if savers split their cash between easy access and fixed-rate deals.

“With 81 easy access accounts paying 0.5 per cent or less, which represent 48 per cent of the easy access market, the need for savers to review the interest they earn has never been so important. Savers could, in fact, earn over twice this amount if they opted for the market-leading deal offered by RCI Bank UK, which currently pays 1.45 per cent yearly.”

Anyone willing to tie up a lump sum for a year – and happy to organise it entirely through their smartphone – could do even better with Atom, the UK’s first digital-only bank.

It has no branches and operates via an iPhone and iPad app, with an Android version due to launch shortly. Its one-year fixed-rate account pays two per cent interest.

Matt Sanders, spokesperson for Gocompare.com, said: “Atom Bank’s one-year fixed savings account could be competitive enough to persuade those still on the fence about controlling their finances from their phones to take the plunge. That said, it’s worth remembering some current accounts offer up to five per cent interest on balances.”

Halifax Reward, which is giving a £100 bonus to new customers using the Current Account Switching Service, pays £5-a-month tax-free if you deposit at least £750, use two direct debits and stay in credit. This equates to possible earnings of £160 in the first year. The account also gives up to 15 per cent cashback on spending with selected retailers.

TSB’s Classic Plus has a £500-a-month funding requirement and pays 5 per cent on balances up to £2,000. It will also pay 5 per cent cashback until the end of 2016 on the first £100 of contactless purchases each month.

Nationwide’s FlexDirect, which requires a minimum monthly deposit of £1,000 and two direct debits, pays 5 per cent interest on balances up to £2,500 - but only for 12 months, when it drops to 1one per cent. Tesco Bank, which has no minimum funding requirement, gives 3 per cent up to £3,000.

Rachel Springall added: “Until the savings market starts to lift and stops giving savers the cold shoulder, consumers will have to make do with what’s left. Those looking for a reasonable return on their money will need to work hard to keep on top of the best deals and snap up the top rates that surface.”

CASE STUDY

Caro Haddow opened a TSB Classic Plus account in 2014 soon after it was launched.

“The appeal is the interest, five per cent on a maximum of £2000,” she says. “If you are very careful and manage to keep it at £2000 with money going in and out you can get the maximum amount of interest.

"Over the two years I have saved nearly £160, and with interest rates so low it has been impossible to save any kind of amount.”

The FlexDirect account from Nationwide also pays five per cent, on amounts up to £2500, but the snag is that it only lasts only for 12 months when the rate crashes to one per cent.

Ms Haddow, a part-time farmer and horsebox-driver from Jacton near East Kilbride, says the TSB account is easy to manageTSB , and also offers cashback on debit card purchases.

But she adds: “I don’t have a card because otherwise I would be too tempted to spend, I didn’t think that was a good habit.”