IT HAS now been a whole decade since the last time interest rates were increased by the Bank of England and in that time mortgage rates have fallen to record lows while £179 billion is sitting in savers' accounts earning no interest.

In July 2007 rates were increased from 5.5 per cent to 5.75 per cent and since then there has been a series of rate cuts.

But what has the impact been on savers and borrowers and how could you improve your financial situation?

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Financial services firm Hargreaves Lansdown carried out analysis of the impact of the falls, which have left the Bank of England base rate at a record low of 0.25 per cent.

For cash savers, the paltry returns available mean £1,000 stashed in a typical instant access account over the past 10 years would be worth just £878 in today's money, once the eroding impact of inflation is also taken into account.

They also found that £179bn is sitting in bank accounts earning zero interest - up from £23 billion 10 years ago.

In contrast to the situation for cash savers, the same £1,000 investment in the UK stock market in July 2007 could now be worth around £1,323 after adjusting for inflation, Hargreaves Lansdown calculated.

While cash savers have been feeling the pinch, borrowers have seen the cost of their repayments kept relatively affordable with zero rate credit card deals and record low mortgage rates in recent years.

The typical mortgage rate has fallen from 5.8 per cent in July 2007 to 2.6 per cent today, according to Hargreaves Lansdown's analysis.

But strong growth in consumer credit has raised concerns. Bank of England figures have shown consumer credit, which includes credit card, personal loan and overdraft borrowing, has been growing strongly recently.

This has fuelled concerns that, as living costs rise, people could become over-reliant on credit, which would leave them vulnerable if rates were to rise.

Significantly, there have been signs of regulators moving to tighten up on lending, with the Bank of England telling lenders to prove they are not taking on too much risk.

The long period of lower rates means that around eight million Britons have never seen an interest rate rise by the Bank of England in their adult lives.

Alec Pillmoor, a personal insolvency partner at audit, tax and consulting firm RSM, said: "This new generation of borrowers could well get a nasty wake-up call.

"Those who have been tempted by attractive loan and credit card deals, car finance offers and low-rate mortgages may well find that any such rise could leave them with less cash being available to meet repayments when they fall due. Those who are struggling now would do well to consider reining in any additional borrowing."

So what should savers and borrowers do to protect themselves in case interest rates do rise?

Laith Khalaf, a senior analyst at Hargreaves Lansdown, said savers can potentially make their money go further by shopping around for the best rates.

While it may be the easy option to just leave cash in a current account, the chances are it could be doing better in a savings account.

It is also important to make sure cash is held tax efficiently. Low interest rates and the new savings allowance have made people question the purpose of a cash ISA, but interest rates can rise and a cash ISA offers some future-proofing for savings.

Anyone who does not need easy access to their cash should consider a stocks and shares ISA, but only if they can afford to leave it invested for at least five to 10 years.

Rates of return are potentially higher on these vehicles, but so is the risk so a long-term view is needed to ride out the ups and downs of the market.

Meanwhile, Mr Khalaf said that borrowers should make sure their debt is affordable even if interest rates rise, so they should work out whether they have some slack in their household budget that could be used if repayment costs do start to increase.

"Clearly paying down debt is also advisable, starting with the balances on which you pay the highest interest first," he said.

Even though interest rates are not appealing it still makes sense to put some cash aside each month rather spending it all. But how can spenders turn into savers?

Nearly one in three (30 per cent) of us describe ourselves as "spenders", according to research from Leeds Building Society, which also found that many of us go on a shopping spree just to cheer ourselves up. One in three women said they sometimes shop to make themselves happier when they are feeling downbeat, compared with one in seven (14 per cent) men.

However, the survey also showed that the effects of this form of pick-me-up is often short-lived. Two-fifths (41 per cent) of women said they often feel guilty about their purchases, compared with nearly a quarter (23 per cent) of men.

But you can turn your habits around, according to consultant psychologist Frank Ryan, who said a good tip to rein in spending is to make decisions on what you are going to buy in advance and if you are tempted to go off piste while out shopping distract yourself. The impulse to buy something is often short-lived and can fade in five to 10 minutes, he said.