Greed and fear are more often associated with stock market investment than with savings, but over the past few years savers have swung dramatically from one to the other.

Five years ago, when the Bank of England cut the base rate to below 4 per cent to boost the economy after the dot-com crash, savers' quests for an attractive rate of return took them beyond the high street banks in favour of more exotic accounts.

In 2003 the flavour of the month was ING Direct, the UK savings arm of the big Dutch bank. ING was, and remains, a solidly resourced bank, and it triggered something of a rate war for the savings of so-called rate tarts - depositors who studied the best-buy tables and regularly shifted their money to secure the highest possible rate.

Other foreign-owned banks soon joined the party. Anglo Irish Bank was often found in the best-buy tables, as were Icesave and Kaupthing, both UK offshoots of Icelandic banks.

Although some savers raised questions about the security of their deposits with these foreign-owned institutions, hundreds of thousands of people ploughed money into the high-interest accounts that they were offering. These savers were reassured that the banks were safe and that they had signed up to the appropriate compensation scheme.

The main source of complaint was not about security but failure in processing applications quickly because of the sheer weight of money flooding in.

But fast forward a couple of years to last year and the pendulum started to swing ominously from greed towards fear. The episode that sent the erstwhile rate tarts running for cover was the collapse of Northern Rock.

In September last year fears about Northern Rock's solvency triggered the first big run on a bank in the UK since 1866 and long queues of depositors formed outside the bank's branches to withdraw their money.

From then on, rate tarts abandoned their high-fashion Manolo Blahniks and joined the sensible-shoe brigade. “Safety first” began to replace “best buy” as the saver's mantra. When Northern Rock was nationalised and deposits were guaranteed in full, rather than restricted to the prevailing compensation limit of £35,000, it suddenly became the safest bank in the UK and savers now formed queues to deposit their money. The wheel had turned full circle.

The move from greed to fear explains the surge in popularity of National Savings & Investments (NS&I), the other government-backed repository for UK savers, which has rarely featured prominently in the best-buy tables. The fear factor has been given another boost by the collapse this week of Icesave.

Such is savers' new-found enthusiasm for total security that Northern Rock and NS&I are having to lower their rates to deter savers or risk breaching their agreed market share.

But Kevin Mountford, of the comparison website Moneysupermarket.com, believes that the pendulum could have swung too far towards lower rates and safety. He says that banks may now see an opportunity to bring down savings rates aggressively, particularly after the Bank of England cut the base rate this week. On top of this, the consolidation that is going on in banking circles means that there is less competition for savers' custom, which could lead to less attractive rates all round.

Mr Mountford says: “I think that you need a balance. You need to ensure that your money is secure, but you should also seek to avoid uncompetitive rates. You should not be spooked by safety fears into accepting the wrong product.”

In his opinion, banks that offer both a decent level of security and reasonable rates include HSBC and the Santander group, which includes Abbey, Alliance & Leicester and Bradford & Bingley.

Darren Cook, of Moneyfacts.co.uk, the financial website, says: “The measures that the Government took this week should help to reassure savers. It is guaranteeing deposits of Icesave customers and offering a £50 billion injection of capital for banks that require it. Savers should sleep more soundly at night.”

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Fixed rates are dwindling fast

The Bank of England's surprise half-point cut in interest rates on Thursday has taken a heavy toll of the remaining savings accounts paying 7 per cent or more.

The AA, Birmingham Midshires and Saga, which all come under the umbrella of HBOS, have pulled a number of fixed-rate bonds paying more than 7 per cent. Birmingham Midshires and Saga were paying 7.05 per cent and 7.06 per cent while the AA offered 7.21 per cent.

The Clydesdale and Yorkshire banks have also pulled some fixed-rate bonds, which were offering savers up to 7.22 per cent.

Among the 7 per cent deals that still remain, for the time being, are the State Bank of India's five-year fixed-rate bond, at 7.5 per cent, and a one-year fixed-rate bond from ICICI Bank UK, paying 7.2 per cent.

However, more banks are likely to withdraw their best deals after this week's cut in the base rate. Savings rates have been artifically high during the credit crunch as banks tried desperately to bring in more deposits.