Interest paid on various savings accounts averaged 0.81 percent, The Daily Telegraph reported.

The declining rates in December come on the heels of the Bank of England's decision to cut key lending rates. Rates could fall further, as the BOE cut rates in December to 1 percent and last week to 0.5 percent.

Banks usually adjust their rates at the first day of the month, the British newspaper said.

International bank ICICI has already reduced its one-year fixed rate bond rate from 5.1 percent to 4.65 percent. The Anglo Irish Bank has also reduced its one-year fixed rate bond from 5 percent to 4.6 percent, the Telegraph reported.