Six savings accounts that are beating inflation

The consumer prices index (CPI) rate of inflation was 3 per cent in the year to September, according to the latest figures from the Office for National Statistics.

This means that no available-to-all savings accounts currently pay a level of interest that beats or matches the rate of inflation.

- How to inflation-proof your portfolio

How can I make my cash beat inflation?

While there are no open-to-all accounts that beat 3%, there are a small number of regular savings accounts which do pay more than inflation. However, all require you to have a current account with the provider.

Consumers with a First Direct current account, HSBC Advance or Premier account, M&S Bank current account, Nationwide Flex account or Santander 123 account can access linked regular savings accounts offering 5% interest.

However, these accounts have limits to the amount holders can pay in each month.


Regular saver providerInterest rate (%)Savings limits (per month)
First direct5£25-£300
M&S Bank5£25-250

Remember these accounts are regular savers – designed for you to drip feed cash into over the course of a year.

Let’s use Nationwide’s 5 per cent regular saver as an example. You can save £500 a month in this account, but you only earn interest while your cash is in the account.

This means your first £500 deposit earns 5% interest for a full 12 months, the second £500 earns it for 11 months and so on. At the end of the year you’ll have earned £161.

Current accounts could be a better bet for your savings – especially if you want easy access. However, only one current account on the market beats 3 per cent inflaton. It also has a minimum monthly pay-in and other restrictions, such as including a bonus for the first year.

The Nationwide FlexDirect account pays 5 per cent interest on balances up to £2,500 for the first year, but this drops to 1 per cent thereafter. You have to deposit at least £1,000 each month into the account to earn this 5 per cent rate of interest.  

- This article first appeared on our sister website Moneywise

Subscribe to Money Observer magazine



Post new comment

The content of this field is kept private and will not be shown publicly.
By submitting this form, you accept the Mollom privacy policy.