Savings accounts that beat inflation

Thanks to a Consumer Price Index inflation rate of 2.5 per cent, options for savers to match or beat inflation have increased significantly. In an environment of low savings rates and high inflation, Moneywise has listed the number of accounts that beat inflation. This list has at times been as low as six accounts. Thanks to falling inflation, the number of accounts has now boomed to 21.

In fixed-term deposits, savers can now beat inflation using a fixed five-year account. Secure Trust Bank, United Bank UK and Vanquis Bank all now offer inflation-beating five-year fixed savings accounts, all with an interest rate of 2.65 per cent.

-ETF analysis: How to protect against inflation

Secure Trust Bank also offers longer-term accounts of six and seven years, with rates of 2.7 per cent and 2.75 per cent respectively.

Other five-year fixed saver providers that now match or beat inflation include PCF Bank (2.60 per cent for five years and 2.75 per cent for seven years), Close Brothers Savings (2.6 per cent), Ikano Bank (2.52 per cent) and  Hodge Bank (2.5 per cent).

However, Kevin Doran, chief investment officer at AJ Bell, caveats this news: ‘The year-long pay squeeze may have ended with wages finally back on par with inflation in February but the fact is, any cash they hold in savings accounts continues to go backwards in real terms. 

‘Inflation of 2.5 per cent still comfortably outstrips the returns available from most cash accounts and so anyone with large amounts of cash savings really needs to think about other forms of investments if they want to preserve the spending power of their money.’  

Regular Savers

Alternatively, there are several regular savers on the market that beat inflation. However these accounts require a current account with the provider to open. Moneywise (our sister magazine) current best buys include:

This article was orignally written by our sister publication Moneywise.

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