Four savings accounts now beat inflation - Savings - News - Moneyfacts


Four savings accounts now beat inflation

Four savings accounts now beat inflation

Category: Savings

Updated: 19/09/2013
First Published: 17/09/2013

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Official figures reveal inflation fell for the second consecutive month during August.

Consumer Prices Index inflation now stands at 2.7%, 0.1% below July's figure of 2.8%, according to the Office for National Statistics (ONS).

This means that in order to beat inflation, a basic rate taxpayer at 20% needs to find an account paying 3.38% per annum, while a higher rate taxpayer at 40% needs to find an account paying at least 4.5%.

There are now three savings accounts on the market that will beat tax and inflation for a basic rate taxpayer, out of 804 ISA and non-ISA accounts.

At the time of last month's inflation announcement there was only one account that beat inflation.

"Inflation may have fallen but it is still high enough to ruin the spending power of any feeble interest paid on today's savings accounts, which leaves the elderly reliant on savings income and the young saving for a house deposit high and dry," said Editor Sylvia Waycot.

Which savings accounts beat inflation?

There are now three cash ISAs and one fixed rate bond that beat inflation.

But all three products require savers to commit funds for at least five years.

Leeds Building Society's 5 Year No Access ISA Issue 1 pays 3.05% yearly on a minimum investment of £1. The building society is also paying an inflation-beating 2.90% yearly on the access version of this product - 5 Year Access ISA Issue 1 - allowing savers to withdrawal up to 25% of the balance penalty-free.

Skipton Building Society's Online 5 Year Fixed Rate ISA also pays 3.00% yearly, but on a minimum investment of £500.

All of these products allow savers to transfer in previous cash ISA savings.

The other product that beats inflation is:

Skipton BS's Online Limited Edition 7 Year Bond that pays 3.50% yearly on a minimum investment of £500.

Savers must remember, however, that they will have to commit funds for the full seven-year term as earlier access or withdrawals are not permitted.

What Next?

Find the best savings rates with our best buys

Compare the best long term fixed rate bonds

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Savings being used as a festive financial buffer

Good news from RCI Bank UK – its latest research shows that many of us are saving more than we were a year ago, but the question is, will you be dipping into that buffer to cover the cost of Christmas?

6 of the best easy access savings accounts

Easy-access savings accounts are as simple as they sound – they allow you to access your money whenever you need it, without having to give advance notice, and they also allow you to pay into them at any time. Here are six of the best.

Start saving for Christmas… 2017!

Christmas is just around the corner and our annual festive splurging is starting to step up, but are you prepared? It may be too late to start saving for this year’s festive spend, but it’s never too early to start for next year’s!