Moneyfacts Inflation Beating Savings Accounts

Inflation Beating Savings Accounts

  • Moneyfacts' monthly report on the number of savings accounts available that will beat the current rate of inflation for basic rate taxpayers.*
  • Data last updated 18/11/14

October Commentary

  • Inflation figures released today show that the Consumer Prices Index (CPI) rose from 1.2% to 1.3% during October.
  • To beat inflation, a basic rate taxpayer at 20% needs to find a savings account paying 1.63% per annum, while a higher rate taxpayer at 40% needs to find an account paying at least 2.17%.
  • Of the 619 non-ISA accounts in the market today, there are 137 that basic rate taxpayers can choose to negate the effects of tax and inflation.
  • ISAs, however, present a slightly better picture with 130 out of 209 offering rates that beat inflation.
  • The effect of inflation on savings means that £10,000 invested five years ago, allowing for average interest and tax at 20%, would have the spending power of just £8,734 today – a fall of 12.66%.

Inflation Beating Savings Accounts

Sylvia Waycot,
Editor at

Inflation may have risen after three consecutive months of falls, but it still makes little difference to savers suffering from poor returns.

There is an abundance of ISAs that beat inflation, over half all cash ISAs in fact. However, it is the lack of decent returns that’s the big problem for savers, not choice.

Today there are a total of 828 savings accounts on the market, but only 267 (135 fixed bonds, 130 ISAs and 2 notice accounts) pay enough interest to negate the effects of tax and inflation*.

This time last year there were only 45 accounts to choose from, but despite the lack of choice, these savings deals paid better interest, so savers are in a worse situation today.

With the New Year fast approaching, savers are daring to hope because the much anticipated Pensioner Bonds launch in January, offering up to 4% interest. However, those looking to supplement their income will be disappointed as these won’t pay monthly interest. The average fixed return on standard monthly interest accounts is currently an inflation beating 1.83%.

What savers really want for Christmas is someone to shake up the market, so that providers start offering decent returns on their savings.

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* Represents the percentage of savings accounts open to new savers that basic rate taxpayers can choose to negate the effects of income tax and inflation.