Top returns double in past year, but inflation persists | moneyfacts.co.uk

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Rachel Springall

Rachel Springall

Finance Expert & Press Officer
Published: 13/04/2022

Savers will be pleased to see some of the top rates have doubled over the past year, but inflation is having a devastating impact on their cash and is 10 times higher than it was a year ago. For savers who are looking for a competitive return, visit our tables here

Inflation rises to 7%

Savers could protect their cash from inflation a year ago, but this was short-lived when inflation rose to 1.5% during May 2021 (April CPI) and is now 10 times higher than when it sat at 0.70% in April 2021 (March CPI). If savers had locked into a one-year fixed bond or ISA in April 2021, they could have missed out on higher returns, as interest rates rose during the second half of 2021. The inflation pressure on the everyday lives of consumers this year has been relentless and for savers it’s impossible to beat it unless it sat closer to the Government’s desired target of 2%. Despite an uplift in rates across the savings spectrum, not one standard savings account can outpace inflation today.

Challenger banks and building societies have been competing fiercely with rate changes over the past month, with some changing their rates within just a few days of prior amendments. This has resulted in the top rate tables becoming particularly volatile, but thankfully for savers, has provided much higher rates than they could have secured a month ago. The back-to-back base rate rises are also having a positive influence on the market, but not all savings providers, such as the high street banks, have passed on the rises in full. The need for savers to review their rate and switch is crucial, especially as we have entered a new tax year and the ISA market is booming.

A good deal might not last for very long, but savers may also need to think carefully about how soon they may need access to their cash if they are considering a fixed bond or fixed ISA. Keeping a close eye on the present market and acting quickly is wise to secure a top rate. If savers have an existing variable rate account which has not risen in line with the base rate moves, then switching to an alternative by ditching any loyalty is a wise move to get a better return.

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