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170 savings accounts now beat inflation

170 savings accounts now beat inflation

Category: Savings

Updated: 19/08/2014
First Published: 19/08/2014

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 It is now over 6 months old so the content may be out of date.

The latest official inflation figures, released this morning, show that the Consumer Prices Index (CPI) fell to 1.6% in July. Down 0.3% on June's figure, it also marks the eighth consecutive month that inflation has remained at or below the Bank of England's 2.00% target.

And there's some good news for savers, as there are now an impressive 170 savings accounts that will beat it! In order to counter the effects of tax and inflation, a basic rate taxpayer will need to find an account that pays at least 2.00% per annum (or 2.67% for a higher-rate tax payer) – and there are a fair amount available.

The 170-account total is evenly spread across the ISA and non-ISA market, with 86 non-ISA accounts and 84 cash ISAs offering the necessary rates. It's a fantastic improvement on last month when there were just 72 accounts that could beat inflation, and means there's now a lot more choice for savers seeking real returns on their cash.

"Today, although savings rates are disheartening, savers do at least have a few accounts they can choose from that will leave them with some form of return after tax and inflation pressures," said Sylvia Waycot, editor of Moneyfacts.co.uk. "Last year inflation hit 2.8%, and Moneyfacts reported that there was only one savings account on the market that paid an interest rate that negated the effects of tax and inflation."

It's definitely an improvement on last year. Rates may not exactly be setting the world on fire – the average easy-access account pays 0.66% compared with 0.67% last year, while the average ISA offers 1.56%, down from 1.66% a year ago – but the fact that the number of inflation-beating accounts is on the rise has got to be a good thing.

There's still the chance to make some decent returns too, but usually on the provision that you're willing to lock your money away. Fixed rate accounts tend to offer the best rates on the market, with the top seven-year account coming from Secure Trust Bank, which pays an impressive 3.52%.

Alternatively, the top-paying five-year bond comes from United Bank UK at 3.20%, and you can even get an inflation-beating rate if you want to tie up your money for just 18 months – United Trust Bank currently pays a market-leading 2.15% for its 18-month bond.

So, there are still plenty of options, no matter how long you're willing to lock your cash away for. One can only hope that more accounts – ideally shorter-term bonds or, dare we say it, easy access accounts – will start offering the same kind of inflation-beating returns, giving savers even more choice in the future.

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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.