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45 savings accounts now beat inflation

45 savings accounts now beat inflation

Category: Savings

Updated: 12/11/2013
First Published: 12/11/2013

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 It is now over 6 months old so the content may be out of date.

The UK's rate of inflation fell to its lowest point in more than a year during October, from 2.7% to 2.2%.

This means a basic rate taxpayer at 20% needs to find a savings account paying at least 2.75% per annum in order to beat inflation, while a higher rate taxpayer at 40% needs to find an account paying at least 3.66%.

Currently there are 45 savings accounts that basic rate taxpayers can choose from that do just this, out of a total of 877 ISA and non-ISA accounts.

In comparison, when Consumer Prices Index (CPI) for September was announced a month ago there were only nine accounts that beat inflation.

However, most of the inflation-beating accounts are fixed rate bonds or ISAs that require savers to commit funds for at least four years.

If you need easy access to your savings, the top-paying account offers 1.60% per year – far below what is needed to beat inflation.

Commenting on the latest figures, Moneyfacts.co.uk's editor, Sylvia Waycot, said: "The increase in accounts that beat tax and inflation is not due to a sudden increase in competitiveness but merely a result of the larger than average fall in CPI."

"Bearing in mind that the average no-notice savings account only pays a miserable 0.67% (or a £67 return based on a £10,000 investment in one year), savers have no hope of achieving the 2.75% needed just to counter the effects of inflation and pay the taxman's share without locking money away for a longer term."

What Next?

Find out which accounts beat inflation – Top 5 inflation-beating cash ISAs

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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 Any products featured may be withdrawn by their provider or changed at any time.