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Five minute finance: Inflation elation?

Five minute finance: Inflation elation?

Category: Savings

Updated: 21/06/2010
First Published: 21/06/2010

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 It is now over 6 months old so the content may be out of date.

Figures out last week revealed a slight fall in the rate of inflation, delivering some respite to UK savers. The Consumer Prices Index, the Government's target measure of inflation, fell from 3.7% to 3.4%, but still remains well above the agreed target of 2%.

Despite the drop, the challenge facing savers looking for a savings account which pays a rate high enough to counter the effects of tax and inflation on their savings remains a tough one.

A basic rate tax payer will need to find a savings account paying a rate of 4.25%, a level that is only available on 27 accounts. Meanwhile, higher rate tax payers are limited to a choice of just three accounts, as they need to earn a rate of 5.67% to break even.

Here are some of the newest savings accounts to come to the market:

Nationwide leads the way

Nationwide Building Society is looking to tempt ISA savers by launching a market leading Three Year Fixed Rate ISA paying 4.00%, 0.25% higher than its nearest rivals. Saver can invest from £1 into the branch based account, which accepts transfers in. Access during the three year term is available on closure only and will be subject to a loss of 270 days' interest. For savers looking to invest outside of an ISA wrapper, the society has increased the rates on its two year bonds to 3.50%.

Older savers out in front

Savers aged 50 years and over are being offered a best buy rate of 4.00% from SAGA on its new 3 Year Fixed Rate Savings Account. For those after a regular income, a monthly interest option is also available. Savers can invest between £1 and £10m into the online and postal operated account. Further additions are permitted whilst the issue remains open and withdrawals can be made during the term, but will be subject to a loss of 270 days' interest.

NPBS still on top

Following in the footsteps of other providers, Norwich & Peterborough Building Society has cut its fixed rate bond. However, the society continues to offer the market leading rate of 2.24% for savers looking for a six month commitment. Savers bringing new money to the society can invest between £1,000 and £1m into the bond. Once opened, further additions and earlier access is not permitted.

New bond from Santander

Santander has announced the launch of its latest one year bond offering up to 3.01%. Savers investing from £1 to £9,999 will receive a return of 2.60%, while those investing £10,000 and above will receive a rate of 3.01%. The deal is only available until 30 June, although it may be withdrawn earlier, without notice.

Find the best savings rates for you - Compare savings accounts

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.