Inflation Falls But Savers Face Challenging Market | will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by will always be from Be Scamsmart.

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Derin Clark

Derin Clark

Online Reporter
Published: 17/06/2020

Although inflation fell to a four-year low of 0.5% during May, savers are still struggling to find attractive deals as providers continue to slash rates.

May’s figure of 0.5% is the lowest inflation has been since June 2016 and is mainly due to a fall in fuel, clothing and footwear prices. While this will be positive news for savers as it means that there are now 491 savings accounts that can match or beat inflation*, many providers are continuing to cut savings rates, so if inflation does rise in the upcoming months, savers may struggle to find an inflation-beating account.

Of the savings accounts that can currently match or beat inflation, 255 are fixed rate bonds, 103 fixed rate ISAs, 45 variable rate ISAs, 45 easy access accounts and 43 notice accounts.


Savings market analysis
Top savings deals at £10,000 gross 13-Jun-18 19-Jun-19 20-May-20 Today
Easy access account Paragon Bank – 1.31% Virgin Money – 1.50% National Savings & Investments – 1.15% National Savings & Investments – 1.15%
Notice account Charter Savings Bank – 1.67% (95-day) Secure Trust Bank – 1.91% (90-day) ICICI Bank UK – 1.59% (95-day) ICICI Bank UK – 1.39% (95-day)
One-year fixed rate bond Atom Bank – 2.05% BLME – 2.20%*** Gatehouse Bank – 1.50%** Al Rayan Bank – 1.20%**
Two-year fixed rate bond Atom Bank – 2.15% Al Rayan Bank – 2.40%** QIB (UK) – 1.65%** Al Rayan Bank – 1.40%**
Three-year fixed rate bond Gatehouse Bank – 2.33%** Gatehouse Bank – 2.55%** Gatehouse Bank – 1.75%** Al Rayan Bank– 1.50%**
Four-year fixed rate bond Vanquis Bank – 2.52% BLME – 2.50%** BLME – 1.70%** BLME – 1.55%**
Five-year fixed rate bond United Bank UK – 2.79% Gatehouse Bank – 2.75%** Gatehouse Bank – 1.85%** BLME – 1.60%**

**Islamic bank, pays an expected profit rate.


Commenting on today’s inflation announcement, Rachel Springall, finance expert at said: “The impact of the UK lockdown in response to the Coronavirus pandemic has without a doubt influenced inflation. Consumers are adjusting to a change in spending behaviours and are perhaps saving their disposable income amid economic uncertainties, despite a drop in the cost of goods and services. Those consumers who have decided to spend less and save more though will find that interest rates on savings accounts are plummeting.

“Savers may well be putting money aside in an easy access account due to the flexibility these vehicles provide, rather than to tie up their cash in a fixed account. If savers are looking to open one of these accounts, then they will be disappointed to find that several providers have reduced or removed their offerings from sale in recent weeks. This includes competitive deals offered by RCI Bank and Marcus by Goldman Sachs®, both of which held high positions in the top rate tables for many months – the latter pulling its deal to new customers in response to a high inflow of deposits.

“The rate cuts and withdrawals may well be set to continue in the months to come, but there are still many savings accounts out there that will be impacted by the eroding effects of inflation today. In fact, some accounts pay as little as 0.01%. Inflation is expected to rise in the years to come, indeed by Q2 2021, CPI is predicted to climb to 1.4% and by Q1 2023, it’s predicted to be 2.0%. As it stands, savers would need to lock their cash away to beat 1.4%, but 2.0% cannot be beaten by any standard savings account today.

“The savings landscape is almost unrecognisable to a year ago, where savers could find a one-year fixed bond offering 2.20% as an expected profit rate with Bank of London and The Middle East (BLME), but the same provider now pays 1.00%, some 1.20% less. Savers coming off this rate to the other would therefore see a difference of £240 as a profit on a £20,000 deposit after a period of 12 months.

“It has become more vital than ever for consumers to act quickly to have a chance to acquire the top savings rates. To ensure they are in the best possible position to move quickly, signing-up to alerts and checking the top rate tables regularly is a wise move. Switching may well become a frequent occurrence among savers in the weeks to come as they race to secure the best possible return on their cash.”


*Data note: Please note that these savings product numbers only include deals that are available to all UK residents (no notice/easy access, notice, fixed rate bonds, variable or fixed ISAs) and excludes regular savers and children’s savers (this figure does not count each interest payment option for each account), based on a £10,000 deposit. Higher rates may be available for larger deposits.




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