Savers Struggle To Find Inflation-Beating Rates | moneyfacts.co.uk

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Derin Clark

Derin Clark

Online Reporter
Published: 21/04/2021

The Consumer Price Index (CPI) rose to 0.7% during March, up from 0.4% in February, resulting in savers now having the choice of just 90 savings accounts with rates that are able to beat inflation.
Research carried out by Moneyfacts.co.uk found that of the 90 accounts that are able to beat the inflation rate of 0.7%, two are easy access accounts, 12 are fixed rate ISAs and 76 are fixed rate bonds.

Although two easy access accounts are able to beat inflation, which are being offered by Furness Building Society and Harpenden Building Society, both these accounts have restrictive opening conditions and, as a result, are not available to the majority of consumers and are therefore not available in the easy access savings chart – the next-best rate in this chart is below inflation at 0.50%.

As well as this, the remaining inflation-beating accounts are only available in the fixed rate bond and fixed rate ISA charts, which might result in savers seeing their saving deposits erode over time if inflation rises. As Rachel Springall, finance expert at Moneyfacts.co.uk, explains: “Savers could indeed beat the level of inflation with some accounts today, but it is still expected for the level of inflation to rise beyond the Government’s target of 2% in the coming months. Savers will recognise why their pots’ spending power may be eroded in real terms if this comes to be, as the top savings rates pay far less than 2%, and if they are choosing an easy access account, the best deal today pays 0.50%.”

Alternative options for savers

As no easy access savings accounts or ISAs in the charts currently offer inflation-beating rates, savers looking for a flexible savings account that offers an above-inflation rate will be disappointed. Instead, these savers may have to settle for a below-inflation rate but, if so, should keep a constant watch on the easy access savings and ISA charts to see if any new higher-paying accounts enter the charts.

For long-term savers, opting to invest or a stocks and shares ISA may be a better option. Those considering investing should be aware that it comes with the risk of not making any returns on the investment and, in some cases, could result in the investor losing all their initial capital as well. As such, those considering this option may want to speak to an independent financial adviser first to ensure it is the right decision for them.

There are several investment options available to consumers, including stocks and shares ISAs, structured deposits, and real estate investment trusts (REIT). More information about the different types of investments opportunities can be found in our investment section.

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