Savings rates fall well short of rising inflation | 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.

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 It is now over 6 months old so the content may be out of date.

Published: 12/09/2017

Official figures from the Office for National Statistics (ONS) show that inflation jumped to 2.9% in August, up from 2.6% in July and the highest level seen in more than five years. Not only could this be taking its toll on consumers' wallets, but it could also be impacting their savings, with no cash savings account able to even come close to the rate of CPI.

This is despite recent improvements in the savings market, with there now being eight consecutive months where rate rises have outweighed cuts – August saw 118 rises versus just 36 reductions, equating to three rate increases for every cut.

However, this doesn't mean that any can beat or even match inflation, with not one of the 1,786 standard savings account on the market able to do so. Unfortunately, we're even further away from an inflation-beating account than last month, as despite the slight improvement overall, some of the best fixed rate bonds have had their rates cut or been withdrawn, which means the top deal now pays less than it did a month ago.

The table below highlights the changes in more detail:

12 Sep 17 - best long-term deals
Company Term Rate £10k
Secure Trust Bank 5 Year Bond 2.51%
Atom Bank 5 Year Bond 2.40%
PCF Bank 7 Year Bond 2.40%
Shawbrook Bank 7 Year Bond 2.40%
Paragon Bank 5 Year Bond 2.35%
Tesco Bank 5 Year Bond 2.35%
Best deals shown are based on a £10k tier

11 Aug 17 - best long-term deals
Company Term Rate £10k
PCF Bank 7 Year Bond 2.60%
United Bank UK 5 Year Bond 2.53%
PCF Bank 5 Year Bond 2.50%
Vanquis Bank 5 Year Bond 2.50%
Atom Bank 5 Year Bond 2.40%
Shawbrook Bank 7 Year Bond 2.40%
Best deals shown are based on a £10k tier

This all means that, regardless of whether savers manage to acquire the best rates, the true return on cash savings remains poor – but it also highlights that, if you want the best possible chance of securing the best savings rates, you need to act fast.

"Although the market continues to show signs of recovery as we hit eight consecutive months of rate rises dwarfing cuts, savers who manage to grab the top cash rates will be disappointed to know the true spending power of their money is still being eroded by inflation," said Rachel Springall, finance expert at

"What's more, a few of the top longer-term fixed bonds have in fact reduced in rate since August, a clear sign that some of the challenger banks are becoming more cautious in setting their top rates.

"Many new brands have entered the market over the last year, creating some welcome competition, but while they have certainly made a mark on the Best Buys, they also need to manage the flow of new money into the business, which means a good deal may not be around for long. As the challengers make minor cuts, they push other brands to the top of the charts, which then have no choice but to also cut rates to cope with demand."

This domino effect means that the best rates could be cut even further as providers can't cope with the influx of cash, and unless they actually need our deposits – challengers who need to build their balance sheets, for example – they have no need to fight for our business.

"At the same time, savers seem to be becoming more reluctant to tie up their cash," continued Rachel, "with the Bank of England reporting that the flow of money coming out of fixed bonds has built rapidly between April and the end of July 2017, hitting £3.7 billion. Considering the low interest rates on offer today, savers with maturing fixed bonds may well be acting with caution and decide to put their money into easy access accounts for safe-keeping instead of getting another fixed rate bond."

Given the landscape at present, it's little wonder. Opting for an easy access account isn't only safe and convenient, but it also allows savers to move their money freely should interest rates improve, rather than being tied in to another fixed rate term. Given that there is a growing expectation that interest rates will rise in the near future, savers may well decide that they're not prepared to lock their funds away for the long term.

However, "the obvious downside to sticking cash in easy access is the rates on offer, as 89% of deals in the easy access account market pay less than 1%, compared with just 30% across the entire one-year fixed bond market," said Rachel. "With this in mind, savers would be wise to keep a close eye on the Best Buys and grab a top rate as soon as they can, while accepting the fact that it's unlikely to be inflation-beating."


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. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

blue lines

Cookies will, like most other websites, place cookies onto your device. This includes tracking cookies.

I accept. Read our Cookie Policy