You are here: Home - Saving & Banking - News -

Savings rates rise but few deals beat inflation

Written by:
Competition is hotting up in the savings market but unfortunately for savers, few deals beat inflation.

Data firm Moneyfacts recorded 115 rate rises and just 44 rate cuts last month compared to 18 rises and 156 cuts in May 2016.

The short-term bond space has seen a notable improvement lately, with rates reaching a two-year high.

Atom Bank currently pays a market-leading 2.05% on its one-year bond, after it hiked its rates in retaliation to Gatehouse Bank launching the first 2% one-year rate since August 2017.

But neither of these headline-grabbing rates beat or even match inflation which stood steady at 2.4% in May. In fact just 17 fixed rate bonds currently beat or match inflation, according to Moneyfacts, meaning the majority of savers are still losing money in real terms.

To earn enough interest so that the value of the money you have in the bank isn’t eroded by inflation, you’ll need to tie your cash up for at least four years.

Vanquis Bank’s four-year bond pays 2.52% but you can earn as much as 2.79% from challenger bank United Bank UK’s five-year bond.

See table below for all 17 fixed rate bonds paying 2.4% or more

Another way to outpace inflation is to go for a high interest current account. Nationwide FlexDirect pays 5% on balances up to £2,500 and requires £1,000 minimum to be deposited a month.

Tesco Bank pays 3% on balances up to £3,000 and requires £750 to be paid into the account each month as well as three direct debits paid out.

Nationwide FlexPlus pays 3% on balances up to £2,500 and requires two direct debits.

Several regular saver accounts also offer rates above 2.4%. Saffron Building Society’s 12 Month Fixed Rate Regular Saver pays 3.5% and has a minimum deposit requirement of £10 a month and a maximum of £200.

Kent Reliance’s 1 Year Regular Savings account pays 3% with a £1 minimum and £500 maximum monthly deposit.

There are also a number of linked regular savings accounts paying above-inflation interest rates but these require you to have a current account with the provider. First Direct, M&S Bank, Nationwide, Santander and HSBC all offer 5%.

table inflation

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co... Awards 2018

Now in their 21st year, our awards recognise the companies offering the best products and services to consumers

Money Tips of the Week

Read previous post:
Self-employed Pimlico Plumbers contractor wins workers’ rights court case

A self-employed contractor for Pimlico Plumbers has won his case at the Supreme Court, with the decision set to have...