Savers suffer blow of high inflation
According to MoneySupermarket, to beat inflation, basic rate tax payers will need an account paying at least 3.39% to gain benefit in real terms from their savings, increasing to 4.51% for higher rate tax payers, and 5.41% for 50p tax payers.
Kevin Mountford, head of banking at MoneySupermarket.com, said: “Today’s news that inflation has remained high at 2.7% after last month’s increase is a further blow to savers and struggling UK households, and is a bitter pill to swallow for those planning to make savings goals a big part of their New Year resolutions for 2013.”
“It is important savers don’t give up or get put off, and prepare to switch if they are not currently on the most competitive deal.
“There is a significant difference between the average and top paying rates, and moving to a better deal can go a long way to help savers limit the impact of inflation on their pots.”
There are only four Fixed Rate Bonds, and 16 regular saver accounts that beat inflation for basic rate taxpayers.
For higher rate tax payers, only seven regular saver accounts beat inflation. On tax-free ISA accounts, only 10 easy access ISAs and five fixed rate ISAs beat inflation.
Mountford added: “As we approach the start of Tax Year end season, for savers, using products such as Cash ISAs to take advantage of the tax free benefits is a must.
“However, even if you cannot find an account that beats inflation, consumers need to make sure they are on the best deals possible.
“Savers should also consider looking at alternative products such as offsetting savings against mortgage borrowing, peer-to-peer lending, or structured savings products.”