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

Savers need to lock up cash for SEVEN years to match inflation

Written by: Paloma Kubiak
Despite coming in at a lower-than expected rate of 2.6%, July’s CPI inflation rate still remains a challenge to savers.

Consumers breathed a sigh of relief as the UK’S CPI inflation figure for July remained steady at 2.6%, unchanged from the previous month, and lower than the peak of 2.9% seen in May.

While the rate confounded expectations of an inflation rise, the figure hasn’t done much to alleviate savers’ concerns as the value of their money is being eroded over time. And coupled with the poor returns on cash, savers have to be savvier than ever to make their money work hard.

Aside from high interest current accounts and linked saver products, one way for savers to match the 2.6% inflation rate is to open a fixed bond and lock up their money for seven years.

Challenger PCF Bank is offering a seven-year bond which pays 2.6%. It’s fairly new to the savings scene, having only received its bank authorisation in December 2016, but financial data site, Moneyfacts, said it has offered some incredibly competitive rates from the outset.

However, finance expert, Rachel Springall, said seven years is a considerable amount of time for someone to invest in cash, but it is an alternative for those who do not want to risk their capital on the stock market.

She said: “Consumers should be mindful that inflation could rise further still and that interest rates on cash savings are unlikely to outpace its effects in the current market. Therefore, savers would be wise to compare all kinds of cash savings vehicles to boost their returns: Fixed rates, regular savers, high interest current accounts but be mindful that they are likely to face funding and access restrictions on some of these options.”

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

A guide to switching energy provider

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

Which ISA is right for you? A round up of the six products available in 2017

From cash to innovative finance to lifetime, here's our guide to the ISA products available to savers this yea...

Guide to buy-to-let tax changes

In late 2015, former Chancellor George Osborne announced a range of  tax measures aimed at landlords, which t...

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.

Five fund tips for a 0.25% interest rate environment

With interest rates stuck at a record low 0.25% and expectations rates could fall to close to zero, here are ...

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...

Investing your money

Alliance Trust Plc gives you smart insight into how to invest your money

Money Tips of the Week

Read previous post:
buying a house
First-time buyer and home mover numbers soar

The government’s tax changes for buy-to-let landlords have opened the door to first-time buyers and home-movers as their numbers grew...