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29 savings accounts beat inflation, but most people won’t switch

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14/11/2018
A total of 29 accounts now match or beat inflation, but the majority of savers will stick with a poor paying deal.

Figures published today show the Consumer Price Index (CPI) measure of inflation remained stable at 2.4% for October, despite experts predicting a rise.

The shortest term savings deal offering an inflation-beating return is three years, with Secure Trust Bank paying the top rate of 2.41%, according to data from rate monitoring service Savings Champion.

If you can tie your money up for seven years, the same bank offers 2.75%.

But a survey by Hargreaves Lansdown suggests two thirds of savers are not planning to switch account in the next 12 months.

It found half of people surveyed haven’t switched a savings account or cash ISA in the past five years and 40% have never switched.

If they have cash in an easy access account, they could boost their returns tenfold by switching from the worst deal on the market (0.15% from HSBC) to the best (1.5% from Marcus).

While this account won’t mitigate the effects of inflation, it will reduce the effects of it.

According to Savings Champion, a deposit of £50,000 in an account paying 0.15% would be worth £44,743 in real terms over five years, assuming an inflation rate of 2.4%.

In an account paying 1.5%, it would be worth £47,841.

Tom Adams of Savings Champion said: “Savers are suffering from high inflation levels and it is not always easy to find a suitable account that beats inflation. But that doesn’t mean they have to accept paltry rates – particularly from the big high street brands.

“Switching to mitigate the effect of inflation is far better than leaving the funds earning next to nothing.”

How to beat inflation

If tying up your money for a minimum of three years is not an option, you could consider an interest-bearing current account.

Nationwide pays 5% on balances up to £2,500 for the first 12 months but savers need to deposit at least £1,000 a month into their account.

TSB also offers 5% but the minimum monthly deposit is lower at £500.

Below is a full list of the inflation beating accounts:

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