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Inflation hits 2.7%: the 17 savings accounts that can beat it

Joanna Faith
Written By:
Joanna Faith

Savings accounts with restrictive criteria might be the best bet for struggling savers as inflation rises.

No open-to-all standard savings accounts on the market currently pay a rate higher than inflation, which unexpectedly jumped from 2.3% to 2.7% in April.

Data firm Moneyfacts said none of the 753 savings products available to all UK residents, with no restrictive criteria, can outpace rising prices, meaning savers who opt to house their cash in one risk losing money in real terms.

Despite rising inflation, there’s little sign of interest rates going up anytime soon, especially with the economic uncertainty surrounding Brexit.

And even when the Bank of England raises rates, there’s no guarantee banks and building societies will improve deals on cash savings accounts overnight.

So, what’s the answer if you’re a beleaguered saver struggling to find a home for your money?

Tying your cash up for long periods of time is no longer the answer – the market-leading five-year account from Paragon Bank pays just 2.25%.

Fortunately, there are a few products offering inflation-busting returns – but with one caveat: they all have restrictive criteria.

Regular savings accounts

There are a two regular savings accounts paying above 2.7%.

Saffron Building Society pays 3.5%. The minimum monthly deposit is £10 and you can save up to £200 a month. The account can be opened by post or in branch.

Kent Reliance pays 3%, with a minimum deposit of £25 a month and a maximum of £500. This account can only be opened in branch.

High interest current accounts

There are four high interest current accounts paying above 2.7%.

TSB Classic Plus pays 3% on balances up to £1,500. You must pay in at least £500 a month and register for internet banking and paperless statements.

Nationwide’s FlexDirect pays 5% for 12 months on balances up to £2,500. After the first year, the rate drops to 1%. You have to pay in a minimum of £1,000 a month.

Tesco Bank pays 3% on balances up to £3,000, guaranteed until April 2019. You have to pay a minimum of £750 into the account each month and set up three direct debits.

Nationwide FlexPlus pays 3% on balances up to £2,500. There’s no minimum monthly deposit requirement but it comes with an account fee of £10 a month.

Regular savings accounts tied to current accounts

There are 11 regular savings accounts paying over 2.7%. These are linked products, which means you must have an account with the bank or building society to be eligible.

Of the 11, first direct, HSBC (Regular Saver, Preferential Rate), M&S Bank, Nationwide and Santander are offering 5% interest.

Saffron Building Society pays 3.5%, HSBC (Regular Saver), Kent Reliance and Lloyds Bank pay 3%, Hanley Economic Building Society pays 2.85% and Chorley & District Building Society pays 2.75%.

See the table below for all the eligibility criteria for these accounts: