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Savers urged to move fast as inflation-beating accounts decline

Paloma Kubiak
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Paloma Kubiak

The number of inflation-beating savings accounts has fallen, with savers urged to act fast to secure the best rates.

The Consumer Prices Index (CPI) measure of inflation rose from 0.2% in August to 0.5% in September, according to figures published today by the Office for National Statistics.

While last month savers had a choice of hundreds of accounts which beat or matched inflation, this number is now on the decline.

Moneyfacts data revealed the number of deals able to outpace inflation has fallen from 661 in August (beating the 0.2% August figure) to 444 today that beat 0.5% CPI.

This includes 40 easy access accounts, 48 notice accounts, 37 variable rate ISAs, 114 fixed rate ISAs and 268 fixed rate bonds (based on a £10,000 deposit).

Of the standard savings accounts that beat 0.5%, this includes 29 easy access accounts, 44 notice accounts, 24 variable rate ISAs, 106 fixed rate ISAs and 241 fixed rate bonds.

Further, the predicted rate for inflation during Q3 2023 is 2.2%, but there are no standard savings accounts currently able to beat this.

Rachel Springall, finance expert at Moneyfacts, said: “Over the past month, the top rates available on shorter-term fixed bonds and ISAs have improved, with providers such as Al Rayan Bank increasing rates – a positive change for savers looking for a competitive return over the next year or so. However, there is still much more room for improvement across the market and there is no guarantee such lucrative offers will stick around for long.

“Within the easy access market there has continued to be some volatility, as the top deals offered a month ago did not last on the shelf for long, reiterating why savers need to act quickly to take advantage. Indeed, a month ago savers could find a top rate of 1.20% with Skipton Building Society, but today the top easy access rate comes from Coventry Building Society at 0.96%. This excludes the National Savings & Investments top rates as they are due to be cut next month.”

Springall added that while the inflation figure remains below the government target, it does still have an eroding effect on savers’ cash if money is left idling in a poor interest account.

“As an example, stashing cash with a high street bank’s easy access account would net savers just £1 a year in interest on a £10,000 investment, based on a rate of 0.01% with NatWest’s Instant Saver. In comparison, they could earn £96 within the first year with Coventry Building Society at 0.96%,” she explained.

She added: “There may well continue to be consumers who have amassed some disposable income over the past six months or so and are debating where to put their cash. A mix of easy access, short-term fixed and an ISA are all good choices to spread the investment, but it does entirely depend on how soon savers need access to their money. As it stands, savers may be concerned about the months ahead, so it is vital they are comfortable with locking their money away, and if they are not, easy access may be the most appropriate choice. As always, it is imperative they pick a lucrative offer and not leave their cash in an account that is being eroded by inflation.”