Save, make, understand money


The inflation-beating savings deals

Joanna Faith
Written By:
Joanna Faith

Savers only need to lock their money away for two years to get an inflation-beating return after the Consumer Price Index fell to a 20-month low in November.

Figures published today show CPI dipped to 2.3% last month, down from 2.4% in October.

Falling inflation – along with more competitive interest rates – means two years is now the shortest term paying more than the current CPI rate.

Masthaven and Investec both pay 2.35% on their two-year fixed term accounts but savers prepared to lock their money away for longer can get higher rates.

In total, 51 fixed term accounts now beat or match inflation, according to independent savings advice site, Savings Champion.

Sharia bank BMLE is the top payer. Savers can earn 2.75% if they tie their money up for seven years.

If they want a shorter term, they can earn 2.70% on five-year deals from Vanquis Bank, Atom Bank and BLME.

However, around 75% of all savings is in easy access deals meaning the majority of savers won’t take advantage of these deals. The best easy access accounts from Marcus, Virgin Money and the West Brom, pay 1.5% but some pay as little as 0.15%.

Tom Adams, head of research at Savings Champion, said: “While you would have to tie your money up for at least two years to beat CPI inflation, those who need more access to their money still do not have to accept paltry rates – particularly from the big high street brands.

“If you can’t tie up your funds, switching to mitigate the effect of inflation is far better than leaving the funds earning next to nothing and by choosing the best rates, they are at least reducing the effect of inflation on money that they need access to.”

Other ways to beat inflation

High interest current accounts are a good alternative if tying your money up for two years isn’t an option.

TSB pays 5% on balances up to £1,500. You need to pay in a minimum of £500 a month and register for internet banking, paperless statements and paperless correspondence. You also need to log-in to your account once every 12 months.

Nationwide pays 5% for the first 12 months on balances up to £2,500 if you pay in at least £1,000 every calendar month.

Below is a full list of inflation-beating accounts: