Very best savings accounts to beat inflation

Posted by admin on August 20th, 2014 in Savings

With inflation slowing to 1.6pc a year, more savings accounts will keep your money growing in real terms. We list the best The effect of inflation on savings means that £10,000 invested five years ago, would have the spending power of just £8,713 today

  Photo: Alamy

Savers received good news today when figures showed inflation had dropped further than anticipated.

It is now slightly easier to find savings accounts that pay enough interest to negate the effects of tax and inflation.

Price rises, measured by the consumer prices index (CPI), fell from 1.9pc to 1.6pc in July. CPI inflation was expected to register at 1.8pc.

Basic-rate taxpayers will need an account paying more than 2pc to keep their savings pot growing, while higher-rate taxpayers will need an account paying more than 2.67pc.

Of the 650 non-Isa accounts, 86 beat inflation after tax for a basic-rate taxpayer. Moneyfacts, the data firm, said 84 out of 223 Isa accounts now beat inflation.

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Sylvia Waycot of Moneyfacts said the average interest rates on Isas had fallen from 1.66pc to 1.56pc in a year. But savers were likely to be better off in real terms due to lower inflation.

“Last year inflation hit 2.8pc and there was only one savings account on the market that paid an interest rate that negated the effects of tax and inflation,” she said.

“Although savings rates are disheartening today, savers do at least have a few accounts they can choose from.”

The effect of inflation on savings means that £10,000 invested five years ago, allowing for average interest and tax at 20pc, would have the spending power of just £8,713 today – a fall of 12.87pc.

Best fixed rate Nisas

Provider and account
Term
Rate
Notes

United Bank Limited Pakistan – fixed rate cash Isa

1 year

1.75pc

Allows transfer in. Min. deposit of £2,000.

Nationwide – fixed rate cash Isa

2 years

2.05pc

Allows transfers in. Min deposit of £1. Interest paid monthly or annually

Virgin Money – E-Isa issue 81

3 years

2.25pc

Allows transfers in. Min deposit of £1. Interest paid annually or monthly.

Coventry Building Society – fixed rate Isa (21)

4 years

2.75pc

Does not allow transfers of previous years’ Isas. Min. deposit £1.

Leeds Building Society – fixed rate Isa (issue 39)

5 years

2.85pc

Does not allow transfers of previous years’ Isas. £100 min. deposit.

Source: SavingsChampion.co.uk

Best variable rate Nisas

Provider and account
Term
Rate
Notes

Nationwide – Flexclusive Isa (issue 7)

–

1.75pc

No transfers in. £1 min. deposit. Only available to those who have a “Flex” current account

Market Harborough Building Society – Isa 90 (issue 1)

–

1.7pc

No transfers in. £1,000 min. deposit, withdrawals subject to 90 days notice.

Teachers Building Society – cash Isa notice 90 (issue 4)

–

1.65pc

Transfers in allowed. £100 min. deposit. Withdrawals subject to 90 days notice.

Source: SavingsChampion.co.uk

Best of the rest

Provider and account
Term
Rate
Notes

Kent Reliance – fixed rate bond (issue 25)

2 years

2.3pc

Min. deposit £1,000. Withdrawals allowed, subject to 180 days loss of interest. Interest paid annually or monthly.

Vanquis Bank – fixed rate bond

4 years

2.91pc

Min. deposit £1,000. Interest paid annually or monthly.

Coventry Building Society – PostSave Easy Access (issue 2)

–

1.4pc

Min. deposit £500. Maximum of 12 easy access withdrawals per year. Additional withdrawals subject to 30 days loss of interest.

Sainsbury’s Bank – eSaver special

–

1.35pc

Min. deposit £1,000. Rate of 0.5pc paid if the balance falls below £1,000.

Source: SavingsChampion.co.uk

>> More “best buy” deals here: Best cash Isa ‘Nisa’ rates

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