Inflation fell to 3.6% last month as lower energy costs helped pull the rate of price increases down. News of the figure published by the Office for National Statistics (ONS) on Wednesday should prompt savers to make sure their hard-earned cash is in an account that pays more than that.
Anything that pays less than the rate of inflation means your money is losing value. At the time of writing, there are more than 1,300 savings accounts which offer rates above 3.6%, including easy access accounts, cash ISAs and fixed rate bonds. Antonia Medlicott, founder and managing director at Investing Insiders in London, told the Express which three accounts currently offer the highest rates.
She said: “The top rate right now is available on Zopa. If you open a Biscuit current account, you’ll get access to their Regular Saver account paying a massive 7.10% AER (variable).
“As with most regular savings accounts, there are limits to how much you can put away this way (£300 per month maximum in the case of Biscuit) but there are no fees for either the current or the savings account, and you can get access to your savings at any time which is vital if you’re using this as an emergency cash fund.”
Antonia said if you wanted to put a bit more away, Santander is offering 6% AER (variable) on up to £4,000, but you would need to open a Santander Edge current account, which costs £3 per month.
The expert said you can also save up to £1million with Oxbury Bank and receive 4.51% AER on their 90-day notice base rate tracker account.
She added: “You will need a minimum deposit of £10,000, and the account tracks the Bank of England base rate, so if interest rates are cut in December, as is now widely expected, your rate will drop too.”
Express analysis of Moneyfacts data below shows nine other accounts offering inflation-busting rates.
Three easy access savings accounts offer rates ranging from 5.00% to 4.37%. Top of the list is Cahoot’s Sunny Day Saver (Issue 5).
This Santander UK provided account has a £1 minimum opening amount and maximum investment of £2,000. It offers 5.00% Annual Equivalent Rate (AER)/gross for 12 months on up to £3,000.
Cahoot’s Simple Saver (Issue 13) offers 4.40% AER/gross for a year on balances up to £500,000.
After 12 months, the paper-free account gets transferred to another Cahoot savings account. The minimum that can be paid in is £1 and the maximum is £2million.
Chip’s Easy Access Saver offers new customers 4.37% AER for a year, with interest paid monthly. Account holders can make three withdrawals in a 12 month period without being penalised.
It’s important to remember of course that rates on easy access savings accounts are variable so they could drop at short notice.
The best rates for easy access cash ISAs found by Moneyfacts range from 4.56% to 4.47%.
Trading 212′ Cash ISA Promo Rate offers a 4.56% AER variable tracker rate. It pays interest monthly and withdrawals can be made anytime. There are no account fees. It includes a 0.71% bonus for the first 12 months.
Hargreaves Lansdown’s HL Active Savings Cash ISA has a variable rate of 4.55%. Withdrawals are allowed, with £1 minimum opening amount and the ISA maximum of £20,000 per tax year.
Moneybox’s Cash ISA offers 4.47% AER paid at £500 and includes a bonus for 12 months. Interest is paid monthly. The minimum opening amount is £500 and the rate is only available to new customers.
A lower rate is paid if more than three withdrawals are made over a 12 month period.
The top three one year fixed rate bonds range from 4.46% to 4.37%. LHV Bank’s 1 Year Fixed Rate Bond offers 4.46% at £1,000 and allows a maximum investment of £1m. Interest is paid when the bond matures.
Habib Bank Zurich Plc.’s HBZ Fixed Rate e-Deposit Account offers 4.44%. The least you can invest is £5,000 and most is £1m. Again, interest is paid on maturity.
Ziraat Bank and Raisin UK’s 1 Year Fixed Term Deposit offers 4.37% paid at £1,000. The most you can invest is £85,000.
With this type of savings account, you can’t make withdrawals from your savings during the one year period, but you will be paid the interest rate advertised for the whole period so there’s no risk the rate will drop.