Best inflation-beating savings accounts to make your money work hard

Tens of billions of pounds is languishing in savings accounts paying out paltry levels of interest.

Around £31.6 billion is sat in adult savings accounts earning 1% interest or less, according to recent data published by savings app Spring, a part of Paragon Bank.

The UK’s CPI measure of inflation stood at 3.8% in September, the same as August, with the Bank of England (BoE) saying it may have peaked.

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However, prices are still rising at a rate above the BoE’s 2% target, and higher than interest rates offered by many of the UK’s leading banks on their savings accounts.

The average interest rate for a savings account on 31 October was 3.42%, 0.38 percentage points below the latest inflation reading, according to money comparison website Moneyfacts.

As average savings rates are lower than inflation, consumers holding money in these accounts are seeing their cash erode in real terms.

There are currently 897 savings accounts that beat inflation on the market right now, made up of 72 easy-access accounts, 82 notice accounts, 54 variable rate cash ISAs, 191 fixed rate cash ISAs, and 498 fixed rate savings accounts, according to Moneyfacts.

This is significantly less than the 1,731 accounts that beat inflation in October 2024, when inflation was just 2.3%.

The top easy-access savings account on the market right now is Chase’s Saver. The account offers 4.5% interest for the first 12 months, but the rate reduces to 2.5% after this window.

Caitlyn Eastell, spokesperson at Moneyfacts, said: “With the number of inflation-beating deals wavering, any saver who finds their account falling behind inflation should immediately switch to a more attractive deal, or consider locking into a fixed bond to secure guaranteed returns on their hard-earned cash.”

Which are the best savings accounts to beat inflation?

Best easy-access savings accounts

Best easy-access cash ISAs

Best one-year fixed savings accounts

Best one-year fixed cash ISAs