Over 1,000 ways to beat inflation: here’s where to put your cash now

If you haven't looked at your cash savings rate lately, then now is the time as inflation falls to its lowest level in two and a half years, meaning there are now over 1,000 inflation-busting savings options. 

Latest data shows inflation has slowed down to 3.4% for February. But, with the Bank of England looking to push it to 2%, interest rates have gone up and the base rate currently sits at 5.25%, which has in return prompted many banks to push up the rates on savings accounts. 

Though rates on current accounts still remain relatively low, where the average cash holding is around £10,000.

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According to Paragon Bank, savers are missing out on a collective £6.9bn in returns by leaving their cash in accounts that pay little or no interest.

Moneyfacts data reveals there are now 1,365 accounts that beat inflation. This was not the case a year ago when inflation stood at 10.4% in March 2023, and no accounts beat inflation. So, if you have not reviewed your account since then, then you want to switch.

This is a sign for savers to snap up the best rates while we enjoy the sweet period between high-interest rates and falling inflation, as Mark Hicks, head of active savings at Hargreaves Lansdown warns: “The fly in the ointment is that when the market starts to see inflation under control, it will price in lower interest rates and savings deals will drop.”

Currently, you can earn above 5% on the best savings accounts. Find out which savers beat inflation and where to find them.

Inflation-busting savings accounts 

The latest ONS data reveals inflation fell to 3.4% in February after being held at 4% in December and January, which means prices are rising at a slower rate than the previous month. Factors that contributed to the drop included falling restaurant and food prices. 

It means four in five savings accounts now beat inflation. According to Moneyfacts, the total of 1,365 inflation-busting accounts includes 151 easy-access savings, 622 fixed bonds, 152 easy-access ISAs, 298 fixed ISAs and 142 notice accounts. 

This compares to January when 967 accounts beat inflation, and this dropped slightly to 953 accounts in February. 

Here’s a breakdown of each type of savings account and how many more are inflation-busting compared to last month. 

The biggest rise is in fixed bonds with 164 more inflation-beating accounts- and that doesn’t come as a huge surprise as MoneyWeek has been tracking the best savings rates and has seen competition pick up among fixed savings accounts, tipping towards the 5.3% mark. 

“The rates on one-year fixed-term deposits have risen the most over the past four weeks, and these products are still offering the highest rates across the savings curve,” says Hicks. 

Not only that, but they lock in the deals available before the market starts to reprice to take account of falling Bank of England rates. If you don’t need a chunk of your savings for a year or longer, it’s well worth considering a fixed-rate deal right now.”

We’ve seen five providers hike their fixed bond rates in February and seven increases so far this month. That said, it’s been a mixed bag, with seven providers dropping their rates since 1 February, to date. 

The number of inflation-busting Fixed ISA rates has also seen a considerable increase with 105 more this month – and it could be a good time to consider an ISA right now to make use of your £20,000 allowance before the new tax year on April 6. 

But are the rates on ISAs as good as fixed bonds? 

What are the top savings rates on the market right now?

The savings market is still flying high, with the best accounts still offering above 5%. These are the best savers around currently.  

MBNA entered the savings scene just over a month ago with its one-year fixed bond, offering 5%. Since then, it upped its rate to a market-leading 5.27%. 

If you’re looking for more flexibility, an easy-access savings account might suit your needs better and you can earn up to 5.2% with Santander-owned Cahoot. But, remember, the rate is variable so it could change at any time based on market conditions. 

Plus, it’s always worth reading the small print as some easy-access accounts impose restrictions on their accounts, for example the Cahoot saver only permits up to £3,000. 

MoneyWeek has also been tracking the top ISAs and has seen providers up their rates slightly, but no drops have been recorded since around mid-February. As it stands you can earn above 5% on variable and fixed ISAs too. 

Plum launched its top cash ISA today (20 March) offering 5.15%, surpassing Moneybox’s 5.11% cash ISA, which has remained top for over a month. If you’re willing to fix your cash you can get a 5.25% return with Virgin Money – and now could be a good time to make use of your ISA allowance before the new tax year, especially as ISA rates are at their best in 10 years.