Dan McEvoy
The rate of UK inflation slowed to 2.8% in February, down from 3% the month before.
While savings rates have been falling lately, savers can still find inflation-beating deals with the best one-year fixed-rate accounts offering up to 4.67%.
Those looking to shield their savings income from the taxman could find even better deals with a cash ISA. The best easy-access cash ISA currently pays 5.32%, while the best one-year fixed ISA pays 4.55%. It may be a tempting option for those looking to make full use of their ISA allowance before the end of the tax year, which is just days away.
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The latest data from Moneyfacts shows there are currently 1,575 savings accounts that beat inflation overall, including 165 easy-access accounts, 176 notice accounts, 192 variable-rate ISAs, 334 fixed-rate ISAs and 708 fixed-rate bonds.
Are you making the most of your savings?
We lived through an ultra-low interest rate environment for more than a decade after the 2008 financial crisis, but higher rates have been back on offer over the past couple of years after the Bank of England raised the base rate in a bid to tackle inflation.
Millions of savers have been missing out, though, either by failing to review the rate on their savings account or keeping the majority of their savings in a current account. Many current accounts pay low or no interest.
Despite a gloomy picture for savers, ISAs remain on a positive trajectory, according to Caitlyn Eastell of Moneyfacts.
“Top rate reductions are prevalent, alongside a mixture of increases and a few holding firm, albeit with a slew of providers now taking market-leading positions. In the aftermath of last month’s base rate reduction, easy-access ISAs have won out against reductions and have improved over the past month.
“The leading easy-access ISA has risen by 0.28% and, although this could be attributed to the upcoming tax-year end, it is a positive sign for savers who need a bit more flexibility with their cash.
As the end of the tax year approaches, savers now have a limited time to utilise their remaining ISA allowance.
“With less than a fortnight to go until the new tax year, providers would typically be improving their rates to boost competition,” says Eastell. “As inflation stands above the 2% target, easy-access cash ISAs are losing money in real terms on average, but this should not deter savers from shopping around for better deals.”
Which are the best savings accounts to beat inflation?
Account | Rate (AER) | Access notes / bonus rate |
Cahoot Sunny Day Saver | 4.75% | Rate only paid on balances up to £3,000. |
Principality Building Society Online Bonus Triple Access | 4.70% | Includes a 1.50% bonus for 12 months. Up to three withdrawals per year including account closure. |
Coventry Building Society Five Access Saver | 4.66% | Up to five penalty-free withdrawals per year. Further withdrawals subject to a 50-day loss of interest. |
West Brom Building Society Four Access Saver | 4.65% | Lower rate paid if more than four withdrawals per annum. |
Atom Bank Instant Saver Reward | 4.60% | Lower rate paid if withdrawal made that month. |
Account | Rate (AER) | Access notes / bonus rate |
Moneybox Cash ISA | 5.32% | Rate includes a 1.12% bonus for three months. |
Chip Cash ISA | 5.26% | Rate includes a 0.9% bonus for three months. |
Plum Cash ISA | 5.04% | Rate includes a 1.5% bonus for 12 months. |
Zopa Smart ISA - Access ISA pot | 5.01% | Rate includes a 1.16% bonus for three months. |
Account | Rate (AER) |
Birmingham Bank 1 Year Fixed Rate Bond | 4.67% |
Al Rayan Bank Raisin UK - 1 Year Fixed Term Deposit | 4.65% |
Cynergy Bank Fixed Rate Bond | 4.65% |
Gatehouse Bank 1 Year Fixed Term Woodland Saver | 4.65% |
Account | Rate |
Cynergy Bank Fixed Rate Cash ISA | 4.55% |
Vanquis Bank 1 Year Fixed Rate Cash ISA | 4.51% |
OakNorth Bank Fixed Rate Cash ISA | 4.5% |
Shawbrook Bank 1 Year Fixed Rate Cash ISA Bond | 4.5% |
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