The best inflation-beating savings accounts

Updated
The best inflation-beating savings accounts
The best inflation-beating savings accounts



The latest Consumer Price Index (CPI) figures show that inflation has fallen to just 0.5%, down from 1% in November.

A large drop in oil and food prices is said to be a catalyst for the fall.

This is good news for savers, as finding a home for your money that offers an inflation-beating return just got a lot easier. A total of 510 savings accounts now beat inflation.

To beat inflation, a basic rate taxpayer would need an account that pays 0.63% a year, while higher-rate taxpayers would need a minimum of 0.83%.

But don't settle for that. Here are the accounts that offer far better returns.

Easy access savings

If you want to start saving, but feel like you might need to dip into your account now and again, then your best bet is an easy access savings account.

Account

Interest rate (gross AER)

Minimum deposit

Withdrawal limits

Bonus

Kent Reliance Branch Easy Access Savings

1.5%

£1,000

None

N/A

The West Brom Limited Access Saver

1.4%

£1

Up to six withdrawals a year

N/A

ICICI HiSAVE SuperSaver Savings Online Account

1.4%

£1

None

N/A

Earl Shilton BS Progress

1.4%

£100

Six withdrawals a year

Bonus of 1.30% applies if certain conditions are met

Coventry BS PostSave Easy Access

1.4%

£500

12 withdrawals a year

N/A

Post Office Online Saver

1.4%

£1

None

0.75% for 12 months


Compare savings accounts

Fixed rate savings bonds

For greater returns, you could look at a fixed rate savings bond. As your money is locked away, you'll get more back.

One year

Account

Interest rate (AER)

Minimum deposit

Access

NS&I 65+ Guaranteed Growth Bond*

2.8%

£500

Online, post, telephone

Al Rayan Bank** Fixed Term Deposit

1.9%

£1,000

Online, post, telephone, in-branch

ICICI Bank HiSAVE Fixed Rate Account

1.85%

£1,000

Online

State Bank of India Fixed Deposit

1.80%

£10,000

Branch, online


*Only available to savers over 65

**Formerly Islamic Bank of Britain, anticipated profit rate

18 months

Account

Interest rate (AER)

Minimum deposit

Access

Al Rayan Bank 18 Month Fixed Term Deposit*

2%

£1,000

Online, post, in-branch

Harrods Bank 18 Month Fixed Rate Deposit Account

1.95%

£20,000

Post, in-branch

FirstSave Fixed Rate Bond

1.90%

£1,000

Online

Hampshire Trust Bank 18 Month Bond

1.90%

£1,000

Post

Bank of Cyprus UK 18 Month Fixed Rate Bond**

1.85%

£1,000

Online, post, telephone, in-branch


*Anticipated profit rate

**Must be an existing customer

Two years

Account

Interest rate (AER)

Minimum deposit

Access

Al Rayan Bank Fixed Term Deposit*

2.32%

£1,000

Online, post, telephone, in-branch

State Bank of India Fixed Deposit

2.25%

£10,000

Post, in-branch

Harrods Bank 2 Year Fixed Rate Deposit

2.25%

£20,000

Post, in-branch

Close Brothers Savings Select Gold Fixed Term Deposit

2.15%

£10,000

Post

Paragon Bank Two Year Fixed Rate

2.1%

£1,000

Online


*Anticipated profit rate

Compare savings accounts

Three years

Account

Interest rate (AER)

Minimum deposit

Access

NS&I 65+ Guaranteed Growth Bond*

4%

£500

Online, post, telephone

Secure Trust Bank Fixed Rate Bond 3 Year Term

2.51%

£1,000

Post, telephone

State Bank of India Fixed Deposit

2.50%

£10,000

Branch, post

Harrods Bank Fixed Rate Deposit

2.50%

£20,000

Branch, post

Vanquis Bank High Yield

2.41%

£1,000

Online


*Only available to savers over 65

Five years

Account

Interest rate (AER)

Minimum deposit

Access

Secure Trust Bank Fixed Rate Bond 5 Year Term

3.03%

£1,000

Post, telephone

Vanquis Bank High Yield

3.02%

£1,000

Online

UBL Fixed Term Deposit

3.01%

£2,000

Online, branch, post

Yorkshire Bank Retail Term Deposits

3%

£2,000

Online, branch, post, phone

Clydesdale Bank Retail Term Deposits

3%

£2,000

Online, branch, post, phone


Or if you're happy to go the whole hog, you can opt for the Secure Trust Bank Fixed Rate Bond 7 Year Term. You'll get 3.25% interest with a minimum £1,000 deposit.

Cash ISAs

Cash ISAs offer a tax-free return on your savings. Here are the top rates on offer, across a range of terms, all of which handily beat inflation.

ISA

Term

Interest rate (AER)

Minimum deposit

NS&I Direct ISA

Instant access

1.50%

£1

Virgin Money Fixed Rate Cash E-ISA

One year

1.70%

£1

Post Office Fixed Rate Cash ISA

Two years

1.95%

£500

Coventry BS Fixed Rate ISA

Three years

2.25%

£1

Virgin Money Fixed Rate Cash E-ISA

Five years

2.50%

£1


Compare ISAs

Why current accounts are better

It's worth remembering that current accounts still offer better rates than savings deals.

For example, the Nationwide FlexDirect account offers you 5% on balances of up to £2,500 for the first 12 months. It also has fee-free overdrafts for that period. However, this will drop to a measly 1% after the first year. If you want a consistently high rate for a smaller savings pot, the TSB Classic Plus account might be the deal for you. it pays 5% on balances up to £2,000, and that rate won't drop off after a year.

For bigger balances, the Santander 123 current account pays 3% if you have a balance of between £3,000 and £20,000. It also pays cashback on your direct debits, though there is a £2 monthly fee to consider.

Compare current accounts

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