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 |
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 |
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 |
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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