22 Dec 2024

Savings hit hard by inflation

Inflation figures released today show the Consumer Prices Index (CPI) fell during August, from 2.6% to 2.5%.

To beat inflation, a basic rate taxpayer at 20% needs to find a savings account paying 3.12% per annum, while a higher rate taxpayer at 40% needs to find an account paying at least 4.20%.

Today there is a choice of 198 standard savings accounts and ISAs that basic rate taxpayers can choose from to negate the impact of tax and inflation. No non-ISA accounts are available to higher rate taxpayers.

The impact of inflation on savings means that £10,000 invested five years ago, allowing for average interest and tax at 20%, would have the spending power of just £9,248 today.

Sylvia Waycot, spokesperson for Moneyfacts.co.uk, said:

“Although today’s fall in inflation is welcomed, it does not alter the painful truth that in five years, the average saver has seen over £750 knocked off the spending power of their savings, the equivalent of just over £2 for a cup of coffee everyday of the year.

“Spending power is eroding because the average savings account simply does not keep pace with inflation.

“Once again, we have the ridiculous situation where we have more savings accounts that don’t bean inflation than those that do.

“Today there are 1,017 savings accounts on the market, but only 198 (3 notice, 66 fixed rate bonds and 129 ISAs) accounts that negate the effects of tax and inflation. There are no no-notice accounts on the market that beat inflation.

“Savers need to be vigilant and take advantage of tax breaks such as ISAs and if they can, lock their money away for a fixed period to ensure better rates.”

Cash ISAs
Provider	Account	Rate	Notes
Coventry BS	60 Day Notice ISA	3.25%	Earlier access on 60 day loss of interest.Rate includes 0.50% bonus for 12 monthsTransfers of 2012/13 ISAs permitted.
West Brom BS	WeBSave ISA 6	3.16%	Earlier access on 60 day loss of interest.Rate includes 1.66% bonus until 30.09.2013
Aldermore	60 Day Notice Cash ISA	3.15%	Earlier access on 60 day loss of interest. Withdrawals via nominated account.
Manchester BS	Platinum Instant ISA Issue 1	3.06%	Rate includes 1.05% bonus for 12 months
Post Office®	Premier Cash ISA	3.01%	2 withdrawals pa.Rate includes 1.26% bonus for 18 months
Source Moneyfacts.co.uk Compiled 18.9.12
Fixed Cash ISAs
Provider	Account	Rate	Notes
Julian Hodge Bank	5 Year Fixed ISA	4.00%	Earlier access on closure only subject to penalty.
Julian Hodge Bank	5 Year Fixed ISA	4.00%	Earlier access on closure only subject to penalty.
Wesleyan Bank	Internet Fixed Rate Cash ISA	4.00%	Earlier access on 180 day loss of interest. All withdrawals via BACS to a nominated account.
Halifax	ISA Saver Fixed	4.00%	Earlier access on closure only on 365 day loss of interest.Can apply online.
Halifax	ISA Saver Fixed	3.80%	Earlier access on closure only on 320 day loss of interest.Can apply online.
Wesleyan Bank	Internet Fixed Rate Cash ISA	3.75%	Earlier access on 180 day loss of interest. All withdrawals via BACS to a nominated account.
Source Moneyfacts.co.uk Compiled 18.9.12

5 Year Fixed Rate Bonds
Provider	Account	Rate	Notes
Julian Hodge Bank	Capital Millennium Bond	4.00%
Yorkshire Bank	Term Deposits	3.98%
Clydesdale Bank	Term Deposits	3.98%
Triodos Bank	Triodos Five Year Ethical Savings Bond	3.75%
Principality BS	5 Year Fixed Rate Bond 210	3.75%	Earlier access on closure only on 360 day loss of interest.
Source Moneyfacts.co.uk Compiled 18.9.12

Notice Accounts
Provider	Account	Rate	Notes
Shawbrook Bank	120 Day Notice Personal Savings Account Issue 2	3.30%	No cash transactions.
Shawbrook Bank	95 Day Notice Personal Savings Account Issue 2	3.20%	No cash transactions.
Hanley Economic BS	Postal 180 Day Notice	3.20%	New money to the Institution (at least 50% must be new funds.) Earlier access on 180 day loss of interest. Withdrawals by cheque.
Source Moneyfacts.co.uk Compiled 18.9.12

Moneyfacts Group
Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry.

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Savings hit hard by inflation

Cash ISAs

Fixed Cash ISAs

5 Year Fixed Rate Bonds

Notice Accounts