Savings rates and amounts will continue to be hit by inflation over the coming months, with the Bank of England detailing today that the CPI has risen to 2.5 percent. With this in mind, Moneyfacts.co.uk noted savers “will be pleased to find that the top deals available to them across various types and terms of products have improved month-on-month”, but the rising cost of living will limit any optimism.
Rachel Springall, a Finance Expert at Moneyfacts.co.uk, commented on the state of the savings market in the face of rising inflation.
Ms Springall said: “Despite improvements to the top savings rate deals in recent weeks, inflation is raining havoc on savers’ cash.
“There is currently not one standard savings account that can outpace its eroding power and, according to the Bank of England, it is expected to pick up further above the target of two percent.
“Consumers with a fixed bond or ISA that is about to mature may wish to compare deals now, particularly on one-year fixed bonds.
“Savers who prefer to lock away their cash for a higher return may want to think carefully about how long they are comfortable to commit, as we could see further improvements to rates in the weeks to come.
“A saver who locked into a five-year fixed bond a year ago would be on a lower rate than they could get today on an equivalent term bond.
“Those savers who traditionally lock cash away for one year and grabbed the top rate a year ago will find they can lock into a higher rate today.
“The sad truth despite such positive rate changes is that there are no standard savings accounts that can beat the current level of inflation.
“One year ago, inflation sat at 0.60 percent and there were over 300 savings accounts which could beat this; inflation is clearly now much higher and poses a challenge to savers looking to protect their hard-earned cash from its eroding power. “
Ms Springall concluded by providing guidance on what savers need to do to give themselves the best chance at success.
Ms Springall detailed: “Those savers who have yet to utilise their ISA allowance would be wise to compare the rates carefully and consider the longer-term advantages of a tax-free wrapper and their personal savings allowance.
“There continues to be a notable gap between the top fixed bonds and ISA rates regardless of the term.”
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