Despite a recent fall in Consumer Price Index (CPI) and Retail Price Index (RPI) inflation, savers are still struggling to find savings accounts that give them a healthy return on their investments.
This month banks and building societies have made 120 cuts to savings rates in accounts held by their customers. This comes in addition to the 750 cuts made to existing easy access accounts; revealed by The Telegraph last month. The changes include a 1% cut to the Swansea Building Society Regular Saver account, as well as a 0.25% drop in the rate offered by the NatWest Direct Reserve account. Figures from the Bank of England (BoE) have also revealed that the average savings rate on easy access accounts has plummeted from 1.14% in January to 0.97% June. Anna Bowes, director of Savings Champion, said that the BoE’s announcement that the base rate will remain at its historic low of 0.5% until 2016 could spark an “avalanche” of rate reductions.
With the data pointing to a decidedly bleak outlook for the savings rates available to consumers, is it still possible to get an inflation beating savings account? Here we look at some of the best deals on the market.
Just one inflation-beating savings account on the marketAccording to Moneyfacts, of the number of inflation beating accounts available on the market has fallen substantially; dropping from a figure of 227 a year ago to just one today.
The site argues that of the 804 accounts available, which includes ISAs, the fixed-rate seven-year bond from Skipton Building Society, offering a rate of 3.5%, is the only one to beat both a basic rate tax and inflation. CPI inflation currently stands at 2.8%, while RPI inflation comes in at 3.1%.
Commenting on the plight faced by savers, Moneyfacts.co.uk spokeswoman Rachel Springall, said:”These are dark days for savers as there is only one standard savings account to beat basic rate tax and inflation, a seven-year bond which is a long commitment.”Savers would be wise to be wary of locking their money away for the long term. The market remains volatile so opting for an easy access account to move money more freely is a safer option.”
Best buy tables: Instant access savings accounts
While many instant access savings accounts may not beat inflation, ICICI Bank UKI HiSave SuperSavings Online is currently topping the best buy tables for this type of account offering a rate of 1.60%. This account requires a minimum deposit of just £1.
In second place in the ranking is the NS&I Income Bonds offering a rate of 1.75%; this requires a minimum deposit of £500.
Despite ranking in third with a rate of 1.5% the AA Internet Extra Issue 11 does offer a 1% bonus rate for the first 12 months. However, the account requires a minimum deposit of £1,000.
Best buy tables: Regular savings accounts
While regular savings accounts can offer a higher rate of interest than the instant savings accounts, they place a minimum and maximum on the amount you can deposit each month. In addition, many will also only allow you to withdraw from the account one or two times before incurring a penalty.
Currently topping the best buy tables for regular savings accounts is Leeds Building Society Regular Saver Issue 2 offering a rate 3.05%. This account requires a minimum monthly deposit of £20, and a maximum monthly deposit of £500. Account holders can make one withdrawal without incurring a penalty.
This is followed by the Marsden Building Society Regular Savings 2nd Issue offering a rate 3%. This account requires a minimum monthly deposit of £25, and a maximum monthly deposit of £500. Account holders can make two withdrawals without incurring a penalty.
Ranking in third place is the Norwich & Peterborough Building Society Regular Saver offering 3%. This account requires a minimum monthly deposit of £1, and a maximum monthly deposit of £250. Account holders can make one withdrawal without incurring a penalty.