Six savings accounts that are beating inflation

Savers are facing a battle as the UK’s rate of inflation continues to be higher than the interest rate offered by almost all savings accounts.

The consumer prices index (CPI) rate of inflation was 3 per cent in the year to January 2018, according to the Office for National Statistics.

This means that no available-to-all savings accounts currently pay a level of interest that beats or matches the rate of inflation.

- How to inflation-proof your portfolio

How can I make my cash beat inflation?

While there are no open-to-all accounts that beat 3%, there are a small number of regular savings accounts which do pay more than inflation. However, all require you to have a current account with the provider.

Consumers with a qualifying current account with First Direct, HSBC, M&S Bank, Nationwide or Santander can access linked regular savings accounts offering 5 per cent interest.

However, these accounts have limits to the amount holders can pay in each month.



Regular saver providerInterest rate (%)Savings limits (per month)
First Direct Regular Saver5£25-£300
HSBC Regular Saver5£25-250
M&S Bank Monthly Saver5£25-250
Nationwide Flexclusive Regular Saver5£1-£250
Santander 123 Regular eSaver5£1-200

Remember these accounts are regular savers – designed for you to drip feed cash into over the course of a year.

Let’s use Nationwide’s 5 per cent regular saver as an example. You can save £250 a month in this account, but you only earn interest while your cash is in the account.

This means your first £250 deposit earns 5% interest for a full 12 months, the second £250 earns it for 11 months and so on.

Current accounts could be a good bet for your savings – especially if you want easy access. However, only one current account on the market beats 3 per cent inflaton. It also has a minimum monthly pay-in and other restrictions, such as including a bonus for the first year.

The Nationwide FlexDirect account pays 5 per cent interest on balances up to £2,500 for the first year, but this drops to 1 per cent thereafter. You have to deposit at least £1,000 each month into the account to earn this 5 per cent rate of interest.  

- This article first appeared on our sister website Moneywise

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