CPI has remained close to zero throughout the last 12 months, even dipping into negative inflation on several occasions during that period. Although inflation appears to be on the rise, moving up from 0.30% in both January and February, it remains significantly below the Bank of England’s target of 2%.
Low inflation is generally seen as good news for savers, as the task of finding an account that makes a return in real terms is made easier, but shockingly around 1 in 4 accounts are not currently beating inflation even at this low level, as there are over 900 savings accounts paying a paltry 0.50% or less. Are you one of those savers?!
The Bank of England’s Monetary Policy Committee (MPC) also unanimously voted to keep the base rate at 0.50%, appearing to be partly influenced by economic uncertainty surrounding Brexit. The base rate has now remained unchanged for over seven years and there appears to be little prospect of an increase in the short term.
The likelihood of the historically low base rate level continuing for at least the short term means that savers cannot rely on rates increasing, so must take action to get a better return. To make matters worse, providers continue to cut interest rates for existing account holders, with the rates on over 4,000 accounts slashed since 2012! Many accounts that were previously paying competitive rates may have slumped to lower levels, unbelievably with some even falling below the paltry level of CPI and the base rate.
So, if any of your accounts are currently paying less than inflation, you have suffered a cut in your interest rate or you simply need to increase your return, here’s a few of the highest rates available on the market at the moment.
TSB Bank – Classic Plus Account - 5% AER
Nationwide Building Society – FlexDirect – 5% AER
Santander – 123 Current Account – 3% AER
RCI Bank – Freedom Savings Account – 1.45% AER
State Bank of India – Online Hi-Return Fixed Deposit Account (Five Years) – 2.90% AER
For more options, please take a look at our independent, hand-picked best buy tables and remember the best way to maximise your returns is by switching to a better deal.