Savers are facing a new 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 reached 2.9% in the year to May, the Office for National Statistics announced. This means that no available-to-all savings accounts currently pay a level of interest that beats or matches the rate of inflation.
There are fears that inflation could rise even further, so there could be further struggles for savers ahead.
How can I make my cash beat inflation?
There are a small number of regular savings accounts which pay more than inflation – but all require you to have a current account with the provider.
Consumers with a First Direct current account, HSBC Advance or Premier account, M&S Bank current account, Nationwide Flex account or Santander 123 account can access linked regular savings accounts offering 5% interest.
Lloyds Bank’s Club Lloyds account holders can also access a 3% regular saver with their bank. However, these accounts have limits to the amount holders can pay in each month.
| REGULAR SAVER PROVIDER | INTEREST RATE | SAVINGS LIMITS (PER MONTH) |
|---|---|---|
| Nationwide | 5% | £1 - £500 |
| First Direct | 5% | £25 - £300 |
| HSBC | 5% | £25 - £250 |
| M&S Bank | 5% | £25 - £250 |
| Santander | 5% | £1 – £200 |
| Lloyds Bank | 3% | £25 - £400 |
Current accounts could be a better bet for your savings – especially if you want easy access. The Nationwide FlexDirect account pays 5% interest on balances up to £2,500 for the first year, but this drops to 1% thereafter.
Tesco Bank offers 3% on balances up to £3,000 while TSB also pays 3% interest on its Classic Plus current account, but only on balances up to £1,500. Remember that you have to meet certain requirements, such as minimum pay-ins, to get these accounts.
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