Savers urged to grab high interest accounts that 'beat inflation' as CPI rate drops

Man looking at tablet and interest rates going up

Savers are being told to "beat inflation" with high interest rates

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Patrick O'Donnell

By Patrick O'Donnell


Published: 19/06/2024

- 11:22

Savings interest rates continue to be high but for how much longer remains to be seen

Britons are being urged to ensure their savings accounts "beat inflation" following the publication of the most recent consumer price index (CPI) figures by the Office for National Statistics (ONS).

Inflation for the 12 months to May 2024 eased to two per cent, down from 2.3 per cent the month before, with analysts noting this could give the green light to the Bank of England when it comes to cutting interest rates.


Thanks to the central bank's Monetary Policy Committee (MPC) raising rates in recent years, savers have been able to benefit from competitive accounts.

The UK's base rate stands at 5.25 per cent and has been held at this level since August 2023.

Currently, there are currently at least 1,622 savings accounts from banks and building societies that beat inflation.

This includes 277 easy access, 160 notice accounts, 210 variable rate ISAs, 311 fixed rate ISAs and 664 fixed rate bonds.

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Woman on the phone and interest rates risingSavings interest rates are continuing to remain competitive GETTY

For the second quarter of 2025, the Bank of England’s modal projection rate for inflation is 2.6 per cent.

Back in June 2023, there were no savings deals that could beat the 8.7 per cent CPI inflation rate for May 2023.

Furthermore, there was no deals in June 2021 that could beat the 9.1 per cent rate for the month before.

Experts are reminding savers of the importance of taking advantage of "inflation-beating" interest rates before the Bank of England introduces any interest rate cuts this year.

Caitlyn Eastell, a spokesperson at Moneyfactscompare.co.uk, gave an update to the current state of the savings market and outlined what Britons should expect to receive from interest rates.

She explained: “Savers will find that there has been a hive of activity within the savings market over the past month, albeit relatively mixed with reductions, increases, launches and withdrawals. As a result, there have been a handful of new providers offering the top rates, but average rates have remained steady.

“One-year fixed bonds have seen a slight uptick month-on-month, however, savers who are about to have their bond expire will find that the current market-leading rate no longer beats that of June 2023, which may be discouraging but to be expected with the growing potential of a base rate cut in the future.

"In comparison, those who locked into a two-year term back in 2022 will find that the current top rates pay over two per cent more interest and those who fixed for even longer will be able to get significantly higher rates if they decide to fix again.

"As inflation hovers around its two per cent target, it may be more rewarding for savers to fix for longer, as the longer their savings beat inflation the more cash they can earn in real terms.

"Meanwhile, variable savings rates have seen little movement but continue to be dominated by challenger banks despite further pushes for fairer rates required by the FCA’s Consumer Duty rules."

LATEST DEVELOPMENTS:

Bank of England base rate chartThe Bank of England has continued to hold the Base Rate at 5.25 per cent since August 2023 GB NEWS

Analysts are current pricing in a reduction to the base rate from the Bank of England later in the year.

While this will hurt the competitiveness of savings account, this will likely provide much needed relief for homeowners and other debt borrowers.

Mortgage and debt repayments have gone up significantly during the cost of living crisis in response to the Bank's actions.

The central bank's MPC is next set to make an announcement regarding interest rates tomorrow on June 20, 2024.

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