Savers seeking ‘best interest rate’ on savings told to act as inflation surges – top deals
Inflation: Expert discusses Consumer Price Index rise of 2.1%
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The Consumer Price Index (CPI) increased to 2.1 percent during May 2021, up from 1.5 percent in April, the Office for National Statistics (ONS) data revealed today. The 0.6 percent rise meant the rate of inflation in the UK has busted the Bank of England (BoE) target of two percent.
With the Bank of England Base Rate remaining at a record low of 0.1 percent, the inflation data has meant more bad news for savers.
The current inflation rate means that not one standard savings account can beat its eroding power.
Amid the latest data, the money comparison website Moneyfacts has today warned savers would be “wise to act quickly” to acquire a top rate savings account.
This is because some market-leading rates have been cut in just a few weeks.
The number of deals able to outpace inflation hasn’t changed since last month – but that’s because there’s not one standard savings account that can outpace 2.1 percent.
Commenting on the current savings market, Rachel Springall, Finance Expert at Moneyfacts.co.uk, said: “Inflation is clearly unforgiving on savers cash and the rate is expected to rise further in the months to come.
“There is currently not one standard savings account that can outpace its eroding power and we may see the rate rise to 2.3 percent in Q2 2022.
“Savers who are already locked into an account that beats today’s inflation rate would be wise to see when their deal is set to mature and start to consider where to save their cash next.
“Savers who are looking to lock into the best rate regardless of the effect of inflation would be wise to act quickly, as some headline grabbing rates seen in recent weeks have since been cut.”
Ms Springall went on to highlight some of the banks which have cut their market-leading deals of late.
“Indeed, Aldermore were leading the market with a one percent one-year fixed bond, but after one week the rate dropped to 0.75 percent.
“Atom Bank and Zopa had one-year fixed bonds paying 0.85 percent in May but Atom Bank has since been cut to 0.75 percent and Zopa now pays 0.80 percent.
“It is clear to see from recent changes that challenger banks are fuelling competition, but not all the top deals have a long shelf life.”
The finance expert went on to discuss rates being offered when it comes to ISAs.
“It’s been a couple of months since the start of the new tax-year and any savers who have yet to take advantage of their tax-free ISA allowance may wish to compare the latest rates as we have seen some attractive deals surface,” Ms Springall said.
“Shawbrook Bank and Paragon Bank both increased the rates on their one-year fixed ISAs just last week to 0.56 percent and 0.55 percent respectively and Shawbrook presently leads the market with this rate.
“However, it is important for savers to consider their Personal Savings Allowance and the longer-term advantages of an ISA when comparing alternative savings accounts to ISAs.”
So, how has the savings scene changed over recent years?
“There were over 100 savings deals that could beat 2.4 percent in June 2019, which was the rate of inflation at the time, but there are no deals today, which may feel deflating despite a lower rate of inflation,” Ms Springall said.
“Regardless, it is still positive to see savings rates improve in the past few weeks, but it is obvious that speed is crucial to grab a top rate.
“There are ways for savers to help this endeavour to avoid disappointment, such as to sign up to any rate alerts or newsletters to keep abreast of the changing market and keep them in the know.”
Best interest rates on savings accounts
Among the analysis, Moneyfacts shared the top savings deals at £10,000 gross today.
The money comparison website said these are currently:
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