CHESTER, England, February 12, 2013 /PRNewswire/ --
- Basic rate taxpayers need a rate of 3.39 per cent to gain benefit in real terms, increasing to 4.51 per cent for higher rate taxpayers
- ISAs offer the best return on savings for those looking to lessen impact of inflation
Today's announcement by The Bank of England that The Consumer Price Index (CPI) has remained high at 2.7 per cent, and with indications that high inflation is here to stay for the foreseeable future, savers need to be proactive and move to an account paying better rates in order to limit the impact of inflation on their money, according to analysis by MoneySupermarket.
To beat inflation, basic rate tax payers will need an account paying at least 3.39 per cent to gain benefit in real terms from their savings, increasing to 4.51 per cent for higher rate tax payers, and 5.41 per cent for 50 per cent tax payers.
No easy access accounts currently beat the effects of inflation while six easy access ISAs and one fixed rate ISA beat inflation. In addition, 11 regular saver accounts beat inflation for basic rate taxpayers, while only five regular saver accounts beat inflation for higher rate taxpayers. However, with the current average savings rate currently at 0.26 per cent, the majority of savers can still switch to much better deals and reduce the impact of inflation.
Kevin Mountford, head of banking at MoneySupermarket.com, said: "With inflation remaining high, and set to remain so for the foreseeable future, people need to be prepared to limit the impact of the rising cost of living on their household budgets. For savers it is important to make sure your money is working as hard for you as it can do.
"Although there are only a few accounts which offer returns which beat the eroding effect of inflation, it is vital not to be disheartened. The important thing is that people are prepared to switch if they are not currently on the most competitive deal, even if the rates on offer don't beat the eroding effect of inflation - especially as the majority of savings are sitting in accounts paying a derisory rate of interest. If you are a UK taxpayer, then using your tax free ISA allowance should be the first port of call for savers looking to limit the impact of inflation.
"It is also important to check your rate if you signed up to an account offering a bonus rate, as there are many deals coming to an end shortly, meaning you could be left on a very uncompetitive rate. Savers may also consider looking at alternative products such as offsetting savings against mortgage borrowing or peer-to-peer lending as the returns may be more favourable."
Notes to Editors
Inflation beating savings accounts
Cash ISAs Account (Terms & Conditions Minimum Provider Apply) Deposit AER Notes Newcastle BS Big Home GBP1 3.02% For those saving to buy a home Saver ISA Stafford Railway BS Cash ISA GBP1 3.00% N/A First Direct Cash ISA GBP1 3.00% For 1st Account holders only Vernon BS Regular Saver GBP25 3.00% Local restrictions apply ISA HSBC Cash e-ISA GBP1 2.75% HSBC current account holders only Marsden BS Members GBP10,000 2.75% Only available to existing Reward ISA members of 5 years or more. (Issue 1) Sourced by http://www.moneysupermarket.com 12.02.2013 Fixed Rate Cash ISA Account (Terms & Conditions Minimum Provider Apply) Deposit AER BM Savings 3 Year Fixed GBP500 2.80% Rate ISA Sourced by http://www.moneysupermarket.com 12.02.2013 Regular Savings Account Account (Terms & Conditions Minimum Provider Apply) Deposit AER Notes M&S Bank M&S Monthly GBP25 6.00% Existing M&S Bank customers only. Saver HSBC Regular Saver GBP25 6.00% Existing HSBC Premier, Advance, (preferential Passport or Graduate Advance account rate) holders only. Norwich & E-Family 5.00% Available only to those with Peterborough BS Regular Saver GBP1 dependent children up to the age of 16 or 18 if in full time education. Online access only. Norwich & Family 5.00% Available only to those with Peterborough BS Regular Saver GBP1 dependent children up to the age of 16 or 18 if in full time education. Norwich & Gold Savings GBP20 5.00% Available to Gold Current Peterborough BS Account customers only. West Bromwich BS Fixed Rate GBP10 4.10% N/A Regular Saver (Adult) Norwich & E-Regular GBP1 4.00% 2.15% bonus for 12 months. Peterborough BS Saver Online access only. Norwich & Regular GBP1 4.00% 2.15% bonus for 12 months. Peterborough BS Saver Saffron BS Fixed Rate GBP10 4.00% Existing members only. Members' Regular Saver HSBC Regular Saver GBP25 4.00% Existing HSBC customers only. Sourced by http://www.moneysupermarket.com 12.02.2013
MoneySupermarket.com compares (at 27th Dec 2012)
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