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With High Inflation Here to Stay, Savers Need to Maximise Returns

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
                     (Terms &
                     Conditions     Minimum
    Provider         Apply)         Deposit    AER    Notes

    Newcastle BS     Big Home       GBP1       3.02%  For those saving to buy a home
                     Saver ISA        
    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
    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
                     (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
                     (Terms &
                     Conditions     Minimum
    Provider         Apply)         Deposit   AER     Notes

    M&S Bank         M&S Monthly    GBP25     6.00%   Existing M&S Bank customers only.

    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
    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.
                     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)

  • 134 car insurance brands and 97 home insurance brands
  • 9 broadband providers and 20 energy providers   
  • 31 unsecured loan and 5 secured loan providers
  • 62 mortgage lenders and 26 credit card providers
  • 63 savings providers and 38 current account providers.
  • Over 650,000 mobile phone deals

Our customers

We help our customers to save money on all of their household bills by providing a free, easy to use online service so they can compare a wide range of products in one place and find the product most suited to their needs. Our size means we are able to offer our customers exclusive, market-leading deals, including some they can't even get direct from providers.

Our providers

By having considerable volumes of informed customers actively looking for products and ready to purchase, we offer our providers an efficient and cost effective customer acquisition solution across all of our channels. This enables our providers to target their marketing spend in an effective and completely measurable way.

Our revenue comes predominantly from fees paid to us by product providers when a customer clicks through to their website and actually applies for or purchases a product. It is a success based marketing fee.

Our customer commitment

  • We make it easy to find the brands you expect to see
  • We strive to ensure a product cannot be found cheaper by going direct
  • We let you remain in control of your personal data
  • We are independent and impartial
  • We make it easy to switch and save
  • We strive to always show the most competitive product available

Paul Lawler
+44(0)787-237-9545 / +44(0)1244-370317
[email protected]

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