Savings rates: Inflation-beating deals reduce as CPI rise prompts new negative rate fears | Personal Finance | Finance
Rachel Springall, a Finance Expert at Moneyfacts.co.uk, commented on this: “Savers could indeed beat the level of inflation with some accounts today, but it is still expected for the level of inflation to rise beyond the Government’s target of two percent in the coming months. Savers will recognise why their pots’ spending power may be eroded in real terms if this comes to be, as the top savings rates pay far less than two percent, and if they are choosing an easy access account, the best deal today pays 0.50 percent.
“No one could have predicted the significant impact the Coronavirus has had on the economy and the subsequent base rate cuts it incited. In fact, just a year ago inflation was 1.5 percent , 0.5 percent off the Government’s target and there were only 65 deals that could beat it.
“A year ago, savers could get a top rate of 1.20 percent from RCI Bank UK on an easy access account but today savers would need to lock their cash away for five years to get a similar return, with the top five-year fixed bond paying 1.40 percent from Gatehouse Bank.
“Savers will need to think carefully about how they may wish to use their cash in the coming months, and with the easing out of lockdown underway, easy access accounts may remain a firm favourite for quick movement. Those who are more cautious about spending their disposable income may instead be considering their options and, regardless of the savings vehicle, it is vital they keep a close eye on the top deals.”