Savers lose interest as easy-account rates beaten by inflation
JUST one easy-access savings account now beats inflation in a blow for millions of British families after price rises picked up.
Inflation as measured by the consumer prices index rose by 1pc in July, up from 0.6pc the previous month, after a jump in ice cream and haircut costs as demand surged from customers celebrating lockdown freedom.
The only account on the market with a higher rate than this is offered by the National Savings & Investment Bank (NS&I) and pays interest of 1.16pc.
Every other easy access account open for new customers pays less, meaning families using them will suffer a real-terms drop in the value of their cash. It follows more than a decade of woe for savers since rates were crushed by the financial crisis.
The surprise increase in inflation means that the Bank of England could pause any future plans to cut interest rates or print more money, in case further action stokes demand and pushes prices back up to or beyond the 2pc target. It is likely to quell speculation of a move to controversial negative rates, where banks are charged for depositing money.
NS&I dominates the list of top-paying easy-access accounts, also offering the second and third best rates on the market of 1pc and 0.8pc.
However, even these will not grow savers’ money in real terms and some people have reported problems of slow service and delays as new customers have flocked to open accounts with the state-owned savings bank.
The average interest paid by an easyaccess account has fallen by almost two thirds since March, from 0.56pc to 0.22pc, meaning most of the cash sitting in these flexible accounts will now be losing value in real terms.
Inflation rose after lockdown as families made the most of new opportunities to spend.