Rate cuts mean fewer savers beat inflation

THE number of savings accounts that beat inflation has fallen by a fifth as banks slashed their rates in the run-up to Christmas.

Official figures yesterday showed the key Consumer Prices Index measure of inflation remained at a three-year low of 1.5pc in the year to November.

But the number of savings accounts that pay more than this has fallen from 224 last month to 181 today, the financial information firm Moneyfacts says.

And there is still no standard savings account which pays more than inflation, meaning most savers are seeing the spending power of their cash eroded.

The best easy-access account, which enables savers to withdraw money whenever they want without penalty, is Shawbrook Bank’s and pays just 1.41pc before tax.

The best account had been offered by Goldman Sachs through its retail arm Marcus. But the investment bank has just slashed its rate from 1.45pc to 1.35pc, one of a raft of cuts imposed by banks recently. The top easy-access cash Isa is offered by Al Rayan bank and pays 1.35pc.

To receive an interest rate paying more than inflation, savers have to lock away money in a fixed rate bond for at least a year, or put their cash in an account which requires 180 days’ notice if they want to withdraw it.

Even then, the best one-year fixed rate bond is offered by Islamic bank BLME and pays 1.8pc.

Rachel Springall, finance expert at Moneyfacts, said: ‘Savers looking to earn a decent return still need to search for a savings account that beats inflation. If they want quick access to cash it will be eroded in real terms.’

A separate report by Moneyfacts this week showed nearly one in three savings accounts pay less than the official interest rate of 0.75pc set by the Bank of England.