Rachel Springall, Finance Expert at Moneyfacts.co.uk, said:

“Inflation erosion on the true spending power of consumers’ cash persists and any attempts to ease the strain is unlikely to ease the frustration of savers in a low interest rate environment. As the rate of inflation remains above its target of 2%, consumers would be wise to review the rate on any existing savings account and consider switching to a better deal due to recent improvements to the top rate tables.

“Easy access accounts remain a firm favourite among savers due to their flexibility and rates have improved since last month, but the top rate today still pays less than the best rate offered a year ago. However, it is the fixed bond market which has shown more notable improvements to rates compared to a year ago and savers can now get a better rate on a one-year bond than they could have secured on a two-year bond last November. Fixed rate ISAs have also improved this month but there remains a notable difference in rate compared to fixed bonds. If savers are comparing bonds and ISAs, then it’s vital they consider their Personal Savings Allowance as fixed bonds pay higher rates.

“Interest rates on savings accounts on average dropped to record lows this year so the continued improvements to the top cash savings rates is positive, but in real terms inflation is still taking its toll even on the best rates. The murmurings of a base rate rise could mean a further uplift to interest rates, but savers would be wise not to wait around for this to come to fruition. Competition among challenger banks and building societies is evident in the top rate tables and savers would be wise to act with pace to take advantage.”

*Data note: Please note that these savings product numbers only include deals that are available to UK residents (no notice/easy access, notice, fixed rate bonds, variable or fixed ISAs) and excludes regular savers and children’s savers (this figure does not count each interest payment option for each account), based on a £10,000 deposit. Higher rates may be available for larger deposits.