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

“Any attempt to restrain the level of inflation is unlikely to ease the erosion on standard savings accounts for some time yet due to the current interest rate environment. It would be no surprise for consumers to feel frustrated as inflation eats its way into the true spending power of their cash. Even if high inflation will be temporary, as some suggest, it shows no signs of losing its appetite as it remains above its 2% target. Despite this, savers would be wise to consider switching their account if they are receiving a poor rate of interest, as some of the top savings deals have improved since the last inflation announcement.

“Savers who are due to come off a maturing one-year bond may be pleased to see a notable spate of competition in this arena, as the best deal today pays 1.51% (Gatehouse Bank) as an expected profit rate, which is 0.25% more than last year’s top deal, of 1.26% (Al Rayan Bank) as an expected profit rate. One-year fixed ISAs, however, have not improved at such an encouraging pace, with a difference of just 0.05% between the top best deal of 0.90% today (Castle Trust Bank) and 0.85% (Newcastle Building Society) seen in October 2020. It is prudent then for savers to consider their Personal Savings Allowance along with comparing interest rates.

“Should the murmurings of a base rate rise before the year-end come to fruition, variable rate deals would typically be the first type of savings accounts to see improvements. However, there is no guarantee for rates to do so immediately and this could even take a few months to flow through, or indeed may not even be passed on in full. Savers sitting on the fence about whether to switch now or wait would be wise to keep in mind there is no certainty that interest rates on savings accounts will rise sharply leading into 2022. Indeed, for many, it was hard to imagine that interest rates could even drop to record lows this year.”

*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.