Inflation erosion overshadows savings rate rises

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Rachel Springall, Press Officer
Rachel Springall, Press Officer / Finance Expert T: 01603 476210 E: Email Rachel
15/09/2021

Inflation erosion overshadows savings rate rises

Savings rates continue to improve, however, due to a dramatic rise to inflation, not one standard savings account can beat its eroding power. The latest analysis from Moneyfacts.co.uk reveals the top rate deals available to savers searching for a competitive return.

 

  • The Consumer Price Index (CPI) rose to 3.2% during August, from 2.0% in July.
  • The number of deals able to outpace inflation has not changed since last month, there is not one standard savings account that can outpace 3.2%*.
  • The predicted rate for inflation during Q3 2022 is 3.3%.
  • In September 2020, 661 deals (80 easy access, 72 notice accounts, 77 variable rate ISAs, 134 fixed rate ISAs and 310 fixed rate bonds) could beat 0.2% (August CPI) and in September 2019, 191 deals (163 fixed rate bonds, 20 fixed rate ISAs and eight notice accounts) could outpace 1.7% (August CPI)*.

Inflation erosion overshadows savings rate rises

Savings rates continue to improve, however, due to a dramatic rise to inflation, not one standard savings account can beat its eroding power. The latest analysis from Moneyfacts.co.uk reveals the top rate deals available to savers searching for a competitive return.

 

  • The Consumer Price Index (CPI) rose to 3.2% during August, from 2.0% in July.
  • The number of deals able to outpace inflation has not changed since last month, there is not one standard savings account that can outpace 3.2%*.
  • The predicted rate for inflation during Q3 2022 is 3.3%.
  • In September 2020, 661 deals (80 easy access, 72 notice accounts, 77 variable rate ISAs, 134 fixed rate ISAs and 310 fixed rate bonds) could beat 0.2% (August CPI) and in September 2019, 191 deals (163 fixed rate bonds, 20 fixed rate ISAs and eight notice accounts) could outpace 1.7% (August CPI)*.

Savings market analysis

Top savings deals at £10,000 gross

18-Sep-19

16-Sep-20

18-Aug-21

Today

Easy access account

Al Rayan Bank – 1.60%**

Skipton BS – 1.20%

Tandem Bank – 0.65%

Tandem Bank – 0.65%

Notice account

PCF Bank – 1.85% (180-day)

Secure Trust Bank – 1.17% (90-day)

DF Capital – 1.00% (120-day)

Oxbury Bank – 1.06% (120-day)

One-year fixed rate bond

BLME – 2.10%**

Secure Trust Bank – 1.25%

Tandem Bank – 1.31%

Atom Bank – 1.50%

Two-year fixed rate bond

BLME – 2.35%**

Secure Trust Bank – 1.35%

Atom Bank – 1.43%

Al Rayan Bank – 1.76%**

Three-year fixed rate bond

BLME – 2.45%**

UBL UK – 1.42% (on maturity)

Atom Bank – 1.52%

Al Rayan Bank – 1.81%**

Four-year fixed rate bond

BLME – 2.25%**

BLME – 1.35%**

JN Bank – 1.55%

JN Bank – 1.74%

Five-year fixed rate bond

Gatehouse Bank – 2.45%**

UBL UK – 1.55% (on maturity)

UBL UK – 1.72% (payable on maturity)

Atom Bank – 1.86%

**Islamic bank, pays an expected profit rate. Inflation announcement dates. Source: Moneyfacts.co.uk

 

 

ISA market analysis

Top savings deals at £10,000 gross

18-Sep-19

16-Sep-20

18-Aug-21

Today

Easy access ISA

Charter Savings Bank – 1.44%

Coventry BS – 0.96%

Cynergy Bank – 0.65%

Cynergy Bank – 0.60%

Notice ISA

Buckinghamshire BS – 1.50% (180-day)

Paragon Bank – 0.75% (40-day)

Aldermore – 0.35% (30-day)

Aldermore – 0.35% (30-day)

One-year fixed rate ISA

Cynergy Bank – 1.63%

Hampshire Trust Bank – 0.90%

OakNorth Bank – 0.77%

Hodge Bank – 0.90%

Two-year fixed rate ISA

Al Rayan Bank – 1.80%**

Marsden BS – 1.00%

Paragon Bank – 1.01 %

 Secure Trust Bank – 1.15%

Three-year fixed rate ISA

State Bank of India – 1.90%

Secure Trust Bank – 1.11%

Paragon Bank – 1.11%

Secure Trust Bank – 1.25%

Four-year fixed rate ISA

Hodge Bank – 1.80%

Coventry BS – 1.15%

UBL UK – 1.12% (payable on maturity)

UBL UK – 1.38% (payable on maturity)

Five-year fixed rate ISA

Metro Bank – 2.10%

UBL UK – 1.44% (on maturity)

UBL UK – 1.34% (payable on maturity)

UBL UK – 1.50% (payable on maturity)

**Islamic bank, pays an expected profit rate. Inflation announcement dates. Source: Moneyfacts.co.uk

Savings market analysis

Top savings deals at £10,000 gross

18-Sep-19

16-Sep-20

18-Aug-21

Today

Easy access account

Al Rayan Bank – 1.60%**

Skipton BS – 1.20%

Tandem Bank – 0.65%

Tandem Bank – 0.65%

Notice account

PCF Bank – 1.85% (180-day)

Secure Trust Bank – 1.17% (90-day)

DF Capital – 1.00% (120-day)

Oxbury Bank – 1.06% (120-day)

One-year fixed rate bond

BLME – 2.10%**

Secure Trust Bank – 1.25%

Tandem Bank – 1.31%

Atom Bank – 1.50%

Two-year fixed rate bond

BLME – 2.35%**

Secure Trust Bank – 1.35%

Atom Bank – 1.43%

Al Rayan Bank – 1.76%**

Three-year fixed rate bond

BLME – 2.45%**

UBL UK – 1.42% (on maturity)

Atom Bank – 1.52%

Al Rayan Bank – 1.81%**

Four-year fixed rate bond

BLME – 2.25%**

BLME – 1.35%**

JN Bank – 1.55%

JN Bank – 1.74%

Five-year fixed rate bond

Gatehouse Bank – 2.45%**

UBL UK – 1.55% (on maturity)

UBL UK – 1.72% (payable on maturity)

Atom Bank – 1.86%

**Islamic bank, pays an expected profit rate. Inflation announcement dates. Source: Moneyfacts.co.uk

 

 

ISA market analysis

Top savings deals at £10,000 gross

18-Sep-19

16-Sep-20

18-Aug-21

Today

Easy access ISA

Charter Savings Bank – 1.44%

Coventry BS – 0.96%

Cynergy Bank – 0.65%

Cynergy Bank – 0.60%

Notice ISA

Buckinghamshire BS – 1.50% (180-day)

Paragon Bank – 0.75% (40-day)

Aldermore – 0.35% (30-day)

Aldermore – 0.35% (30-day)

One-year fixed rate ISA

Cynergy Bank – 1.63%

Hampshire Trust Bank – 0.90%

OakNorth Bank – 0.77%

Hodge Bank – 0.90%

Two-year fixed rate ISA

Al Rayan Bank – 1.80%**

Marsden BS – 1.00%

Paragon Bank – 1.01 %

 Secure Trust Bank – 1.15%

Three-year fixed rate ISA

State Bank of India – 1.90%

Secure Trust Bank – 1.11%

Paragon Bank – 1.11%

Secure Trust Bank – 1.25%

Four-year fixed rate ISA

Hodge Bank – 1.80%

Coventry BS – 1.15%

UBL UK – 1.12% (payable on maturity)

UBL UK – 1.38% (payable on maturity)

Five-year fixed rate ISA

Metro Bank – 2.10%

UBL UK – 1.44% (on maturity)

UBL UK – 1.34% (payable on maturity)

UBL UK – 1.50% (payable on maturity)

**Islamic bank, pays an expected profit rate. Inflation announcement dates. Source: Moneyfacts.co.uk

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

“Savings rates have improved vastly since last month which will be great news for consumers looking for a competitive return on their cash. However, inflation overshadows the positive shift, as the latest figure of 3.2% is the largest rise month-on-month since records began and not one standard savings account can beat its eroding power. There is an expectation for inflation to stay above the Bank of England target of 2% for some time yet, but it is vital savers do not become apathetic as they could miss out on some of the best rates we have seen all year.

“Locking cash away for longer may not be feasible for some, indeed consumers may be reluctant to invest longer than a year at most due to the impact of the Coronavirus pandemic on their financial health. However, savings providers are keen to draw in business and fixed rates have been rising substantially in recent months. Savers can now get a one-year bond paying 1.50% (Atom Bank) but a year ago savers would have had to tie their money up for five years for a rate nearest to this return. Those who are averse to a fixed account will find easy access rates have improved since last month, but there is much more room for improvement as a year ago, savers could get a rate of 1.20% (Skipton Building Society).

“ISA’s are still worth considering for any saver yet to use their tax-free allowance, due to their longer-term advantages, and rates are thankfully rising in this arena. However, there remains a notable gap between fixed-rate ISAs and fixed-rate bonds. It would therefore be sensible for savers to compare the rates carefully and consider their Personal Savings Allowance. One of the savings providers to cause a stir in the fixed ISA market recently was Secure Trust Bank, it now leads both the two- and three-year fixed ISA sector with rates at 1.15% and 1.25% respectively.

“Keeping abreast of the changing savings market is vital, as savers could stand to miss out if a deal has a short shelf life or becomes oversubscribed quickly, so signing up to rate alerts and newsletters is wise. Due to the refreshing change to the market, it would not be too surprising if some savers decide to wait a little longer in the weeks ahead expecting more improvements to surface.”

*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.

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

“Savings rates have improved vastly since last month which will be great news for consumers looking for a competitive return on their cash. However, inflation overshadows the positive shift, as the latest figure of 3.2% is the largest rise month-on-month since records began and not one standard savings account can beat its eroding power. There is an expectation for inflation to stay above the Bank of England target of 2% for some time yet, but it is vital savers do not become apathetic as they could miss out on some of the best rates we have seen all year.

“Locking cash away for longer may not be feasible for some, indeed consumers may be reluctant to invest longer than a year at most due to the impact of the Coronavirus pandemic on their financial health. However, savings providers are keen to draw in business and fixed rates have been rising substantially in recent months. Savers can now get a one-year bond paying 1.50% (Atom Bank) but a year ago savers would have had to tie their money up for five years for a rate nearest to this return. Those who are averse to a fixed account will find easy access rates have improved since last month, but there is much more room for improvement as a year ago, savers could get a rate of 1.20% (Skipton Building Society).

“ISA’s are still worth considering for any saver yet to use their tax-free allowance, due to their longer-term advantages, and rates are thankfully rising in this arena. However, there remains a notable gap between fixed-rate ISAs and fixed-rate bonds. It would therefore be sensible for savers to compare the rates carefully and consider their Personal Savings Allowance. One of the savings providers to cause a stir in the fixed ISA market recently was Secure Trust Bank, it now leads both the two- and three-year fixed ISA sector with rates at 1.15% and 1.25% respectively.

“Keeping abreast of the changing savings market is vital, as savers could stand to miss out if a deal has a short shelf life or becomes oversubscribed quickly, so signing up to rate alerts and newsletters is wise. Due to the refreshing change to the market, it would not be too surprising if some savers decide to wait a little longer in the weeks ahead expecting more improvements to surface.”

*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.

Notes to editors

Pioneering financial comparison technology for over 30 years.

Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, business banking, life, pension and investment products in the UK.

Moneyfacts.co.uk is a financial product price comparison site, launched in 2000, which helps consumers compare thousands of financial products, including credit cards, savings, mortgages and many more. Unlike other comparison sites, there is no commercial influence on the way Moneyfacts.co.uk ranks products, showing consumers a true picture of the best products based on the criteria they select.

We hope you find this press release insightful. We would appreciate a link back to Moneyfacts.co.uk if you decide to source this information.

For more information about us please see our key facts.

 

Notes to editors

Pioneering financial comparison technology for over 30 years.

Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, business banking, life, pension and investment products in the UK.

Moneyfacts.co.uk is a financial product price comparison site, launched in 2000, which helps consumers compare thousands of financial products, including credit cards, savings, mortgages and many more. Unlike other comparison sites, there is no commercial influence on the way Moneyfacts.co.uk ranks products, showing consumers a true picture of the best products based on the criteria they select.

We hope you find this press release insightful. We would appreciate a link back to Moneyfacts.co.uk if you decide to source this information.

For more information about us please see our key facts.

 

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Rachel Springall Press Officer / Finance Expert
Eleanor Williams Press Officer / Finance Expert