Caitlyn Eastell, Personal Finance Analyst at Moneyfactscompare.co.uk, said:

“With the cost of living continuing to put pressure on households, savers can’t afford to be complacent about where their money is held. Watching a savings balance creep up can offer reassurance, but if the interest earned fails to keep pace with inflation, that money is effectively losing spending power. The difference can be stark. On a £10,000 balance, choosing the top one-year fixed rate over an account paying just 2% could leave savers around £315 better off in real terms over a year. 

“While volatile swap rates have created uncertainty for borrowers, they have helped push fixed rate bonds to their most attractive levels in years. Top fixed terms of one year or more have climbed above 5% for the first time since December 2023, giving savers a timely opportunity to secure a competitive return and protect themselves against falling rates in the future. The difference in the longer term is striking; in October 2021, the top five-year bond paid just 2%, compared with 5.37% today. On £10,000 that could mean earning around £1,950 more in interest over five years. For savers who can afford to put their money aside, fixing could offer valuable certainty. 

“Those who require more flexibility needn’t miss out, either. The top easy access rate has risen from 0.65% five years ago to 4.89% today, giving savers a much stronger return while keeping their cash accessible. However, improvements across the market may not translate into better rates on existing accounts. Savers should regularly review what they are earning and compare alternatives, as loyalty to a provider does not always pay.

“Although inflation remains a challenge, savers should not assume the worst. Just over one in four savings accounts lag behind inflation, while more than 1,600 deals offer a positive real return. Simply comparing and switching deals can be one of the quickest ways for savers to improve their returns without having to save more.”

*Data note: Please note that these savings product numbers include deals that are available to UK residents (easy access accounts, notice accounts, fixed rate bonds, variable Cash ISAs and fixed Cash ISAs) and exclude regular savers, children’s savers, variable rate fixed term bonds or ISAs, JISAs and LISAs, based on a £10,000 deposit, gross rates. Higher rates may be available for other levels of deposit.