British people could potentially gain an additional £1,000 in real terms on their savings, says the analysis, as providers offer competitive interest rates that exceed inflation levels.
The current financial climate is favourable to savers, with 14 successive rises in the base rate, which has remained stable at 5.25% since August 2023. Consequently, there is a wide range of savings products that outperform inflation.
Prolific Savings Offers
Currently, Moneyfactscompare.co.uk has found that there are a staggering 1,364 general savings offers, including Easy Access and Notice accounts, as well as ISAs and bonds, which are bucking the inflationary trend.
As one of the leading easy access accounts, Ulster Bank’s Loyalty Saver is offering a variable rate currently set at 5.2% for savers with more than £5,000 in their account.
This means that a £50,000 deposit generates £2,600 in a year, or £1,000 in real terms when inflation is taken into account.
The QIB (UK) Raisin UK one-year fixed term deposit allows savers to earn hundreds of pounds in interest for those who can afford to put their money away for 12 months. On a £10,000 deposit, savers can expect around £510 in interest for the year.
The Bank of England relies on the rate of inflation to determine whether it should raise or lower its base rate, with the aim of stimulating borrowing or spending. Although inflation has not yet reached the 2% target, cuts are expected later this year.
Currently, the financial markets are forecasting that interest rates will fall for the first time in June 2024, reaching around 3% by the end of 2025. Therefore, savers are encouraged to take advantage of the best possible rate while it is available, as these rates may start to fall.
The Moneyfacts experts pointed out that most of the top savings rates have been flat for a while, but it is still possible to get accounts offering more than 5% AER.
The Wombat Invest – Base Rate Tracker account from GB Bank is the best easy-access account for those with less than £5,000 in savings, offering an annual rate of return of 4.91% on balances over £500.
Plum’s Attractive Easy Access Cash ISA
In addition, Plum offers the best easy-access Cash ISA with a rate of 5.17%, including a Plum Bonus of 0.88% in the first year. However, to qualify for the bonus rate on new contributions, customers must meet certain conditions.
In order to qualify for the bonus rate, customers must:
- Maintain a minimum balance of £100
- Make no more than three withdrawals in a year
Should the balance of new contributions fall below £100 or if more than three withdrawals are made, the rate falls to 3% of the AER.
Rachel Springall, financial expert at Moneyfacts, points out that easy-access accounts earn just over three per cent on average, but the best deals earn around five per cent. This means that someone earning around the average rate of 3% or less is losing money in real terms, as the CPI is 3.2%.
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