Inflation erosion on savings accounts intensifies

Inflation erosion on savings accounts intensifies

10:04 AM, 17th February 2021, About 3 years ago 2

Text Size

The number of inflation-beating accounts on the UK savings market has fallen month-on-month and there has been a rise in inflation. The latest analysis from reveals the options available to savers to beat the current level of inflation today.

– The Consumer Price Index (CPI) rose to 0.7% during January, from 0.6% in December.

– The number of deals able to outpace inflation has fallen since last month’s announcement, due to a rise in inflation of 0.10%, from 157 in total that beat 0.6%, to 100 today that beat 0.7%.

– Standard savings accounts that can now match or beat inflation* (0.7%) include two easy access accounts, two notice accounts, two variable rate cash ISAs, 24 fixed rate ISAs and 92 fixed-rate bonds (based on a £10,000 deposit).

– Standard savings accounts that beat 0.7% include two easy access accounts, two notice accounts, one variable rate ISA, 17 fixed rate ISAs and 78 fixed-rate bonds.

– The predicted rate for inflation during Q1 2022 is 2.1%, but there are no standard savings accounts currently able to beat this.

– In February 2020, 21 deals (all fixed-rate bonds) could beat 1.8% (January CPI) and in February 2019, 194 deals (158 fixed bonds, 30 fixed ISAs and six notice accounts) could outpace 1.8% (January CPI).

Savings market analysis
Top savings deals at £10,000 gross 13-Feb-19 19-Feb-20 20-Jan-21 Today
Easy access account ICICI Bank UK – 1.54% Marcus by Goldman Sachs® – 1.34% ICICI Bank UK – 0.60% ICICI Bank UK – 0.60%***
Notice account Charter Savings Bank – 1.90% (95-day) BLME – 1.70% (90-day)** ICICI Bank UK – 0.85% (95-day) ICICI Bank UK – 0.85% (95-day)****
One-year fixed rate bond BLME – 2.15%** Atom Bank – 1.65% QIB (UK) – 0.80%** QIB (UK) – 0.65%**
Two-year fixed rate bond Al Rayan Bank – 2.40%** Atom Bank – 1.80% Gatehouse Bank – 1.10%** Gatehouse Bank – 1.10%**
Three-year fixed rate bond Al Rayan Bank – 2.50%** FCMB Bank (UK) – 1.90% Gatehouse Bank – 1.25%** Gatehouse Bank – 1.25%**
Four-year fixed rate bond Vanquis Bank – 2.52% BLME – 1.95%** BLME – 1.05%** BLME – 1.05%**
Five-year fixed rate bond BLME – 2.70%** Gatehouse Bank – 2.10%** Gatehouse Bank – 1.50%** Gatehouse Bank – 1.50%**
**Islamic bank, pays an expected profit rate. ***Rate is reducing to 0.50% on 1.3.21. ****Rate is reducing to 0.55% on 15.3.21 and 0.35% on 3.5.21. Inflation announcement dates. Source:


ISA market analysis
Top savings deals at £10,000 gross 13-Feb-19 19-Feb-20 20-Jan-21 Today
Easy access ISA Virgin Money – 1.45% Al Rayan Bank – 1.35% Al Rayan Bank – 0.60%** Al Rayan Bank – 0.60%**
Notice ISA Charter Savings Bank – 1.45% (95-day) Paragon Bank 1.31% (120-day) Aldermore – 0.55% (30-day) Marsden BS – 0.55% (95-day)
One-year fixed rate ISA Shawbrook Bank – 1.74% OakNorth Bank– 1.41% Al Rayan Bank – 0.65%** Al Rayan Bank – 0.65%**
Two-year fixed rate ISA Shawbrook Bank – 1.91% Al Rayan Bank – 1.50%** Gatehouse Bank – 0.80%** Gatehouse Bank – 0.80%**
Three-year fixed rate ISA Coventry BS – 2.05% Virgin Money – 1.55% Gatehouse Bank – 0.90%** Gatehouse Bank – 0.90%**
Four-year fixed rate ISA Hodge Bank – 1.80% Hodge Bank – 1.55% Hodge Bank – 0.65% Hodge Bank – 0.65%
Five-year fixed rate ISA Coventry BS – 2.30% Cambridge BS – 1.70% Gatehouse Bank – 1.30%** Gatehouse Bank – 1.30%**
**Islamic bank, pays an expected profit rate. Inflation announcement dates. Source:

Rachel Springall, Finance Expert at, said:

“The eroding power of inflation on cash savings is getting worse – not only has the number of savings of accounts that can beat inflation fallen, but some top deals have also been cut over the past month. Those savers who are hoping to earn a decent return on their cash will be disappointed by the current state of the market, but they should not be discouraged to switch if they are on a poor rate.

“Inflation is predicted to climb to 2.1% during Q1 2022, and right now not one standard savings account could beat this, nor the Government’s target of 2%. The top rate deal on the market today stands at 1.50% on a five-year fixed-rate bond as an expected profit rate from Gatehouse Bank. In real terms, savers’ cash would depreciate based on those levels.

“Fixed rates may offer the highest returns on a standard savings account, but due to the Coronavirus pandemic’s influence on the everyday finance of consumers, some may wish to have their cash more accessible just in case. If they are looking for a top easy-access account, the best is currently on offer from ICICI Bank UK, paying 0.60%, but this will drop to 0.50% next month. Assessing the top rates in this sector, savers will notice many of the best deals now pay 0.50%, including the recent re-entry from Marcus by Goldman Sachs®. The best deal for a consumer then maybe more than just the rate, it would be its accessibility and whether it applies any withdrawal restrictions.

“Savers searching for the best rates will find that challenger banks continue to take the top spot in many areas across the market, as they did last month. The need to chase a top rate and review any existing account could not be greater considering interest rates now sit at an all-time low, so considering the more unfamiliar challenger banks is a wise choice.”

Share This Article


Chris Bradley

15:55 PM, 17th February 2021, About 3 years ago

Guess it's time to spend instead of save. Already paid of one mortgage. Can always borrow at lower rates if need the cash

Mick Roberts

9:56 AM, 20th February 2021, About 3 years ago

It's not sensible to leave large amounts languishing in bank accounts losing money with inflation.
At least get some in Premium Bonds with hope, & sensible people now ought to think more of using the word Investing instead of saving. Only stuff u may not need for 5 years though.

Leave Comments

In order to post comments you will need to Sign In or Sign Up for a FREE Membership


Don't have an account? Sign Up

Landlord Tax Planning Book Now