Inflation taking its toll on your cash reserves

Inflation taking its toll on your cash reserves

9:24 AM, 18th November 2021, About 2 weeks ago

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The savings market has seen some top-rate accounts improving since last month, but not on shorter-term fixed bonds. However, inflation continues to take its toll on the true spending power cash. 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 4.2% during October, from 3.1% in September.

The number of deals able to outpace inflation has not changed since last month. There is not one standard savings account that can outpace 4.2%.

The predicted rate for inflation during Q4 2022 is 3.4%.

In November 2020, 227 deals (seven easy access, 17 notice accounts, four variable rate ISAs, 38 fixed rate ISAs and 161 fixed rate bonds) could beat 0.7% (October CPI) and in November 2019, 224 deals (168 fixed rate bonds, 40 fixed rate ISAs and 16 notice accounts) could outpace 1.5% (October CPI).

Savings market analysis
Top savings deals at £10,000 gross 13-Nov-19 18-Nov-20 20-Oct-21 Today
Easy access account Coventry BS – 1.46% ICICI Bank UK – 0.75%*** Coventry BS – 0.65% Shawbrook Bank – 0.67%
Notice account Gatehouse Bank – 1.82% (120-day)** UBL UK – 1.00% (35-day) OakNorth Bank – 1.06% (120-day) Secure Trust Bank – 1.10% (120-day)
One-year fixed rate bond Gatehouse Bank – 1.85%** Al Rayan Bank – 1.08%** Gatehouse Bank – 1.51%** Union Bank of India (UK) Ltd – 1.35%
Two-year fixed rate bond Al Rayan Bank – 2.15%** Al Rayan Bank – 1.25%** Al Rayan Bank – 1.76%** Gatehouse Bank – 1.60%**
Three-year fixed rate bond Al Rayan Bank – 2.30%** Al Rayan Bank – 1.41%** JN Bank – 1.81% UBL UK – 1.85%
Four-year fixed rate bond BLME – 2.10%** BLME – 1.30%** Gatehouse Bank – 1.92%** Gatehouse Bank – 1.92%**
Five-year fixed rate bond UBL UK – 2.47% (on maturity) BLME – 1.50%** Gatehouse Bank – 2.05%** UBL UK – 2.14%
**Islamic bank, pays an expected profit rate. ***NS&I excluded from top rate position as rates were due to be cut. Inflation announcement dates. Source: Moneyfacts.co.uk
ISA market analysis
Top savings deals at £10,000 gross 13-Nov-19 18-Nov-20 20-Oct-21 Today
Easy access ISA Virgin Money – 1.36% Paragon Bank – 0.65% Cynergy Bank – 0.65% Shawbrook Bank – 0.67%
Notice ISA Aldermore – 1.30% (30-day) Teachers BS – 0.70% (90-day) Aldermore – 0.55% (30-day) Aldermore – 0.55% (30-day)
One-year fixed rate ISA Al Rayan Bank – 1.60%** Virgin Money – 1.00% Castle Trust Bank – 0.90% West Brom BS – 1.00%
Two-year fixed rate ISA Al Rayan Bank – 1.80%** Newcastle BS – 0.80% West Brom BS – 1.15 % West Brom BS – 1.25%
Three-year fixed rate ISA Hinckley & Rugby BS – 1.76% Coventry BS – 0.85% West Brom BS – 1.25% West Brom BS – 1.50%
Four-year fixed rate ISA Hodge Bank – 1.55% Hodge Bank – 0.75% UBL UK – 1.38% (payable on maturity) UBL UK – 1.38% (payable on maturity)
Five-year fixed rate ISA UBL UK – 2.09% (on maturity) UBL UK – 1.18% (on maturity) UBL UK – 1.56% (payable on maturity) West Brom BS – 2.00%
**Islamic bank, pays an expected profit rate. Inflation announcement dates. Source: Moneyfacts.co.uk

Rachel Springall, Finance Expert at Moneyfacts.co.uk, said: “Inflation erosion on the true spending power of cash persists and any attempts to ease the strain is unlikely to ease the frustration of savers in a low-interest rate environment.

“Easy access accounts remain a firm favourite among savers due to their flexibility and rates have improved since last month, but the top rate today still pays less than the best rate offered a year ago. However, it is the fixed bond market that has shown more notable improvements to rates compared to a year ago, and savers can now get a better rate on a one-year bond than they could have secured on a two-year bond last November. Fixed-rate ISAs have also improved this month, but there remains a notable difference in rate compared to fixed bonds. If savers are comparing bonds and ISAs, then it’s vital they consider their Personal Savings Allowance as fixed bonds pay higher rates.

“Interest rates on savings accounts on average dropped to record lows this year so the continued improvements to the top cash savings rates is positive, but in real terms, inflation is still taking its toll even on the best rates. The murmurings of a base rate rise could mean a further uplift to interest rates, but savers would be wise not to wait around for this to come to fruition. Competition among challenger banks and building societies is evident in the top rate tables and savers would be wise to act with pace to take advantage.”



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