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Hundreds of savings accounts are now offering interest rates above inflation

Savers can still snap up a great deal as top interest rates are more than double inflation.

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If the interest rate is higher than inflation it gives your money more purchasing power.

Interest rates on savings accounts have been competitive for the past few years, with peak rates hitting 6% last September. 

However, during this time the UK’s annual inflation rate had slowed to 6.7% in August so the top interest rates were not higher than inflation. 

It’s a different story today, as top savings rates remain high at just over 5%, and inflation has now slowed to 2.3%. This means savers can take advantage of interest rates that are more than double inflation. This is good news as if the interest rate is higher than inflation it gives your money more purchasing power. 

The good news continues as our data* shows that out of 1,735 products in the market, there are 1,642 savings accounts that now offer an interest rate above 2.3%.

This means there is no reason for savers to leave their money in an account that has an interest rate below inflation. 

So, as the savings account market is booming, which account is the right one for you? Here, we look at the top interest rates for each type of savings account…

Easy access accounts

Easy access savings accounts are perfect for savers that want to earn interest on their money, but may also need the flexibility of accessing it when they need it. Oxbury currently has the top rate for this type of account at 5.02%, but you’ll need an opening balance of £20,000 and if the balance falls below this amount the interest is not paid.

Kent Reliance has a more accessible easy access account as its offering can be opened with £1,000 and this has an interest rate of 4.96% if there are only two withdrawals in 12 months. It’s also important to check the terms and conditions of easy access accounts and assess which one works best for you. Plus, easy access accounts normally have a variable interest rate which means it can go up and down. 

Fixed-rate accounts 

Alternatively, fixed-rate accounts offer savers the chance to lock away their money for a set period of time and they’ll be rewarded with a fixed interest rate. 

National Bank of Egypt UK via Raisin currently has a one-year fixed-rate account at 5.22% and this has a minimum opening balance of £10,000. This account is exclusive to Raisin and guarantees a competitive interest rate for 12 months. 

For savers keen to lock away their money for longer, Raisin continues to be a good place to explore as it has a five-year fixed-rate account from Işbank at 4.75%. This is still more than double the inflation rate and it can be opened with £1,000. 

Notice savings accounts 

Notice savings accounts offer a happy medium to savers as they have high interest rates and no fixed-term. The only condition is that savers provide a set amount of notice before withdrawing their money. For example, Investec is currently offering a 90-day notice savings account at 5.25% and this can be opened with a minimum deposit of £5,000. This is a great interest rate as it not only beats inflation but matches the Bank of England’s base rate.

Cash ISAs 

Plus, don’t forget about cash ISAs as this offers tax-free saving up to £20,000. Interest rates are normally slightly lower but the trade off is that you won’t pay any tax on the cash you earn via the interest rate. 

Plum’s cash ISA is competitive at 5.17% and this includes a bonus rate of 0.88% for the first 12 months. However, there are some terms to adhere to, for example the balance must be above £100 and no more than three withdrawals in 12 months. 

In terms of fixed-rate cash ISAs, United Trust Bank has a one-year bond at 4.78% and this can be opened with a minimum deposit of £5,000. 

*Data sourced by money.co.uk and Defaqto on May 30, 2024. 

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About Lucinda O'Brien

As a trained journalist, Lucinda has spent the past 10 years writing and editing content for regional and national titles, including The Mirror, WalesOnline and Manchester Evening News. She is now a personal finance editor and specialises in savings, helping people to make confident financial decisions so they can save for what matters most.

View Lucinda O'Brien's full biography here or visit the money.co.uk press centre for our latest news.