Jump to main content of pageaccessibility informationSitemap
7 Jul 2020

Go Direct Personal Finance News  2009

Jump in inflation continues to punish savers

Inflation figures released today show that the Consumer Price Index (CPI) has increased again to 3.70%.

To stop their savings pot effectively eroding away, a basic rate tax payer needs to find an account paying 4.63%, while a higher rate tax payer needs to find an account paying 6.17%.

Basic rate tax payers have a choice of 20 accounts to break even, while only one account is available to higher rate tax payers.

The 20 accounts on the market that do beat inflation are only likely to be suitable for a small proportion of savers. To qualify for these accounts, savers need to open a fee paying current account, invest in a riskier investment product or commit funds for five years.

Paying 8.00%, the HSBC Preferential Saver is the only product that beats inflation for higher rate tax payers, but savers need to hold or open a fee paying account with the provider to qualify. Thereafter the amount that can be invested is restricted to £250 per month (£3,000 over the one year term).

Inflation continues to lessen the real return savers can achieve. The real return after basic tax and inflation on an average no notice account today stands at minus 4.72%.

Darren Cook, spokesman for Moneyfacts.co.uk commented:

“Rises in the rate of inflation continue to antagonise savers who are already struggling to achieve a competitive rate of return on their money.

“Prudent savers are being left out in the cold and are finding it near impossible to combat the effects of tax and inflation.

“Basic rate tax payers need to earn 4.63% just to break even, while higher rate tax payers need to earn 6.17% a level that is only available on a handful of products.

“The qualifying restrictions on those products that do beat  tax and inflation are likely to be suitable for only a small proportion of savers.

“A spiralling inflation rate, which could be aggravated by the predicted rise in VAT can only point towards a bank base rate increase sooner rather than later.”

Real Return on Average Savings Rate

Moneyfacts Group
Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry.



Think carefully before securing other debts against your home, your home may be repossessed if you do not keep up repayments on your mortgage.

Go Direct.co.uk is a trading style for website purposes of Go Direct UK Ltd.

Go Financial Services is a trading style of Go Direct UK Ltd which is an appointed representative of Personal Touch Financial Services Ltd which is authorised and regulated by the Financial Conduct Authority. Registered in England & Wales Company 5703224. FCA Number 456600

We normally do not charge a fee for mortgage advice, however this is dependent on your circumstances. Our typical fee would be £500

Remortgage | Mortgage Guide | Remortgage Guide | Life Insurance Quote | Mortgage Life Insurance | Decreasing Life Insurance | Home Insurance Quote | Conveyancing Quote | Mortgage Comparison | Free Mortgage Advice | Mortgage Rates | Mortgage Payment Calculator | Mortgage Protection | Best Mortgage | Mortgage Lenders | Income Protection | Remortgage Lenders | Gas and Electric | Remortgage Calculator