19 Apr 2024

Savers the Forgotten Casualties

Inflation figures released today show the Consumer Prices Index (CPI) in March stuck at 2.8%.

To beat inflation, a basic rate taxpayer at 20% needs to find a savings account paying at least 3.50% per annum, while a higher rate taxpayer at 40% needs to find an account paying at least 4.66%.

Although there are 868 standard savings accounts in the market, not a single ‘non-ISA’ account negates the impact of tax and inflation regardless of your tax position. Even with the tax advantage, there are only seven cash ISAs that beat inflation.

The impact of inflation on savings means that £10,000 invested five years ago, allowing for average interest and tax at 20%, would have the spending power of just £8,870 today.

Sylvia Waycot, editor at Moneyfacts.co.uk, said:

“Savers could be forgiven for thinking they are the forgotten casualties from volatile inflation.

“This might be because the word ‘savers’ conjures up wealth when the reality is more to do with making ends meet.

“Many people, particularly pensioners, rely on savings interest to fund day-to-day living expenses and today’s announcement will not ease the burden of a dwindling spending power from what are meagre savings returns.

“Anyone looking to save will need to do their homework first because despite it being full blown ISA season there are depressingly, only seven ISA accounts that beat tax and inflation out of 248 ISA on the market.

“Today, the average easy access account pays 0.77% as opposed to 0.84% last year.

“Settling for a fixed bond today will give you a much lower return of interest compared to this time last year, when you could get 3.9% over a two-year deal, compared to under 2.6% today.”

Fixed Cash ISAs
Provider	Account	Term	Rate	Notes
Halifax	ISA Saver Fixed	5 Year Bond	3.10%	Earlier access on closure only on 365 day loss of interest. Can apply online.
Principality BS	5 Year Fixed Rate Cash ISA Issue 108	5 Year Bond	3.10%	Earlier closure on 360 day loss of interest.
Halifax	ISA Saver Fixed	4 Year Bond	3.05%	Earlier access on closure only on 320 day loss of interest. Can apply online.
Halifax	ISA Saver Fixed	3 Year Bond	3.00%	Earlier access on closure only on 270 day loss of interest. Can apply online.
Skipton BS	5 Year Fixed Rate ISA	14.05.18	3.00%	Earlier access on closure only on 240 day loss of interest.1st interest payment 14.5.14.
Source Moneyfacts.co.uk Compiled 16.4.13

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.

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