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Savings rates: Best inflation-beating ISA & savings deals shared but savers must act fast

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Inflation figures were released today, with it being revealed that the CPI dropped from 0.7 percent to 0.4 percent in February. As the CPI has dropped to unprecedented lows it now means various ISAs and savings accounts are available which will offer inflation beating rates but savers have been warned to act fast on this.

Neil Messenger, a Director at 1825, explained how low inflation rates may not last for much longer: “While inflation stays subdued for now, the Bank of England has signalled it has a close eye on the potential end of the low-inflation era.

“Expectations hint at inflation rising rapidly this year and well above its two percent target by 2022, as the post-Brexit and post-pandemic environment becomes clearer.

“People living off savings, like retirees, should be paying extra attention to the headline rate. “Rising inflation means their money needs to work harder simply to keep up with the cost of day to day life, from the food shop through to weights needed to kit out the home gym.

“Anyone in, or approaching, retirement should factor rising inflation rates into their future financial plans and ensure that their annual budget rises accordingly.”

READ MORE: Nationwide customers can get 2% interest rate on savings

According to moneyfacts.co.uk the best savings and ISA deals can be found with the following:

  • Easy access account, Virgin Money – 0.50 percent
  • Notice account, Charter Savings Bank – 0.65 percent (120-day)
  • One-year fixed rate bond, Ahli United Bank (UK) plc (Through Raisin UK) – 0.65 percent
  • Two-year fixed rate bond, QIB (UK) (Through Raisin UK) – 0.80 percent
  • Three-year fixed rate bond, BLME – 1.00 percent
  • Four-year fixed rate bond, BLME – 1.05 percent
  • Five-year fixed rate bond, Hodge Bank – 1.30 percent
  • Easy access ISA – Al Rayan Bank – 0.60 percent
  • Notice ISA Marsden BS – 0.55 percent (95-day)
  • One-year fixed rate ISA Charter Savings Bank – 0.50 percent
  • Two-year fixed rate ISA State Bank of India – 0.65 percent
  • Three-year fixed rate ISA Charter Savings Bank – 0.75 percent
  • Four-year fixed rate ISA Hodge Bank – 0.65 percent
  • Five-year fixed rate ISA Shawbrook Bank – 1.10 percent

Rachel Springall, a Finance Expert at moneyfacts.co.uk, commented on the recent inflation news: “The impact of inflation on savings returns may not be as prevalent today due to the fall, but with the expectations for it to rise above two percent this year, soon there may be not one standard savings account that can fight its eroding power.

“Month-on-month there has been a notable drop in the rates offered across some top rate deals, showing signs that cuts are still a frustrating trend.

“Those savers who decide to put their cash in an easy access account may well do so due to the continued uncertainty.

“If savers are doing so for convenience rather than chasing the top rates, it is still important that they check the terms and eligibility criteria of their account, as there are many easy access accounts now that restrict withdrawals or require savers to open a separate account with the institution to get the top rate.

“Savers may well be hoping to see some decent ISA deals as there is little time left to take advantage of the 2020/21 ISA allowance, and while we have seen some deals launch, the top fixed ISAs available are in fact worse than a month ago.”

Rachel concluded by reiterating the importance of acting quickly: “If savers were to be coming off the top one-year fixed ISA rate from March 2020 and wish to fix into the top deal today, they will note a staggering rate difference of 0.86 percent and on an investment of £20,000 – that is a loss of £172 in one year.

“The changing savings landscape from the past 12 months and state of play only reiterate the need for savers to keep a close eye on the top rate deals and act quickly if they wish to take advantage.

“Challenger banks and mutuals continue to offer some of the best returns this month but there is no guarantee these deals will last long.”

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