The 12 inflation-beating savings accounts
The official measure of UK inflation remains high at 4.4% - over twice the levels of the government's 2% target.
Meanwhile, the retail prices index (RPI), which includes council tax and mortgage payments, has stayed at 5%.
High inflation means there are now only 12 accounts available if you are looking for an account that gives a return.
Basic rate taxpayers can choose from eight accounts that negate the effects of tax and inflation, all of which are fixed-rate ISAs.
However, there are only three accounts available that beat Retail Price Index at 5.00%.
THE INFLATION BEATERS
|Chelsea BS||Combination Fixed Rate ISA||5.00%||30.9.12||£1,000*|
|Yorkshire BS||Combination Fixed Rate ISA||5.00%||30.9.12||£1,000*|
|Barnsley BS||Combination Fixed Rate ISA||5.00%||30.9.12||£1,000*|
|Birmingham Midshires||Five Year Fixed Rate ISA||4.65%||Five years||£500|
|Clydesdale Bank||Cash ISA Fixed Rate Bond Issue 11||4.50%||29.4.16||£2,000|
|Yorkshire Bank||Cash ISA Fixed Rate Bond Issue 11||4.50%||29.4.16||£2,000|
|Principality BS||ISA Builder five-Year Plan||4.50%||Five years||£5,340*|
|United Trust Bank||Five Year Fixed Cash ISA||4.45%||Five years||£5,340|
* Savers must invest at least 70% of total investment in an Aviva investment product.
Source: Moneyfacts.co.uk 15.8.11
Along with these accounts there are a further four inflation-linked accounts
INFLATION-LINKED ACCOUNTS (LISTED ALPHABETICALLY)
|Cambridge BS||Inflation Linked Bond||1.00% plus RPI||16.9.16||£5,000|
|Post Office||Inflation Linked Bond Issue 2||0.50% plus RPI||10.10.14||£500|
|Post Office||Inflation Linked Bond Issue 2||1.50% plus RPI||11.10.16||£500|
|Santander||Inflation Linked Bond Issue 4||110% of the growth in the Retail Prices Index, or a guaranteed minimum return of 12%, plus original investment returned||1.4.17||£1|
Source: Moneyfacts.co.uk 15.8.11
Replaced as the official measure of inflation by the consumer prices index (CPI) in December 2003. Both the Retail Price Index and CPI are attempts to estimate inflation in the UK, but they come up with different values because there are slight differences in what goods and services they cover, and how they are calculated. Unlike the CPI, the RPI includes a measure of housing costs, such as mortgage interest payments, council tax, house depreciation and buildings insurance, so changes in the interest rates affect the RPI. If interest rates are cut, it will reduce mortgage interest payments, so the RPI will fall but not the CPI. The RPI is sometimes referred to as the “headline” rate of inflation and the CPI as the “underlying” rate.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).