Six savings accounts to beat inflation

Published by Adam Williams on 27 June 2017.
Last updated on 14 November 2017

Nine savings accounts to beat 2.9% inflation

Savers are facing a new battle as the UK’s rate of inflation continues to be higher than the interest rate offered by almost all savings accounts.

The consumer prices index (CPI) rate of inflation was 3% in the year to September 2017, according to the Office for National Statistics.

This means that no available-to-all savings accounts currently pay a level of interest that beats inflation.

How can I make my cash beat inflation?

While there are no open-to-all accounts that beat 3%, there are a small number of regular savings accounts which do pay more than inflation. However, all require you to have a current account with the provider.

Consumers with a First Direct current account, HSBC Advance or Premier account, M&S Bank current account, Nationwide Flex account or Santander 123 account can access linked regular savings accounts offering 5% interest.

However, these accounts have limits to the amount holders can pay in each month.

Provider

Interest rate
(AER)

Savings limits
(per month)

First Direct Regular Saver

5%

£25 - £300

Nationwide Flexclusive Regular Saver

5%

£1 - £250

HSBC Regular Saver

5%

£25 - £250

M&S Bank Monthly Saver

5%

£25 - £250

Santander 123 Regular eSaver

5%

£1 – £200

Remember these accounts are regular savers – designed for you to drip feed cash into over the course of a year.

Let’s use Nationwide’s 5% regular saver as an example. You can save £250 a month in this account, but you only earn interest while your cash is in the account.

This means your first £250 deposit earns 5% interest for a full 12 months, the second £250 earns it for 11 months and so on. 

Other accounts to beat inflation

Current accounts could be a good bet for your savings – especially if you want easy access. However, only one current account on the market beats 3% inflaton. It also has a minimum monthly pay-in and other restrictions, such as including a bonus for the first year.

The Nationwide FlexDirect account pays 5% interest on balances up to £2,500 for the first year, but this drops to 1% thereafter. You have to deposit at least £1,000 each month into the account to earn this 5% rate of interest. 

Use the Moneywise model savings portfolio to beat inflation

Savvy savers can also use the Moneywise model savings portfolio in the fight against inflation.

Created in conjunction with advice site Savings Champion, our two portfolios use high interest current accounts, regular savers and one-year bonds to maximise your total return. The £10,000 portfolio currently returns an inflation-busting 3.28% over a year.

Money is drip fed through the accounts to achieve the best returns. There is some legwork involved in setting up this portfolio, but we think the returns make it worthwhile.

Read our guide to getting the most out of your savings.

Leave a comment

You people need to go on a

You people need to go on a basic maths course,a regular saver only accumulates at the full rate for one month of the year,example Lloyd bank pays 5% per annum if you deposit £400 in January you will only get the full 5% for that month all other months will only be in for part of the year are and reduced accordingly.

Unbelievable - I came to this

Unbelievable - I came to this article because I was wondering what these accounts were that I had missed. However the article is simply and quite significantly incorrect - bit scary from a financial source! I hadn't missed anything - the headline rates of 5% are certainly higher than inflation at 2.6% but the annual interest on a Regular Saver is effectively only half the headline rate, so coming in at 2.5%. Perhaps still worth having but certainly not inflation beating!

Colin and Garry, you need to

Colin and Garry, you need to be more respectful, this article is not incorrect at all. A regular saver is a drip feed account, it is not meant to be a lump sum account, and neither does this article claim it to be. Yes, you're correct in that the interest amount awarded at the end will be the equivalent of half the total amount when looking at the headline figure vs. the rate, but you fail to account for the money that hasn't yet been dripped in earning interest in other accounts. Every single pound in a regular saver earns the advertised interest rate at all times, so it's absolutely inflation beating. You both seem to understand the concept of a regular saver, but seem to forget that interest is calculated daily, not annually with these accounts.

Where are the nine savings

Where are the nine savings accounts to beat 2.6% inflation? The article only lists 6,

Correction: The Nationwide

Correction: The Nationwide Flexclusive Regular Saver has a maximum monthly savings limit of £250 not £500 as stated (sadly).

The above savings accounts

The above savings accounts are all very well, however, they require a regular amount going into the account each month, and other necessary procedures/payments. As a pensioner with moderate means, this virtually rules me and many other pensioners out.
With a static income, there is no chance of making a little more.

Hi Lobby, the accounts which

Hi Lobby, the accounts which pay more than inflation are the regular savers from First Direct, HSBC, Lloyds Bank, M&S Bank, Nationwide and Santander. Plus the current accounts from Nationwide, Tesco Bank and TSB – these are strictly current accounts rather than savings accounts but each of them pays a high rate of interest and charges no monthly fee. Although note that the each of these accounts have minimum pay-ins and some other restrictions.

Hi Mags, some of the regular

Hi Mags, some of the regular savers the article mention only require a minimum monthly pay in of £1 so you don't need to have lots of money to make a gain. It can be £1 one month and the next if you have a little more you can pay in £10 for example. So you shouldn't feel ruled out, of course other conditions apply such as having a current account with the bank too but there are a few providers who do not impose these requirements. Ford Money had a really popular one, (£25-£250 pm deposits) it was so popular they closed it early, it's not currently available but I would recommend bookmarking their website and then checking in from time to time.

Re savings accounts. As a

Re savings accounts. As a pensioner with a low income but some savings, nothing on offer will keep me up with inflation. I cannot afford to make regular payments into the accounts you suggest - they all require a reasonable regular income.
How about a pensioners special from you instead of quoting accounts which we are unable to access.

Hi M, some of the regular

Hi M, some of the regular saver accounts we have selected can be opened and maintained with deposits of £1 per month. Each of the accounts currently selected do require a linked current account, and these all have minimum pay-ins, but you can usually meet these by moving around your existing cash each month. You can read more on this in our guide to "current account ping pong"

The Nationwide Flex regular

The Nationwide Flex regular saver monthly limit is £500 not £250 as stated and joint account holders can each have one - so that is £1000. My wife and I have held these for 2 years. Nationwide do not make the joint bit obvious!

Hi Keith, I'm afraid to say

Hi Keith, I'm afraid to say that while you may have a regular saver accepting £500 a month, Nationwide has since lowered that monthly limit to £250 for new account openings.