All savers with Britain’s biggest high street banks are losing money in real terms after their pitiful savings rates were outstripped by the latest inflation figure.
Britain’s consumer prices index more than doubled to 0.5 per cent in September after prices in cafes and restaurants rose following the end of the Government’s Eat Out to Help Scheme.
But while 444 available savings accounts currently match or beat that rate, down from 661 last month, not a single one is offered by a major name, according to figures from Moneyfacts.
Savers with Britain’s biggest banks are seeing their savings squeezed by low rates and an increasing cost of living
Even savers who tie up their cash with the bigger banks will not protect their savings in real terms – even though elsewhere 268 fixed-rate bonds and 114 fixed-rate tax-free Isas pay 0.5 per cent or more.
And the best ‘bread and butter’ account available from a High Street savings provider pays just 0.25 per cent, or half the latest inflation reading from the Office for National Statistics on Wednesday.
Last month just 11 of the 661 inflation-matching savings accounts available on the market were offered by Britain’s biggest banks, despite prices increasing at their slowest rate in four years.
There are now 40 easy-access accounts and 37 Isas which pay at least 0.5 per cent available market-wide, Moneyfacts said, while the best rate in This is Money’s tables is almost double that, at 0.8 per cent.
Alistair McQueen, head of savings and retirement at Aviva, said: ‘Although a relatively low inflation rate is good news for household finances, many savers are struggling to find accounts offering more than 1 per cent interest, meaning that they’re often still seeing their savings being eroded.
‘In the current low interest rate environment we may see households having to increase their monthly savings contributions even more to offset smaller interest income in order to achieve their savings goals.’
Nationwide is the high street savings provider closest to offering an inflation-matching easy-access deal, but its best account still pays just 0.25% – half the latest CPI reading
But despite inflation not being particularly high, with the CPI reading the second-lowest it has been in the last 12 months after the 0.2 per cent figure seen in August, none of those accounts are offered by Barclays, Halifax, HSBC, Lloyds, Nationwide Building Society, NatWest, Royal Bank of Scotland, Santander or TSB.
Some of these banks pay as little as £1 interest on every £10,000 saved after they cut their savings rates earlier this year in response to the Bank of England reducing its base rate to a record low of 0.1 per cent.
Consumer price inflation ticked up to 0.5% in September after the Eat Out to Help Out scheme ended
And with savings rates falling further over the last month since Treasury-backed National Savings & Investments announced heavy cuts to its market-leading variable rate accounts, any further rise in the cost of living could see the number of available inflation-matching safe havens fall even further.
Moneyfacts’ Rachel Springall said: ‘Inflation may remain below the Government’s target, but it can still have eroding power on savers’ cash if they do not have it invested in an account that is paying them a decent return of interest.
What beats inflation?
According to Moneyfacts, the follow number of accounts pay at least 0.5%:
– 40 easy-access accounts
– 37 easy-access Isas
– 48 notice accounts
– 268 fixed-rate bonds
– 114 fixed-rate Isas
But none are offered by Britain’s biggest eight high street names
‘Stashing cash with a high street bank’s easy access account would net savers just £1 a year in interest on a £10,000 investment, based on a rate of 0.01 per cent. In comparison, they could earn £80 within the first year.
‘There may well continue to be consumers who have amassed some disposable income over the past six months or so and are debating where to put their cash.
A mix of easy access, short-term fixed and an Isa are all good choices to spread the investment, but it does entirely depend on how soon savers need access to their money.
‘As it stands, savers may be concerned about the months ahead, so it is vital they are comfortable with locking their money away, and if they are not, easy access may be the most appropriate choice.
‘As always, it is imperative they pick a lucrative offer and not leave their cash in an account that is being eroded by inflation.’