November 13, 2012
- Basic rate taxpayers need a rate of 3.39 per cent to gain benefit in real terms, increasing to 4.50 per cent for higher rate taxpayers
Today's announcement by the Bank of
that The Consumer Price Index (CPI) has soared from 2.2 per cent - its lowest level in almost three years - to 2.7 per cent means consumers should be checking their savings rates even more to ensure they are maximising their returns, according to
To beat inflation, basic rate tax payers will need an account paying at least 3.39 per cent to gain benefit in real terms from their savings, increasing to 4.51 per cent for higher rate tax payers, and 5.41 per cent for 50 per cent tax payers.
For basic rate tax payers there are only 11 accounts that beat inflation, all of them being fixed rate bonds. For higher rate tax payers no accounts that beat inflation.
Kevin Mountford, head of banking, at
"Today's news that inflation has risen by to 2.7 per cent after last month's decrease is a blow to savers and struggling UK households, with the impact of the price increases on energy combined with rising food and petrol costs pushing the cost of living upwards.
"It is as ever vitally important savers check their rates and be prepared to switch if they are not currently on the most competitive deal. The difference between the average and top paying rates can be significant, so moving to a better deal can go a long way to help savers limit the impact of inflation on their pots.
"Only a handful of savings accounts currently beat inflation, and all of them are fixed rate products. However, even if you cannot find an account that beats inflation, consumers need to make sure they are on the best deals possible to limit the impact of inflation and using products such as Cash ISAs to take advantage of the tax free benefits is a must. Savers should also consider looking at alternative products such as offsetting savings against mortgage borrowing, peer-to-peer lending, or structured savings products."