Inflation hits a five-year low, but only 11 savings accounts offered by Britain’s seven largest banks can match the 0.2% low after an interest rate cut to the bone
- There are now 661 inflation matching accounts after the CPI has fallen to 0.2%
- Only 11 of these are offered by Britain’s largest banks
- Only 1 of 87 easily accessible deals that pay 0.2% or more are offered by a major high street name – and it limits you to three withdrawals per year
The low savings rates offered by Britain’s largest banks have been exposed even more today thanks to a sharp fall in the consumer price index.
Hundreds of bills are now beating inflation after the CPI fell 0.2 percent to its lowest level in five years in August.
In total, just 11 accounts offered by Barclays, HSBC, Lloyds, Nationwide Building Society, NatWest, Santander and TSB pay at least the August consumer price index of 0.2 percent, a fraction of the 661 total inflation adjustments available.
These include flat rates, cash ISAs, and termination accounts.
Only 11 accounts offered by Britain’s largest banks pay at least 0.2% and match the low inflation
Additionally, of the 87 easily accessible bread and butter savings accounts that currently pay out at least 0.2 percent, only one, from Nationwide, which limits savers to three withdrawals per year, is offered by the biggest names of UK stores.
Britain’s five largest banks, Barclays, HSBC, Lloyds, NatWest and Santander, have all paid just £ 1 in interest on £ 10,000 in savings since the end of July, bringing deposit rates to next to nothing thanks to a record low Bank of England base rate .
Experts have consistently warned savers to take the billions of pounds they hold at Britain’s largest banks away from the high street to earn a higher return on their money and potentially boost competition.
Figures from Moneyfacts show that less than half a dozen accounts available on the high street contest or beat last month’s inflation data, which hit its lowest level since December 2015 at 0.2 percent.
The Office for National Statistics found that the CPI, which has fluctuated in recent months and surprisingly increased to 1 percent in July, fell in August, largely due to declining restaurant prices due to the government’s Eat Out to Help Out rebate scheme and a VAT cut.
The cost of airline tickets also fell for the first time in August, as fewer people traveled abroad, the ONS said.
|Number of easily accessible accounts corresponding to inflation||Total number of inflation matching accounts|
|Seven large sofas||1||11|
The consumer price inflation index was only 0.2% in August after the government’s Eat Out to Help Out plan pushed restaurant prices down
And with inflation so low, even the small number of accounts of Britain’s largest banks that currently match or beat the CPI could be surpassed elsewhere if savers switch.
The vast majority of the 845 savings accounts available are currently beating the CPI.
Nationwide’s 0.25 percent Triple Access Online saver, the only easily accessible account offered by the big seven that pays 0.2 percent or more, compared to a top 1.2 percent rate offered by Skipton Building Society.
This is a difference of £ 95 per year on £ 10,000 in savings.
And while Barclays, HSBC and Nationwide all offer a one-year fixed-rate bond that pays 0.3 percent, it’s comparable to the 1.25 percent savers can earn from Secured Trust Bank, the best rate on the market.
Analysts also predicted that inflation could rise from the beginning of next year, making it especially important for savers to earn as much as possible.
When it was announced last month that inflation rose surprisingly to 1 percent in July, only 91 accounts paid that much, down 80 percent from the month before, making it clear that the savings rate remains low despite a recent recovery.
This is Money reported at the end of July on how savings in the first six months of this year increased Barclays’ deposits by 10 percent or £ 20.2 billion and Santander by £ 6 billion, despite the two major banks depositors paid little in return.
Meanwhile, Andrew Davis, TSB commercial director recently said it was “a big misconception” that interest on savings was important to customers, describing them as “the icing on the cake.”