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Less than 2 per cent of all savings accounts currently beat inflation

19th November 2012 Print

Following last week's Bank of England quarterly inflation report, MoneyVista reveals that only 1.65% of savings accounts currently beat the Retail Prices Index (RPI) and just 2% beat the Consumer Prices Index (CPI).

With a total of 2,532 savings accounts (which includes cash ISAs) currently available to consumers, this means there are just 42 that beat RPI and 52 that beat CPI.

In the last five months, the savings market has got tougher for consumers as the total number of savings accounts available has fallen from 3,345 in mid-June to 2,534 in mid-November - a drop of 811.

In June, of the 3,345 savings accounts available, 2,622 (78%) paid interest rates below RPI and 76% below CPI. Now the number of accounts paying below RPI has increased to a massive 98.3% and 98% for CPI.  

Savers earning less than 3.25% after tax (4% gross) are losing money in real terms by keeping their savings 'safe' in the bank.

The analysis of the data shows:

30.5% of savings accounts pay 0.5% or less
39.5% of savings accounts pay 1% or less
56.2% of savings accounts pay 2% or less
87.2% of savings accounts pay 3% or less

Savings Watch from MoneyVista can keep track of the interest rates your savings accounts earn, giving you a better chance of keeping up with inflation.

Teresa Fritz, Consumer Finance Expert, at MoneyVista said: "Now more than ever, it's important to check what interest rate your savings account is paying. With inflation rising in October, the vast majority of savings accounts now pay interest well below the rate of inflation, meaning millions of savers are losing money in real terms. It's essential for consumers to keep track of what rate they are getting and to be ready to switch, especially during these harder economic times."

MoneyVista's Savings Watch service is designed to help. It monitors all savings account providers across the market. It alerts you when your savings rate falls and shows you how much extra interest you could earn by switching. You can also use the service to search the savings market for the best paying accounts currently available.

Savings Watch also lets you know when any introductory bonus or fixed rate on your savings account is coming to an end. It sends an alert one month before your rate is due to end to remind you to start looking for a new home for your money.