In the NS&I pulling its savings certificates recently, inflation proof savings accounts have been few and far between.
With the rate of inflation rising rapidly across the UK, savers are finding it a struggle to find savings products with interest rates that can keep up with the current increase to the price of goods, which stands at a massive 5 per cent as measured by the Retail Prices Index. However, there are some options that remain open for those looking to preserve the spending power of their savings pots, personal and business bank account experts say.
There are only five savings accounts available on the market that currently beat the official inflation rate for July, which was calculated at 4.4 per cent by the more conservative Consumer Prices Index. All five products are cash ISAs, which are limited to a £5,340 annual savings allowance due to their tax-free interest, while savers are permitted to transfer in existing balances in many instances.
Principality Building Society, Yorkshire Bank, and Clydesdale Bank all pay an interest rate of 4.5 per cent on their five-year ISAs, subject to minimum deposit amounts. Principality requires savers to deposit their full £5,340 allowance, while both Yorkshire and Clydesdale only require a £2,000 minimum commitment.
Both Barnsley and Yorkshire building societies offer a more lucrative 5 per cent rate. However savers will be investing a minimum of 70 per cent in a Legal & General investment product, which carries inherently more risk.
The Retail Prices Index, which runs higher due to the fact that it includes mortgage costs, was recorded at 5 per cent for July. Unfortunately the savings products that track the RPI are subject to taxation, which means that inflation will slowly erode any balances as a result.