Best savings accounts that offer above-inflation rates: 4 October 2024

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UK households are always looking for ways to make their money go further amid the cost of living crisis and savings accounts can help.

After years of low rates, high-yield savings accounts are having a moment as the Bank of England decided to keep interest rates on hold at 5%. While homeowners face higher mortgages, there is a silver lining in higher borrowing costs and consumers can find UK savings accounts offering higher than inflation rates.

The UK rate of inflation came in at 2.2% in August, unchanged from July, according to figures from the Office for National Statistics (ONS). It was at 2% in June and May.

Savers should shop around to find the best deals and check what rate they are on — as they could still be sitting on a product that does not beat inflation. Providers might also start to lower rates as interest rates fall, so consumers need to check if their money is well-placed for higher returns.

Read more: What are the odds of winning a premium bonds prize?

Liz Edwards, a money expert at finder.com, has advised savers to lock in the best available rates. “[The Bank of England's interest rate] decision, while disappointing for borrowers, serves as a reminder for savers to take advantage of higher rates on fixed-rate accounts,” Edwards said.

Finder’s research revealed that eight of the 16 largest UK banks have already reduced rates on easy-access savings accounts since the Bank’s base rate cut earlier this month.

Mark Hicks, head of active savings at Hargreaves Lansdown, said: “The decision to keep rates steady is positive for savers. Had a rate cut occurred, we would have seen a swift follow-through from other banks and building societies.”

For those with money in easy-access accounts, switching to a fixed-rate account could be a prudent move to preserve returns.

The main factor you should be aware of when choosing a savings account is the difference between easy-access and fixed-term.

Easy-access accounts allow you to access your money when you need it. Fixed-term means you can’t access your cash for the duration of the deal. They usually offer better rates, but you must be comfortable with not touching your savings for a long period, usually between one and five years.

What are the best high-interest fixed-rate accounts?

The best fixed-rate account offers 5% and is available from the Oxbury Bank.

This fixed-term personal savings account requires a minimum of £10,000 to be locked for three months. You can invest up to £500,000. Interest will be paid at maturity, meaning at the end of the three months.

A 4.95% deal is available from Union Bank of India (UK). This fixed-term personal savings account requires a minimum of £1,000 to be locked for a year. You can invest up to £1,000,000.