Five bank accounts that provide a return against inflation
Tuesday, 15 November 2011 01:00
New research has discovered that Britons could be losing out on money from their savings, as only a small proportion of accounts are providing real returns for taxpayers.
Financial research company Defaqto discovered that only five savings accounts out of the 1,999 available nationwide provide a real rate of return based on the Consumer Prices Index (CPI).
First Direct and HSBC offer the best deals, both provide a realk return compared against CPI or the Retail Prices Index (RPI). First Direct allow their own 1st Account current account holders to open a Regular Saver account which allows an investor to save between £25 and £300 each month for a year and pays a fixed rate of eight per cent for 12 months.
HSBC have a similar deal available to existing customers who have an HSBC Premier, HSBC Advance, HSBC Advance (Graduate) or HSBC Passport account. These are packaged bank accounts which charge a fee so you should weigh up the overall cost of the account in relation to the amount you can save to assess if the benefits are worthwhile for you. They beat both RPI and CPI
Halifax has two current accounts that reward savers with a £5 credit each month net of basic rate tax. Both again outpace both forms of inflation It's Reward current account requires customers to pay in £1,000 each month and you would need an average credit balance of £1,200 to make a return above the level of CPI.
Halifax's Ultimate Reward Current Account offers the same deal. However, this is a packaged bank account that charges a fee of £15 a month, so you need to carefully assess if the other benefits make the deal wothwhile for you.
Yorkshire Building Society has a tax free cash ISA that beats CPI and RPI. It's Protected Capital Account Inflation Linked 10 Plan Cash ISA returns 100 per cent of growth in the RPI over a six-year term.
A further savings account matches the new rate of CPI announced today by the Office for National Statistics (ONS). Nottingham Building Society Starter ISA pays five per cent tax-free and savers can save up to £445 every month until April 5th 2012 with the one-off option to top up the account to £5,340 in March before the end of the tax-year.
Higher rate taxpayers who pay the 40 or 50 per cent rate have a choice of only two cash ISAs if they want to beat inflation based on CPI.
Furthermore, only 23 accounts are available to give returns to non-taxpayers on their savings based on CPI.
Defaqto's insight analyst for banking David Black said: "To get the best available returns, savers need to review their savings on a regular basis. In particular, people should look to use their ISA allowance and take advantage of introductory bonuses and guaranteed minimum rates on savings accounts."
He added that fixed-rate bonds could be an option for those people who do not need instant access to their money, while an offset mortgage may also be worth looking into.
The Office for National Statistics said today (November 15th 2011) that the CPI fell as expected to five per cent last month, down from 5.2 per cent in September.
Meanwhile, the RPI decreased to 5.4 per cent from 5.6 per cent in September.
Use the Myfinances.co.uk comparison tables to find the right deal for you on a new savings account
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