8 Savings Accounts that Beat the Rate of Inflation in the UK

After months of rising inflation, UK households got some much-needed good news last week when it was announced that the cost of living had dropped to 2.5 per cent – the lowest rate in a year.

This is good news for savers too, as the lower rate of inflation means that consumers no longer have to worry about losing money in the low-paying savings accounts which were unable to keep pace with the rising rate of inflation.

Now, there are a slew of UK bank accounts which offer savers the chance to grow their money in real terms by offering rates north of 2.5 per cent.

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Each of the accounts listed below is protected by the Financial Services Compensation Scheme (FSCS), which guarantees deposits up the value of £85,000.

However, it is worth noting that none of these accounts are ISA-ready, which means that any interest received will be subject to the usual Capital Gains Tax.

Some of these accounts are current accounts, so a combination or mixture of accounts may provide the best overall return, depending on the amount you have to save.

Best Inflation-Busting Accounts

1. First Direct Regular Saver

First Direct Savings Account: Regular Saver

  • Pays: five per cent (for 12 months only)

This inflation-busting rate is only available to existing current account customers of First Direct, and it is limited to deposits of between £25 and £300 per month.


2. Nationwide Flexclusive Regular Saver

Nationwide Flexclusive Saver

  • Pays: five per cent

Flexclusive savers can save up to £250 per month at an interest rates of five per cent.

However, this account is only available to Nationwide Flex current account holders.


3. HSBC Regular Saver

HSBC Bank Regular Savings Account

  • Rate: five per cent (for 12 months only)

This rate is only paid out on deposits of between £25 and £250 per month.

The account can only be accessed by HSBC’s existing current account customers, and after 12 months all savings will be transferred into HSBC’s Instant Access Savings, Flexible Saver or Premier Saving accounts.

These accounts currently pay 0.10 per cent, 0.05 per cent, and 0.10 per cent, respectively.


4. M&S Bank Monthly Saver

M&S Bank Monthly Savings Account

  • Pays: five per cent (for 12 months only)

Again, this rate is only applicable for the first 12 months, and applies to deposits of between £25 and £250 per month. It is only available to existing current account holders with M&S Bank.


5. Santander Regular eSaver

Santander eSaver Account

  • Pays: five per cent (for 12 months only)

An online-only account which is exclusively available to Santander 123 World customers. The five per cent rate is fixed for 12 months and customer deposits are capped at £200 per month.


6. TSB Classic Plus

TSB Current Account Beats Inflation

  • Pays: three per cent

TSB’s most popular current account pays three per cent on balances up to £1,500, plus up to £10 cashback every month – £5 if you set up two monthly direct debits, and another £5 if you use your debit card at least 20 times during the month.

If you maintain a balance of £1,500 and collect the maximum amount of cashback, this equals an extra 0.66 per cent in interest each month, on top of the three per cent already being paid.


7. Tesco Bank Current Account

Tesco Bank Logo

  • Pays: three per cent

One of the top-paying current accounts at the moment, Tesco Bank pays three per cent on the first £3,000 deposited in this account.

Each customer can open two accounts, so you could effectively make three per cent on up to £6,000.

The rate is guaranteed until 1 April 2019, but you must be able to pay in £750 and set up at least three direct debits every month.


8. Leeds Building Society Regular Saver (Issue 14)

Leeds Building Society

  • Pays: 2.55 per cent

Unlike the other regular savings accounts on this list, this rate is open to all customers – new or old. Savers can deposit up to £250 per month.


Kathryn Gaw

Kathryn Gaw is a financial journalist based in Belfast, Northern Ireland. She has been writing about personal finance and investment trends for more than a decade, and her work has been featured in the Financial Times, City A.M., the Press Association, and The Irish Independent, among many other publications.