Which? uses cookies to improve our sites and by continuing you agree to our cookies policy

CPI soars: 4 ways to help your savings beat inflation

Latest CPI inflation rate of 2.9% can't be beaten by any savings accounts

Inflation has risen to a four-year high, hitting 2.9%. As prices continue to creep upwards, how can you protect your savings?

The latest Consumer Prices Index (CPI) figure increased by 0.2% last month, reaching the highest level since June 2013.

The rising cost of package holidays, computer games, food and clothing were listed as the main factors.

Currently, the highest rate you can get on a five-year fixed savings account rate is 2.3% AER, according to the Which? Money Compare tables. For a cash Isa, interest is at 1.8% AER – so you’ll need to look outside of these traditional savings mechanisms to protect your money from being eroded.

Here, we suggest four steps you can to take to help your savings keep pace with inflation.

How to beat inflation with regular savings accounts

Regular savings accounts require you to drip-feed a defined amount of money into them each month.

The maximum monthly amount you can deposit is typically capped at a few hundred pounds, but there are some inflation-busting rates on offer.

First Direct, HSBC, M&S Bank, Nationwide and Santander all offer regular savings accounts paying 5% AER, albeit only to customers who also hold a current account with them.

Alternatively, Saffron Building Society has a regular savings account paying 3.5% AER which is open to everyone, regardless of their current account provider.

Which? Money Compare table: regular savings accounts – our tables are updated daily

How to beat inflation with current accounts

There are plenty of current accounts offering inflation-busting interest rates, albeit only on small in-credit balances.

Nationwide pays 5% AER on balances up to £2,500 in the first year, dropping to 1% AER thereafter. Tesco Bank pays 3% AER on balances of £3,000, and allows you to open two of these if you want to spread your money between them. Meanwhile, TSB offers 3% AER on balances up to £1,500.

The graph below shows how you can earn inflation-busting returns on up to £15,000 by opening multiple high-interest current accounts.

Find out more: best current accounts if you stay in credit – see our tables  

How to beat inflation by investing

Investing in stocks and shares is commonly seen as a higher-interest long-term savings strategy than keeping your money in cash accounts, although it’s also riskier –  the value of your investment can go down as well as up.

A stocks and shares Isa is the most tax-efficient vehicle for investing. Our video guide will help you find the best one for your needs.

Find out more: are you ready to invest? – the questions to ask yourself

How to beat inflation with peer-to-peer lending companies

Peer-to-peer lending companies match savers who are willing to lend out their money directly with borrowers. These providers don’t have the overheads of traditional savings providers, and can therefore offer superior interest rates.

To achieve these superior returns, savers have to be comfortable with the added risk of losing their money if borrowers default on their loans and cannot make repayments.

Our peer-to-peer lending guide includes customer reviews of the UK’s most popular peer-to-peer lending companies, as well as the rates on offer, the risks involved and the safeguards in place when investing with each of them.

Which? Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited.

Back to top