There's good news for savers looking to protect the long-term value of their money - there are now 325 savings accounts paying higher interest than the current inflation rate.
So, where are the best accounts for depositing your cash?
We reveal how many of each type of savings and cash Isa account can beat inflation, as well as the top three rates.
As the graph below shows, inflation last month hit its lowest level since December 2016, when it measured 1.6%. This means price growth is slowing compared to previous months.
By contrast, savings and cash Isa rates are looking fairly bleak. After slowly rising from the end of 2016, the average has been dropping every month since April 2019.
By August, the rate of inflation was the same as the average savings rates. So, despite the downward trend, it should still be relatively easy to find an inflation-beating account.
The graph below shows how CPI inflation and average savings rates have changed over the past few years, with data from the ONS and Moneyfacts.
Why does inflation matter to your savings? If your money is growing more slowly than inflation, you'll be able to buy less with the same amount of cash. So seeking out a higher interest rate protects the value of your money.
To help you find the right account, we've identified the three highest rates for each kind of savings and cash Isa account.
We analysed Moneyfacts data for 1,428 savings and cash Isa accounts, finding 147 fixed-rate savings accounts that pay a higher rate than 1.7%.
All accounts are based on saving at least £5,000, and all duplicate accounts have been stripped out - for instance, if a provider lists an online and branch account as different entries.
No instant-access accounts beat the current inflation rate, though the top-rate accounts pays 1.6% EPR, just 0.1% short.
The shortest amount of time you can lock your money away to beat inflation is one year.
In total, there are 21 one-year fixed-term accounts that equal or beat inflation. We've listed the top three below.
All accounts listed above require a minimum initial deposit of £1,000.
It's also worth noting that they all pay what is called an 'Expected Profit Rate' (EPR), because they are , and pay their customers a percentage of profits rather than interest. The EPR is not guaranteed, though we've never heard of instances where an Islamic bank has paid less than the EPR in the UK.
It generally follows that the longer you lock up your money, the higher AER rate you'll get - but it's not always the case.
If you're prepared to commit to more than a one-year term, the top-paying accounts are:
Two of the best-rate accounts only require you to commit to a three-year fixed term, exceeding all rates offered on four-year terms, and the majority of five-year terms.
Again, you're required to save at least £1,000 to open these accounts.
We found 27 cash Isa accounts that exceed the current CPI rate of inflation, with a minimum fixed term of two years.
To earn the top rates, you'll have to lock your money away for five years.
The three best-rate accounts are:
The minimum initial deposits needed to open these accounts vary. UBL UK asks for £2,000 while it's £1,000 for Family Building Society and £5,000 for State Bank of India.
While it's true that cash Isa rates can all be beaten by their savings account equivalents, it's worth considering their tax-free status. If your interest is more than the , or you're a higher-rate taxpayer, this could cut your tax bill.
We also found 41 regular savings accounts with inflation-busting rates.
However, most come with several caveats, so make sure you can commit before you open one.
The top three rates are:
All providers require you to hold another account before you can open a regular saver.
First Direct's AER lasts for 12 months, then drops to just 0.15%, at which point you should consider moving your savings elsewhere.
You must keep your account for at least a year with M&S Bank to receive the 5% interest, as closing early will mean you'll only earn 0.2% AER.
To receive the preferential rate from HSBC, you must hold an HSBC Premier or HSBC Advance account.
Both require a fairly high minimum deposit to be paid in each month, so those with low salaries will not be able to use them. The rate will also drop to 0.2% AER if the regular saver is closed within 12 months.
In the 2019-20 tax year, you can save up to £4,368 into a Junior cash Isa, and all interest earned is tax-free.
The three top-rate accounts are:
Two of these accounts have location-related restrictions. Danske Bank's account must be opened in-branch, and all branches are in Northern Ireland. Meanwhile, only customers living in certain postcodes can open accounts with Darlington Building Society.
In addition to the AER interest, the government pays a 25% bonus on whatever you save, with a maximum £3,000 bonus being paid when you save £12,000.
There are 28 Help to Buy Isas that beat the current rate of inflation, the top three are:
There are regional restrictions on all these accounts. You must have a Cumbria postcode to bank with Penrith Building Society; Tipton & Coseley specifies a handful of eligible postcodes; and Vernon Building Society customers must live within 25 miles of Stockport.
The highest rate available nationwide is 2.58% AER from Barclays.
If you want to take advantage of these accounts, you'd better move fast - Help to Buy Isas will be closing to new customers on 30 November 2019.
Children's accounts tend to have more generous rates than adult's. Currently, there are 51 children's accounts that beat the August rate of inflation.
The top three rates are:
The Nationwide account is limited to one withdrawal a year. If you take money out more frequently, the rate will drop to 0.5% AER.
We also found some regular children's savings accounts that pay high interest:
You have to deposit between £10 and £100 each month into the Halifax account, while the others accept £5 to £100.
No withdrawals are allowed from the Halifax account, whereas any month a withdrawal is made with Barclays, the AER will drop to 1.51%.
CPI inflation tracks the prices of an imaginary shopping basket of more than 700 goods and services.
Each month's inflation figure shows how prices have changed since the same month in the previous year.
So, as CPI measured 1.7% in August, it means everything in the basket is 1.7% more expensive than in August 2018.
If your savings aren't growing by at least the same rate, your money's value will shrink as it won't be able to buy you as much.
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