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Inflation-busting savings accounts: where can you earn up to 5%?
The August CPI inflation rate was 3.8% - find out which savings accounts pay more
Less than half of savings deals can beat August's inflation rate, which held steady at 3.8%. It means money sitting in one of these products is losing value over time.
Which? analysis shows that only 48% of savings accounts pay interest higher than the latest Consumer Price Index (CPI) figure. That's unchanged from last month but down from 88% at the start of the year.
Read on to find out which accounts offer the best interest and what's behind the latest Office for National Statistics (ONS) inflation figures.
Which savings accounts beat inflation?
Our analysis of Moneyfacts data shows that there are currently 1,115 savings accounts (48% of all products) offering rates higher than August's inflation rate of 3.8%. This includes variable-rate deals, fixed-rate bonds and cash Isas.
Variable-rate products - such as instant-access accounts - have the worst rates overall, with just 30% of deals beating inflation. The lion's share of inflation-busting deals are fixed-rate bonds, with 66% boasting returns higher than the current CPI figure. While there are 43% of cash Isas with rates better than that.
The table shows the top rates currently available for instant-access, fixed-rate, and cash Isa savings accounts, ordered by term.
| Instant-access | Cahoot | 5% (a) | 61% | £1 | Internet | Monthly, yearly |
| Instant-access cash Isa | Charter Savings Bank | 4.26% | 74% | £1 | Internet | Monthly, anniversary |
| One-year fixed rate | Tandem Bank | 4.45% | n/a | £1 | Internet, mobile app | Yearly |
| One-year fixed rate cash Isa | Tembo Money | 4.27% | n/a | £500 | Mobile app | On maturity |
| Two-year fixed rate | Birmingham Bank | 4.44% | n/a | £5,000 | Internet | Yearly |
| Two-year fixed rate cash Isa | Vida Savings | 4.22% | n/a | £100 | Internet | Monthly, anniversary |
| Three-year fixed rate | Birmingham Bank | 4.46% | n/a | £5,000 | Internet | Yearly |
Table notes: rates sourced from Moneyfacts on 17 September 2025. Provider customer score is based on savers' overall satisfaction with the brand and how likely they are to recommend it to others. n/a means sample size was too small for us to generate a provider score (a) Offers 5% AER up to £3,000.
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Compare and chooseHow savings rates track against inflation
It's important to pick a savings account with an interest rate above the current CPI figure. If your rate is lower than inflation, your savings will lose value in real terms.
The graph shows how average savings rates compare with inflation since August 2020, using data from Moneyfacts:
Average one-year and longer-term fixed rates have beaten inflation since October 2023, but the gap is rapidly narrowing and is now almost on a par with the latest CPI figure. The average rate for these accounts in August stood at 3.99% AER and 3.88% respectively.
In contrast, the average rate of an instant-access savings account has been below inflation since April. Last month's average rate was 2.68%, just over one percentage point below inflation.
- Find out more: best savings accounts 2025
What's happening to savings rates?
Savings rates rocketed after the Bank of England (BoE) increased the base rate 14 times between December 2021 and August 2023. But when the base rate was reduced last August, average savings rates began to drop too.
The BoE has cut the base rate four times since then, reducing it to 4% on 7 August. However, the BoE is widely expected to hold the base rate at its current level when the next decision is announced tomorrow (18 September).
Instant access
Instant-access accounts, which pay variable rates and can be changed at short notice, have had the biggest cuts. The average rate fell from 3.07% AER to 2.59% in the 12 months to 17 September 2025. That's the lowest it's been in more than two years.
There is now only one instant-access deal offering a rate as high as 5% AER, the Cahoot Sunny Day Saver. Even better, the account allows unlimited withdrawals and anyone can open it. The downside is that interest is given only on deposits up to £3,000, after which you earn no interest.
If you want an instant-access account without restrictions, you'll have to settle for a lower top rate of 4.8% AER.
When searching for an instant-access account, watch out for introductory rates. We often see accounts with excellent initial rates that then drop after three or six months.
- Find out more: the different types of savings accounts explained
Fixed-term
Locking your money away for a year or more could help to protect it if savings rates continue to fall, as fixed-term accounts guarantee your rate won’t drop during the term.
One-year fixed rates have fallen this year. In January, you could secure a rate of 4.77% AER. The top deal has since slipped to 4.45%.
Five-year bonds currently offer the best rates, with the top deal from Birmingham Bank paying 4.53% AER. This marks a return to the usual rule of thumb that the longer you fix, the higher the rate – a trend that was reversed in recent years when shorter-term bonds often paid more.
Cash Isas
Cash Isas, which allow you to save up to £20,000 tax-free annually, have also taken a hit.
The average rate of instant-access products got a boost at the start of 2025, reaching 3.03% on 1 January. It's common for providers to hike rates at the beginning of the calendar year as savers rush to use their full tax-free allowance before April. Interest has since plunged, however, hitting 2.82% on 1 September.
Average rates of fixed-rate cash Isas fell dramatically between April and June, when President Trump announced his tariffs. This caused the market to price in additional base rate cuts to counter the potential of falling economic growth.
However, fixed rates have increased slightly since then, as the market now doesn't believe the Bank of England will make as many base rate cuts. Instead, experts predict only one further base rate cut this year, most likely in December.
- Find out more: best cash Isa rates 2025
What's behind August's inflation rate?
CPI inflation held steady at 3.8% in the 12 months to August 2025. It means the rate at which prices are rising is still at a 19-month high.
According to the ONS, the cost of food rose for a fifth consecutive month, up from 4.9% in July to 5.1% in August. The biggest increase came from the price of chocolate, which shot up by 15.4%. The price of beef, butter and coffee also rose sharply, with smaller increases to vegetables, cheese and fish.
Petrol and diesel prices also rose, as well as the cost of eating out at a restaurant and staying in a hotel. Alcohol and tobacco prices experienced a slight month-on-month increase.
However, a big drop in air fares and housing and household services offset other price rises to keep August's inflation rate steady.
- Find out more: what's happening to grocery costs at the supermarket?
