Savers 'need to guard against inflation increases'

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Savers 'need to guard against inflation increases'

Wed 18th Nov 2009

Savers need an interest rate on their products that will beat the rise in inflation, according to moneysupermarket.com.

Individuals who are basic-rate tax payers need to ensure that their account pays at least 1.875 per cent, while those in the higher tax bracket need 2.5 per cent to offset the increases, the website stated.

Research by the price comparison site revealed that only 40 of 269 easy-access accounts are paying at least this minimum inflation-beating level.

The figure is even lower for high-rate tax payers, who have the pick of just seven per cent of easy-access accounts to ensure their savings will combat rising inflation.

Kevin Mountford, head of banking at the website, said regular savings accounts look tempting at the moment as over half will give a real return on investments.

However, he warned: "Savers need to be wary that almost three-quarters of products will fail to give a true return to savers."

The site had earlier advised customers to switch their fixed-rate bond after it matures or they could lose up to £1,000, as banks will switch the money into a regular account, without the high levels of interest.

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