Few savings accounts keeping pace with inflation, says Moneynet.co.uk

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Few savings accounts keeping pace with inflation, says Moneynet.co.uk

Thu 18th Nov 2010

There are not many savings accounts that offer consumers a large enough return to keep pace with inflation, according to a representative from Moneynet.co.uk.

Andrew Hagger, a spokesperson for the firm, noted that an interest rate of four per cent is required from an arrangement if people are going to maintain the spending power of their savings.

He explained that this figure becomes 3.2 per cent after tax, with the consumer price index reaching this figure for October - up from 3.1 per cent in September.

The Moneynet.co.uk representative pointed out that people could achieve this sort of return with a fixed rate bond of three years or more, but this involves tying up money for a long period of time without accessing it.

In his view, the outlook does not look too rosy for savers either, as interest rates are unlikely to rise in the near future, but inflation may well do.

"Savings rates won't increase until [the] base rate gets [an] increase and a lot of commentators are saying that it's going to be at least six or 12 months," added Mr Hagger.

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