Only ONE bank account now beats inflation – where’s the best place to stash your cash?
Nationwide's Flex Direct customers are the only ones who can earn more than inflation as low interest rates continue to cause problems for savers.
JUST one bank account pays more than the current inflation rate, new research has found.
British households face a further squeeze on their finances as inflation hit a five-year high of 3 per cent in August.
And with interest rates still at a record-low, savers looking for a place to stash their cash have few options to get the most for their money and beat the cost of living.
Analysis from Savings Champion reveals that only ONE account - Nationwide's Flex Direct Current Account - beats the inflation rate.
That means for most people, the spending power of their savings is being eroded.
Overall, the average rate for an easy access savings account is a dreadful 0.42 per cent - so on a balance of £2,500 you'll earn a measly £10.50 in interest.
And experts at Savings Champion warned savers are throwing away nearly £6billion a year by keeping their money in these dismal-paying accounts and not switching to better paying ones.
It found deposits in easy access accounts would earn around £2.8billion in interest using the average rate of 0.42 per cent.
If all that cash was put in the best-paying easy access savings account - RCI Bank's Freedom Account at 1.30 per cent - savers would collectively earn £8.8billion instead.
What are the best paying accounts for my savings?
While even the best accounts can't beat inflation, it is still worth looking for a top-rate to make the most of your money - though you probably won't find it on the high street.
Smaller banks you might not have heard of are typically offering the best home for your savings.
Bank of Cyprus' UK Online Account is just behind RCI's Freedom Account with a rate of 1.28 per cent.
If you were to put £2,500 in RCI, you'd earn £32.50 in a year.
And if you can afford to tie your money up, then fixed-rate bonds offer attractive rates.
Access Bank's Sensible Savings one-year deal comes with a rate of 1.85 per cent.
On a balance of £2,500 you'll earn £93 over 12 months.
EASY MONEY YOU'LL SOON BE ABLE TO SEE YOUR BANK ACCOUNTS IN ONE APP
Smartphone bank Atom Bank has a two-year fixed saver which pays 2.05 per cent - and you could earn £103 in interest on a £2,500 deposit.
Nationwide's inflation-buster pays 5 per cent on balances up to £2,500 in the first year - worth £125 in interest - but the rate drops to just one per cent after 12 months.
Money expert at Savings Champion, Tom Adams, said: "All though the number of accounts that actually beat inflation is very small, savers can still take action to mitigate its effects.
"Savers need to look away from the big high street names for the best rates on the market and consider using a lesser known provider.
"Even the top rates are not enough to beat inflation at the current level, at least by switching, savers can reduce its effects."
Will my money be protected by smaller banks?
If you want to take advantage of smaller banks' deals then make sure they are protected by the Financial Services Compensation Scheme (FSCS).
This protects up to £85,000 of deposits - provided the bank you are with is authorised by the Financial Conduct Authority (FCA).
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