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Inflation-busting bank accounts revealed

25 May 2012

With UK inflation reaching a two-and-a-half year low last month, consumer champion Which? has offered a roundup of the bank accounts which beat the 3% current rate.

Savings accounts

Beating the rate of inflation on savings accounts can be difficult if you take into account the fact that tax will always be subtracted from interest earned. As a result a rate of at least 3.8% would need to be achieved by basic rate taxpayers, rising to 5% for higher rate taxpayers.

Derbyshire Building Society offers the best rate for an instant access savings account (3.06%).

This is closely followed Tesco Bank’s one-year fixed rate savings account, which offers 3.50%.

Halifax, Yorkshire Bank and Clydesdale Bank also offer three-year fixed rate savings accounts that beat the rate of inflation.

Consumers looking to get even more from their money may want to turn to an account at Close Brothers, paying a healthy 4%.

You can compare bank accounts with Money Expert.

Cash ISAs

Instant Access: The cash ISA allowance for the current 2012-2013 tax year is up to £5,640. Cheshire Building Society’s Direct Cash ISA tops the list of the best instant access cash ISAs, offering 3.35%.

This is followed by Santander Direct ISA Issue 9 (3.30%), Principality BS e-ISA and Skipton BS Online Bonus Cash ISA (3.10%).

One-year fixed rate: Saga One-year Fixed Rate ISA tops the inflation-busting list at 3.60%, followed by Aldermore One-year Fixed Rate (3.30%) and M&S (3.25%).

What to look for when choosing a bank account

• APR or the annual rate of interest on your account will affect how much you earn on your money. It is also important to check the rate of interest on your overdraft.

• Some banks may offer you introductory incentives to join their branches, which can range from cash incentives to cashback deals.

Getting the best deal on your bank account is important to ensure you’re getting the most from your money.

You can compare bank accounts with Money Expert.


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