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Low saving rates mean you’re losing out in real terms against the inflation rate. So what can you do? Here are my top places to put your cash to make as much as 5%.

(This article is updated in the middle of each month after inflation rate announcements and any significant account changes)

When prices for goods and services are on the up it’s called inflation, and the inflation rate is just the average of those increases. But if your income – whether from a salary or savings isn’t keeping up with that rate, then the cost of living is going to be more expensive.

The latest inflation rate for February was 1.7%, a little down from January when it hit a six-month high of 1.8%). This rate means only a handful of savings accounts now beat it, and the vast majority of accounts are well below this. 

And for the last few months we’ve seen a run of drops across leading savings accounts. TSB’s Classic Plus account will drop from 3% to 1,5% in May, while market-leading easy-access savings accounts such as the one from Marcus at 1.3% (better than most places but even that has fallen from it’s high of 1.5%). The popular NS&I accounts and Premium Bonds are also going to fall in May. And more will follow now the base interest rate has been cut to an all-time low of 0.1%.

This follows a year of cuts to savings accounts, especially on the high-interest current accounts. In June last year Tesco Bank cut from 3% to 1%, followed in July by TSB cutting from 5% to 3%. Nationwide also closed its 5% regular saver, while First Direct, HSBC and M&S Bank all reduced theirs from 5% to 2.75%.

Fortunately, there are a handful of places where you can beat the current rate. Here are my picks of inflation-beating instant-access accounts for your cash savings.

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5% interest on savings for all

This is the highest paying account, and you can access your money at any time. However the amount of money you can save in them is limited.

Nationwide FlexDirect Current Account

You can get 5% for one year on a balance up to £2,500 with the FlexDirect account. You do need to pay in £1,000 a month to get this rate. If you know anyone with this account already you can ask them to refer you, and you’ll both get a £100 bonus (If you know me personally I can share my link with you so just ask).

Afterwards it will drop to 1%, but you can always switch away when that happens and get a nice cash bonus for doing so.

You’re able to get the 5% on both a solo account and a joint account, so it’s worth opening a joint account too if you’re in a relationship (though watch this video first).

2.75% interest if you have a current account with these banks

You can only open these Regular Savings accounts if you have or open a current account with these banks – but that’s no reason to put you off.

There’s a limit to how much you can save each month, and the interest is calculated on the balance each month. After 12 months the interest is paid and your saver closed. But you can then open up another and begin again.

These are ideal if you only have a certain amount of money to put aside each month, or to move money every month from a lower-paying easy access account.

Sadly, in the last year we’ve seen decent-paying options from Nationwide close, and the rate reduced at First Direct and HSBC.

First Direct Regular Saver – 2.75%

This is my top pick as it allows monthly deposits of up to £300. Pay in the full amount over a year and you’ll make £53.40 in interest.

HSBC Regular Saver – 2.75%

The monthly maximum is a slightly lower £250 a month, meaning you can put aside £3,000 over a year and earn up to £44.50 in interest. 

Marks & Spencer Bank Monthly Saver – 2.75%

This is the third regular savings account. You’ll be able to save a maximum of £250 a month.

2.5% Regular Saver open to all

There are a handful of building societies offering 3% on regular savers but they need to be opened and managed in person or possibly by post – so that’s quite restrictive. But if you have a Kent Reliance, Principality or Saffron Building Society near you then it’s worth a look.

As with the Regular Saver accounts you only get this rate for 12 months, and the interest is paid in full on the anniversary date then your account is closed. You then need to open up a new Regular Saver if you want to continue (though the rate is likely to be different in a year).

Coventry Building Society – 2.5%

You can pay up tp £500 a month into this account with the Coventry BS and earn 2.5%, which is paid on the 12 month anniversary.

Virgin Money – 2%

You don’t need a Virgin Money current account to get this one at 2% for one year. Max deposit of £250 a month. Unlike many of the others you can also withdraw money as often as you want without a penalty. 

Halifax – 2%

Again, this is open to anyone. There’s a monthly limit of £250 and you’ll get paid the 2% in interest after the 12 months.

Other savings accounts

The above accounts all have caps on how much you can save, so what should you do with any additional money? Well if you want easy access you’ll struggle to beat inflation, but you will probably beat rates from most other providers.

You can also fix your savings for a year or longer and get a slightly better rate in return. However, you need to be sure you won’t need access to that cash over that time. The longer you fix, the greater the risk you’ll lose out if rates were to rise. But at the same time they’re protected if rates were to fall.

A great place to check out all the different accounts is the Moneyfacts website. Make sure you untick the box that says it’ll display accounts with links first.

Here are a few for you to consider

RCI Bank (1 year fix) – 1.5%

This account has a minimum opening balance of £1,000 so it won’t be for everyone. But if you’ve used the Nationwide and various regular savings accounts above and ant to lock in a rate, you won’t get much better.

TSB Classic Plus (current account) – 1.5%

The TSB Classic Plus offers interest on far a lower balance – you get the 1.5% on just £1,500 – but there’s still the potential to get three of these accounts if you and your partner have one each and open a joint account. You need to pay £500 into the account every month to get the interest.

At the moment, the account actually pays 3% but it will drop to 1.5% in May. That’s a huge knock for savers, but sadly right now even that rate is better than you’ll get elsewhere. And since I’ve already had my Nationwide 5%, it means I’m going to stick with this account for my easy access savings.

Moneybox (95-day notice) – 1.45%

This app-based savings account only has a notice period of just over three months so could be a good option if you don’t want to lock in for too long. The best 1-year fix right now is only around 1.5% so you could stick with Moneybox over that for greater flexibility – though there’s the chance the Moneybox rate could drop.

Marcus (easy access) – 1.30%

This account from Marcus by Goldman Sachs recently dropped to 1.3% (and it’s not long since it fell from 1.45% to 1.35%), and could well drop further. 

Check out all the latest banking deals:

The best bank switching, cashback and interest offers (March 2020)

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