We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
savings rates and rate of inflation

sitroenn
Posts: 17 Forumite
I'm trying to clarify the best way to try and accrue some decent interest on our 'nest egg'.
As I understand it, the current rate of inflation is around 2.7%. I've been looking at easy access accounts, investing for 1 year and the interest rates are about 2.1 -2.2 %
If the rate of inflation is greater than the interest rates of these accounts, is there any real point in putting my money into them ? Will I not be effectively losing money ?
I'm not good at this stuff so please be patient with me
but is this not correct ?
S
As I understand it, the current rate of inflation is around 2.7%. I've been looking at easy access accounts, investing for 1 year and the interest rates are about 2.1 -2.2 %
If the rate of inflation is greater than the interest rates of these accounts, is there any real point in putting my money into them ? Will I not be effectively losing money ?
I'm not good at this stuff so please be patient with me

S
0
Comments
-
Depends on where else you put your money. Under the matrice or in premium bonds you'll end up with no interest.
At least with some accounts you do get back some interest, although not enough to cover inflation (after tax) granted.
It's the best of a bad bunch I guess0 -
Agree with the above post 2.1 is better than zero.
Money is safe in the bank, it's not safe under the mattress.
You could look for better returns but this doees generally means tying up your money or taking some risk.
The stock market should do better long term, but ou have to accept the risk of capital loss and be prepare to tie money up.
Another option is to consider putting money into a pension.
This might attract some tax relief if you are working and is especially beneficial to high rate tax payers, however again, money needs to be tied up until retirement. Impossible to advise without knowing your circumstances, but there are other options to consider.
On straight cash savings, you just need to find the best rate you can.0 -
how soon will you want to spend/use the money, and (if known) what for?
if it's not for many years, you'd probably be better off investing it. (which could be in a pension, but that's just a wrapper.)
if you'll need it quite soon, there's not much sensible alternative to savings accounts.
if you know exactly what you'll want to buy with the money, would it be cheaper to buy it sooner? i.e. do you reckon the price probably go up by more than the 2.1% interest? so e.g. if it's an electronic gadget, then the answer is: no, the price will probably fall if you wait, so you're gaining by waiting. but on average, you'll probably lose by waiting. however, it's not always practical to buy sooner. even if you know what you'll want to buy.0 -
I'm trying to clarify the best way to try and accrue some decent interest on our 'nest egg'.
As I understand it, the current rate of inflation is around 2.7%. I've been looking at easy access accounts, investing for 1 year and the interest rates are about 2.1 -2.2 %
If the rate of inflation is greater than the interest rates of these accounts, is there any real point in putting my money into them ? Will I not be effectively losing money ?
I'm not good at this stuff so please be patient with mebut is this not correct ?
S
Another way around it to get slightly better rates, if you are looking for easy access is that sometimes current accounts are providing better rates.
- for instance nationwide flexdirect 5% up to £2,500 for the first year, Lloyds vantage accounts (which up to 3% for between 3-5k) etc
I have got 3 x Lloyds vantage accounts so can hold £15k between them plus have opened the new nationwide account.
it is a bit more effort than standard savings accounts as you have to credit the account with £1k a month, but I just have mine set up via a standing order.
so whilst I cant keep all the money in the above accounts that I have saved, at least some of it that I want easy access to is held at slightly better rates and the rest can be then held in the standard "savings" accounts and I just monitor the rates.
Also if you are a tax payer (or are likely to be one in future if youre not now) then I would also look for isa's though the rates are on a par with many standard instant access accounts, at least you're protecting some of the interest from the tax man!MFW#105 - 2015 Overpaid £8095 / 2016 Overpaid £6983.24 / 2017 Overpaid £3583.12 / 2018 Overpaid £2583.12 / 2019 Overpaid £2583.12 / 2020 Overpaid £2583.12/ 2021 overpaid £1506.82 /2022 Overpaid £2975.28 / 2023 Overpaid £2677.30 / 2024 Overpaid £2173.61 Total OP since mortgage started in 2015 = £37,286.86 2025 MFW target £1700, payments to date at April 2025 - £1712.07..0
This discussion has been closed.
Confirm your email address to Create Threads and Reply

Categories
- All Categories
- 352.1K Banking & Borrowing
- 253.5K Reduce Debt & Boost Income
- 454.2K Spending & Discounts
- 245.1K Work, Benefits & Business
- 600.7K Mortgages, Homes & Bills
- 177.5K Life & Family
- 258.9K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.2K Discuss & Feedback
- 37.6K Read-Only Boards