To beat inflation, a basic rate taxpayer at 20% needs to find a savings account paying 5.25% per annum, while a higher rate taxpayer at 40% needs to find an account paying at least 7.00%.

Today there just eight standard savings account that taxpayers can choose to negate the effects of tax and inflation and these are all fixed rate ISAs.

The effect of inflation on savings means that £10,000 invested five years ago, allowing for average interest and tax at 20 per cent, would have the spending power of just £9,213 today.

Sylvia Waycot, spokesperson for Moneyfacts.co.uk, said:

“The wheels of UK finance would shudder to a stop without the nation’s savers and yet they still see little reward for their investment.

“The few accounts with headline rates are often brief introductory offers making savers need as many heads as Medusa, just to keep abreast of fluctuating savings rates.

“Today’s rate of inflation means hundreds of thousands of savers need an account paying an hefty 5.25% before they earn a real rate of return on their savings and yet the average no notice savings account only pays a miserly 0.91%.

“This means more and more people are falling into ‘the eroding spending power trap’ which has already wiped nearly £800 off the spending power of £10,000 in just five years.

“Over the previous 12 months the number of savings accounts that beat inflation for basic rate taxpayers has dropped successively from a not very exciting 22 to only eight, which leaves savers feeling desperate.”

Fixed Term Cash ISAs - Gross Rates
Company	Account	Notice	Rate £5.34k	Interest Paid	Min Inv.	Transfer Out Penalty	Notes
Governor Money	Bank of Ireland UK - 5 Year Fixed Rate ISA	30.01.17	4.50%	Yearly	£100	Breakage fee.	Earlier access on closure only subject to breakage fee. 0.50% paid until term starts on 30.1.12.
Clydesdale Bank	Cash ISA - Fixed Rate Bond (Issue 14)	29.01.16	4.40%	Yearly	£2000	Up to 180 day loss (min £30).	Earlier access on closure only subject to a penalty (min £30) based on term remaining: 1-91 days - 45 day loss, 92-181 days - 90 days loss, 182-273 days - 135 day loss, over 273 days - 180 day loss.
Yorkshire Bank	Cash ISA - Fixed Rate Bond (Issue 14)	29.01.16	4.40%	Yearly	£2000	Up to 180 day loss (min £30).	Earlier access on closure only subject to a penalty (min £30) based on term remaining: 1-91 days - 45 day loss, 92-181 days - 90 days loss, 182-273 days - 135 day loss, over 273 days - 180 day loss.
Halifax	ISA Saver Fixed	5 Year Bond	4.40%	Anniversary	£500	365 day loss.	Earlier access on closure only on 365 day loss of interest. Can apply online.
krbs	Flexible Fixed Rate ISA Five Year Issue 1	5 Year Bond	4.35%	Yearly	£1000	180 day loss.	Earlier access on 180 day loss of interest.
Halifax	ISA Saver Fixed	4 Year Bond	4.30%	Anniversary	£500	320 day loss.	Earlier access on closure only on 320 day loss of interest. Can apply online.
BM Savings	5 Year Fixed Rate ISA	5 Year Bond	4.25%	Anniversary	£500	Up to 365 day loss.	Earlier access subject to loss of interest: Year 1 - 365 days, Year 2 - 320 days, Year 3 - 270 days, Year 4 - 180 days, Year 5 - 90 days.
Governor Money	Bank of Ireland UK - 4 Year Fixed Rate ISA	29.01.16	4.20%	Yearly	£100	Breakage fee.	Earlier access on closure only subject to breakage fee. 0.50% paid until term starts on 30.1.12.
Source: Moneyfacts Correct as at 17.1.12

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.

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