Savers need to focus on the real rate paid on their savings after taking inflation into account as new analysis from Investec Bank shows nearly one in four instant access accounts are still offering negative or zero returns.
Consumer price inflation has fallen to 2% but Investec Bank’s data shows 47 out of 202 instant access accounts (23%) pay a rate equal to or lower than 2% which means savers are earning no interest or negative real rates on their deposits.
The analysis for Investec Bank by Andrew Hagger of Moneycomms found 13 accounts pay 2% while 34 pay less than 2% with the lowest at 0.5%. The research also found a 30-day notice account paying less than 2% inflation and offering a real return of -0.2%.
The table below shows the average rate before inflation for instant access, one year, two year and three year bonds as well as notice accounts plus the real rate after inflation at 2%. The analysis looked at 22 instant accounts, 94 one-year bonds, 82 two-year bonds, 54 three-year bonds and 105 notice accounts.
| Type of account | Average rate | Average real rate |
| Instant access | 3.21% | 1.21% |
| One year bond | 4.67% | 2.67% |
| Two year bond | 4.35% | 2.35% |
| Three year bond | 4.22% | 2.22% |
| Notice accounts | 4.29% | 2.29% |
David Hunt, Head of Retail Savings at Investec, said: “Inflation has fallen consistently since hitting a high of 11.1% back in October 2022 but many savings providers have not kept up and are still paying zero or negative real rates. Savers are seeing the value of their savings fall.
“With inflation back at the Bank of England’s target 2% rate and expected to remain around that mark it is more important than ever that savers focus on real rates of return when choosing accounts so that they are earning interest and the value of their money is increasing.
“Unfortunately that is not always the case and too many instant access accounts either pay less than inflation as well as relying on bonuses to boost headline rates making it confusing for savers looking for the best account for their circumstances.”
Investec’s range of accounts, which do not have any penalty fees or hidden bonus rates, include its Online Flexi Saver, 90-Day Notice Saver, and Fixed Rate Saver offering 1-Year, 2-Year or 3-Year terms.
The Online Flexi Saver is a simple and secure instant access savings account. It pays an interest rate of 4.70% AER* monthly on balances of between £5,000 and £250,000, provides instant access to savings, and allows unlimited deposits and withdrawals to a linked current account.
The Investec 90-Day Notice Saver pays 5.25% AER on balances of between £5,000 and £250,000. It also offers unlimited deposits with withdrawals subject to a 90-day notice period.
The Fixed Rate Saver provides simplicity and security for savers and pays an interest rate of 5.04% AER* over a one-year fixed term, 4.70% AER* over a two-year term or 4.45% AER* over a three-year term on balances of between £5,000 and £250,000. Interest is paid on maturity on the 1-Year and annually on the 2-Year and 3-Year. No withdrawals are permitted until the end of the term, and no further deposits can be made after the first seven days.
For more information on Investec’s savings products, visit: https://savings.investec.com/
*AER stands for the Annual Equivalent Rate and illustrates what the interest rate would be if interest was paid and compounded once a year. The AER is intended to be an indicative rate to help you compare the return on different savings products.
