Personal finance experts have weighed in on whether savers should lock into a fixed-rate savings account paying 5.25%. Moneyfacts has confirmed that fixed savings rates are at “multiyear highs,” with top-paying accounts from GB Bank, Shawbrook Bank and Vanquis offering 5.25% on five-year fixed bonds.
According to Moneyfacts data, the average new one-year fixed savings bond rate stood at 4.41% last Thursday. The best one-year accounts include GB Bank’s fixed-rate bond at 5.05% and Kent Reliance’s 13-month account offering 5.06%.
Inflation Forecasts Signal Urgency for Savers
Caitlyn Eastell, Personal Finance Analyst at Moneyfactscompare.co.uk, warned that inflation forecasts above the Bank of England’s 2% target should act as a “wake-up call for savers.” She noted that if inflation reaches 3.2%, as currently projected for Q4 2026, someone with £10,000 in cash would need to earn around £320 in interest over the year just to keep pace with rising prices.
“On today’s rates around one in four savings accounts fail to match forecasts and some savers risk seeing their cash being quickly eroded,” Eastell said. She added that even on a sub-par rate, savers may see their account balance increasing and assume their money is working hard, when in reality it could be losing value in real terms, particularly for those who have left savings in the same account for years without checking the rate.
Spreading Cash and Comparing Rates
Rachel Springall at Moneyfacts expects the deals on offer to savers “to get even better” and recommends spreading cash between accounts. Eastell highlighted that savers are not powerless against inflation, with over 1,800 accounts currently able to outpace it, and the best rates paying upwards of 5%.
“Even small differences in interest can become significant, particularly over several years,” Eastell explained. She illustrated that savers fixing £10,000 for five years at 2% could earn £1,040, compared to around £2,915 from the market-leading five-year bond at 5.25% – an almost £1,900 difference.
Proactive Checking Essential
Eastell concluded that simply sticking with an existing account could mean missing out on valuable returns. “It’s important savers are proactively checking that their savings rates are still competitive,” she said. As inflation continues to put pressure on households, this is one of the best ways savers can protect the value of their cash.
