Savings warning as one in four earn ‘negative’ interest on pots - top three accounts today

Britons are urged to check their savings interest rates as nearly one in four easy access accounts offer "negative" or zero returns.

Although Consumer Price Index (CPI) inflation has fallen to two percent, Investec Bank’s research shows that 47 out of 202 instant access accounts (23 percent) pay a rate equal to or lower than two percent interest.

This means savers are earning no interest or experiencing negative real rates on their deposits.

Easy access accounts are a more flexible type of savings account, which allow people to make payments and withdrawals with minimal restrictions.

In the current high cost-of-living environment, these accounts have grown increasingly popular as more people find the need to dip into their savings to stay afloat.

The analysis, carried out for Investec by Andrew Hagger of Moneycomms, found 13 of these types of accounts pay two percent interest while 34 pay less than two percent, with the lowest at 0.5 percent.

The research also found a 30-day notice account paying less than two percent inflation and offering a real return of -0.2 percent.

David Hunt, head of retail savings at Investec, commented: “Inflation has fallen consistently since hitting a high of 11.1 percent 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 two percent 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 rely on bonuses to boost headline rates making it confusing for savers looking for the best account for their circumstances.”

Savers can still secure easy access interest rates of up to 5.2 percent. However, with predictions of an imminent Bank of England Base Rate change, people are urged to act quickly to take advantage of the top rates.

At the time of writing, Ulster Bank's Loyalty Saver tops the easy access board with an Annual Equivalent Rate (AER) of 5.2 percent on deposits of over £5,000. Those with deposits lower than £5,000 will be paid a lower AER of 2.25 percent. Interest is paid annually and on account closure, and withdrawals are permitted at any time up to the daily limits.

Oxbury Bank falls just behind with an AER of 5.02 percent on its Easy Access Account Limited Edition One for savers with a minimum deposit of £20,000. Up to £500,000 can be invested and interest is paid monthly.

For those looking for more flexibility with smaller sums to invest, Cynergy Bank offers an AER of 4.94 percent for a minimum deposit of £1. A bonus rate of 1.19 percent will be applied for 12 months and interest will be paid on the anniversary. Up to £1million can be invested overall and there are no restrictions on withdrawals.