Anyone with savings in one type of bank account urged to act from Wednesday | Personal Finance | Finance
Anyone with savings in one type of bank account is being urged to act as soon as possible – because you’re probably losing money. Today, it was announced that the Consumer Prices Index (CPI) increased to 3.8% in July, up from 3.6% in June, according to the Office for National Statistics (ONS).
It puts inflation at its highest level since January 2024, when it was at 4%, and the increase was blamed on increased air travel prices, which shot up 30.2% between June and July, the largest single-month rise ever recorded. And according to data from Finder, the average interest rate for an easy access savings account in the UK in July was 2.34%. That means savings were 1.46% behind inflation for those with an average easy access bank account. Or, in other words, you lost money in real terms because the value of your savings rose more slowly than inflation.
But the average one-year fix was 3.98% in July, which was 0.18% higher than inflation. That means your spending power is being maintained because your money has risen slightly faster than inflation in the same period.
Finder explains: “The average UK savings account has lost £2,989 in real terms between June 2020 and June 2025, according to research from personal finance site Finder. A Finder survey found that the average UK adult has just over £16,000 in savings. If savings rates had risen in line with inflation over the last 5 years, then this amount would now be worth £20,286. However, due to the high inflation we’ve seen in recent years – and the fact savings rates have not kept pace with it – this figure is actually almost £3,000 lower with the average savings rate.”
It means those with savings should act as soon as possible, following the inflation news being released today (Wednesday, August 20).
Right now, First Direct is offering an inflation-smashing 7% interest rate on its savings, fixed for one year and Virgin Money offers 6.5% fixed for a year.
In terms of easy access, Kent Reliance offers 4.33% right now with no withdrawal limit, and Charter Savings Bank 4.1%.
Kris Hamer, director of insight for trade body the British Retail Consortium, said: “Households are once again seeing the cost of their weekly shop climb, with food inflation now up by 1.9 percentage points in just four months.
“This surge has been a key driver behind headline inflation, alongside a rise in transport costs, piling fresh pressure on families already being forced to cut back.
“The Bank of England has been clear that Government policies, which have driven up the costs of employment, are fuelling price rises at the till, while poor harvests and global instability have also added further cost pressures.”
Grant Fitzner, the ONS’s chief economist, said: “The main driver was a hefty increase in air fares, the largest July rise since collection of air fares changed from quarterly to monthly in 2001.
“This increase was likely due to the timing of this year’s school holidays.
“The price of petrol and diesel also increased this month, compared with a drop this time last year.
“Food price inflation continues to climb – with items such as coffee, fresh orange juice, meat and chocolate seeing the biggest rises.”
Chancellor Rachel Reeves acknowledged that there was “more to do to ease the cost of living” following the figures.
She said: “We have taken the decisions needed to stabilise the public finances, and we’re a long way from the double-digit inflation we saw under the previous government, but there’s more to do to ease the cost of living.
“That’s why we’ve raised the minimum wage, extended the £3 bus fare cap, expanded free school meals to over half a million more children and are rolling out free breakfast clubs for every child in the country.”
