Inflation-busting savings accounts: where can you earn up to 5%?

A third of savings accounts offer returns below June's inflation rate of 3.6%, meaning money invested in one of these products is losing value over time.

A Which? analysis found that just 65% of UK savings accounts beat June’s inflation rate of 3.6% — down from 72% last month and 88% in January.

Read on to find out which accounts offer the best interest and what's behind the latest Office for National Statistics (ONS) inflation figures. 

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Which savings accounts beat inflation?

Our analysis of Moneyfacts data shows there are currently 1,458 savings accounts (65% of all products) that offer rates higher than June's Consumer Price Index (CPI) inflation rate of 3.6%. This includes instant-access and variable-rate deals, fixed-rate bonds and Isas.

This table shows the top rates currently available on instant-access and fixed-rate cash Isas and savings accounts, ordered by term.

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How savings rates track against inflation

It's important to pick a savings account with an interest rate above the current CPI figure. If your rate is lower than inflation, your savings will lose value in real terms. 

Yet 39% of British adults don't realise the impact inflation has on their savings, according to new research from Tesco Bank. Of those who don’t fully understand inflation, 11% wrongly believe it increases the value of their savings, while 7% think it has no effect.

This table shows how average savings rates compare to inflation since August 2020, using data from Moneyfacts:

The average rates on one-year and longer-term bonds have beaten inflation since October 2023. 

June's average instant-access rate of 2.71% AER, however, is significantly lower than the pace at which prices are rising.

The last time it dipped below inflation was in January 2025, but the gap was much smaller.

• Find out more: best savings accounts 2025

What's happening to savings rates?

Savings rates rocketed after the Bank of England (BoE) increased the base rate 14 times between December 2021 and August 2023. But when the base rate was reduced last August, average savings rates began to drop too. 

The BoE has cut the base rate three times since then, falling to a two-year low of 4.25% on 8 May.

Instant-access

Instant-access rates, which pay variable rates and can be changed at short notice, have seen the biggest cuts. The average rate fell from 3.11% AER to 2.68% in the 12 months to 1 July 2025. That's the lowest it's been in two years.

There are now only three instant-access deals offering a rate as high as 5% AER, but only Cahoot's Sunny Day Saver account has no restrictions on withdrawals or who can open it. The downside is that interest is only given on deposits up to £3,000, after which you earn nothing.

If you want instant access without restrictions, you'll have to settle for a lower top rate of 4.55% AER.

• Find out more: the different types of savings accounts explained

Fixed-term

Locking your money away for a year or more could help protect it if savings rates continue to fall, as fixed-term accounts guarantee your rate won’t drop during the term

Interest rates on fixed bonds have bucked the downward trend seen elsewhere, rising slightly between June and July. The average one-year fixed rate increased from 4.01% to 4.03% AER, while the average rate on longer-term accounts edged up from 3.9% to 3.91% AER.

The best available rate on a one-year fixed-term account is now 4.58% AER – up from 4.44% AER last month. This 0.14 percentage point jump is the biggest increase in top short-term bond rates since last August.

However, a despite a small rise in overall averages, longer-term fixed rates (over 12 months) have remained broadly unchanged over the past month. Top rates are now fairly similar across one to five-year terms, ranging from 4.4% to 4.58% AER.

Fixing for two to five years could still leave you better off in the long run. If you only fix for 12 months or less, you may face lower rates when it's time to reinvest.

Cash Isas

Cash Isas, which allow you to save up to £20,000 tax-free annually, have also taken a hit. Over the past year, the average instant-access cash Isa rate has dropped from 3.31% to 2.92% AER.

Over the same period, the average one-year fixed cash Isa rate has fallen from 4.4% to 3.95% AER, while longer-term fixed rates have dropped from 4.04% to 3.82% AER. 

If you're happy to limit how often you withdraw money, the best cash Isa rate is currently 4.58% AER with Plum. For unrestricted access, the top rate is 4.64% AER from Tembo Money. 

The next base rate decision is due on 7 August, and further cuts are expected over the coming year. This means savings rates may continue to drop. 

• Find out more: best cash Isa rates 2025

What's behind June's inflation rate?

CPI inflation rose from 3.4% to 3.6% in the 12 months to June 2025 – the highest it has been since January 2024. 

According to the ONS, transport costs were the biggest driver of the rise. This was largely due to a smaller fall in fuel prices compared with June last year, alongside soaring air and rail fares. The cost of flying, for example, jumped by 7.9% between May and June 2025.

Food and soft drink prices also pushed inflation higher, rising by 4.5% in the 12 months to June – up from 4.4% in May. This marks the highest food inflation rate since February 2024, though it remains well below the peak of 19.2% recorded in early 2023.

Smaller price rises were seen in clothing and footwear, which increased by 0.5% over the year to June 2025, compared with a 0.3% fall the previous month.

• Find out more: what's happening to grocery costs at the supermarket?