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17 Oct 2012

Number Of Inflation-Beating ISAs Rises

There are more individual savings accounts (ISAs) that mitigate the impact of inflation after the Consumer Price Index (CPI) dipped to its lowest level in nearly three years in September, MoneySupermarket.com said on Tuesday.

According to the price comparison website, currently there are 16 cash ISAs and 61 fixed-rate ISAs that beat inflation for basic-rate taxpayers and three inflation-beating fixed-rate ISAs for higher-rate taxpayers. Last month there were no cash ISAs and 43 fixed-rate ISAs that beat inflation for basic-rate taxpayers and no inflation-beating ISAs for higher-rate taxpayers.

The improvement came as the CPI dropped to 2.2% in September from 2.5% in the previous month. This means that basic-rate taxpayers need an account that pays at least 2.76% to beat inflation, while the minimum interest rate for higher-rate taxpayers and 50% taxpayers is 3.68% and 4.41%, respectively.

In addition to the higher number of inflation-beating ISAs, basic-rate taxpayers can also choose from four easy-access accounts, 144 fixed-rate bonds and 19 notice accounts, while for higher-rate taxpayers there are still no inflation-beating easy-access accounts but there are 12 fixed-rate bonds. Last month there were no inflation-beating easy-access accounts for basic-rate taxpayers although they could choose from 109 fixed-rate bonds, while higher-rate taxpayers could choose from only six fixed-rate bonds.

MoneySupermarket.com said the latest drop in the CPI provided an opportunity for savers to check their existing rates and look for a better deal in order to ensure they were being offered the best returns. However, MoneySupermarket.com´s head of banking, Kevin Mountford, warned the decline in inflation could prove temporary in view of the latest announcements of energy price hikes.

Copyright © M2 Bespoke 2012

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