Only one in four savings accounts pay above 4%

With inflation expected to remain high, it’s crucial savers review their accounts to maximise the return on their hard-earned money.

Just over one in four savings accounts (26%) pay interest above 4%, the current level of the Bank of England’s base rate, data from the Moneyfacts UK Savings Trends Treasury Report revealed.

This means that, despite August’s cut to the base rate from 4.25% to 4%, the majority of savings accounts continue to offer returns below this figure, putting many savers at risk of seeing their savings eroded by inflation (which stands at 3.8%).

How does inflation affect your money?

Inflation is when the cost of goods and services rises, which means the same amount of money buys less than it did before. As a result, any money held in an account that doesn’t pay interest above the rate of inflation (currently at 3.8%) is losing value in real terms. Learn more about inflation and what it means.

“Savers may have assumed with the Bank of England base rate falling, there would be a bigger impact on the pool of deals able to beat [the base rate], but that’s not true,” Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, noted.

“As inflation is expected to climb higher, this means the vast majority of savers will see their pots eroded in real terms. This will be incredibly demoralising for savers who use their interest to supplement their income, and in fact, the situation has been dire for many years,” she continued.

The last time that more than half of the savings accounts on the market (56%) paid above the base rate was the start of August 2022, when the base rate stood at just 1.25%.

What is the base rate?

The base rate is the central interest rate set by the Bank of England, which influences the cost of borrowing and how much interest providers pay on savings accounts. Read more in our guide to the base rate and how it works.

Bearing the brunt of base rate cuts

Unsurprisingly, savings rates have suffered in the wake of the most recent cut to the base rate on 7 August, with the Moneyfacts Average Savings Rate falling to 3.46% at the start of September 2025 compared to 3.50% one month earlier.

Variable accounts have seen particularly significant drops. For example, the average easy access savings rate fell from 2.68% at the start of August to 2.59% at the start of September, while the average notice savings rate plunged from 3.62% to 3.52% over the same period.

These rates are now at their lowest level since July 2023.

The average rate on one-year fixed bonds also edged lower from 3.99% to 3.96%. However, longer-term bonds (with terms of more than 550 days) fared better and saw the average rate increase from 3.88% to 3.89% over the past month.

Choosing a savings account

Even though rates are generally falling across the board, it’s still important for savers to review their accounts and ensure they’re getting the most competitive return on their money.

However, it’s just as crucial to think about your savings needs. For example, do you want the option to dip into your savings pot in an emergency or can you afford to lock away access to your money for several months or years?

Easy access accounts are suitable to keep some savings to cover any unexpected expenses or for money you’ll need to use in the near future, but they may not necessarily offer the best interest rates.

“Savings providers typically offer more attractive returns to savers who are prepared to lock their cash away for an agreed time, such as with a fixed rate bond or notice account, and less so for accounts where the cash could be instantly withdrawn,” Springall explained.

Fixed savings accounts can be appealing as they provide you with a guaranteed return on your money for the length of the term, but you need to be certain that you won’t need to use your savings during this period.

Find the latest fixed savings rates

See our chart to for an up-to-date list of the best fixed savings rates currently available, ranging from short-term bonds to five-year bonds.

Furthermore, savers with a large sum of money to deposit into savings should be mindful of their Personal Savings Allowance (PSA) to avoid being taxed on the interest they earn. Anyone at risk of paying tax on their savings interest could consider an ISA instead, as these accounts allow you to deposit up to £20,000 per tax-year without paying income tax on the returns you make.

Want to find out more about ISAs?

There are many types of ISA available, including easy access ISAs and fixed rate ISAs. Visit our ISA charts to learn more and to compare the latest rates available.