Savers enjoy biggest rate rise in more than a decade

However, Isa rates still lag behind pre-pandemic levels and savers risk their money being eroded by inflation, despite three successive interest rate rises by the Bank of England. 

The average notice Isa, which requires advance warning before funds are withdrawn, pays just 0.51pc – less than half the 1.05pc paid in April 2020, according to Moneyfacts. The average easy-access Isa currently pays 0.38pc, compared with 0.79pc two years ago.

Savers will lose thousands of pounds in the next year as inflation outstrips the best savings rates. Britain’s consumer prices index hit a 30-year high of 7pc in March, which means even a saver using the best open-to-all easy-savings account will effectively lose £230 of their wealth each month on a £50,000 deposit.

Across a year, this would diminish their savings in real terms by £2,757, despite earning 1.1pc interest on their balance.

Tracy Crookes of Quilter, an advice firm, said: “Returns on cash accounts may start to look a little more attractive, but they are still incredibly low and on average are worse than pre-pandemic rates, despite the Bank Rate being higher. 

“While stocks and shares Isas can appear more risky on the face of it, they are still likely to be the best chance of achieving an inflation-beating return on your savings.”

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