Savings rates in the UK move up and down depending on the base rate set by the Bank of England. This also follows inflation, as the central bank will generally raise the base rate when inflation is high to bring it down and lower it again when inflation is within the central bank’s target range. In times of high inflation, it’s worth taking advantage of better rates on savings accounts.
Average savings rates: Highlights
The average instant access savings rate in the UK is 2.73% as of August 2024.
The average variable cash ISA savings rate in the UK is 2.77% as of August 2024.
The average interest rate on a 1-year fixed rate ISA is 4.6% as of August 2024.
The UK inflation rate (CPI) was 2.2% in July 2024. The base rate is 5% as of 1 August 2024.
Average savings interest rates in the UK over the last 10 years
The UK’s average instant access savings rate was 2.73% as of August 2024. This is down from a 13-year high of 2.82% in January 2024.
Meanwhile, the average variable cash ISA interest rate was 2.77% as of August 2024. This is down from a peak of 3.37% in October 2023, but up from an average rate of 2.37% in January 2024.
Savers can generally find higher rates in fixed-rate ISAs, where you lock your money away for a set period. The average savings interest rate for a 1-year fixed rate ISA was 4.6% in August 2024, down from 5.48% in October 2023.
There are different savings rates on the market, and many believe that ISA rates are already being reduced in anticipation of the base rate being lowered this year, while instant access savings rates are still reacting to the current high base rate.
Inflation represents how goods and services rise in cost and decrease your money’s value. While interest rates on savings accounts might make it seem like your account’s value is increasing, inflation could be causing your savings to lose value in “real terms”.
According to our recent survey, the average savings per person in the UK is £11,185. If that amount had been put in a standard variable ISA in January 2014, it would have effectively lost £2,718 in real terms by January 2024.
We calculated this by comparing how average savings rates have kept up with inflation. For example, if average savings rates had been at the level of inflation, £11,185 deposited in 2014 would be worth £14,986 in 2024. Instead, with the actual average savings rates, your savings would be worth £12,268. Most of this loss comes in the last few years, as inflation has soared due to various geopolitical and economic events.
The inflation rate is now coming down after hitting a high of 11.1% in October. This could be the best time to lock in a higher savings rate, as many fixed-rate savings accounts and ISAs are offering higher savings interest rates.
The average inflation rate in the UK reached a 41-year high of 11.1% in October 2022. This triggered a rise in the base rate and a rise in overall savings rates, although banks were not quick to pass on rates to consumers.
This meant that savings rose to higher average interest rates than before, although as the inflation rate decreases, we’ve seen savings rates begin to drop again.
The inflation rate in July 2024 was 2.2%, which is lower than the average easy access savings rate.
Savings rates 30 years ago were generally much higher than they are now due to the base rate being much higher. In 1990, the base rate was 13.88%, which meant that savings rates were high to keep in line with it.
By the year 2000, the base rate was 5.75%, and the average savings rates hovered around this mark. Then, by the end of 2008, it had been reduced to 2.00%, and by 2009, it was lowered even further to 0.50%, meaning low savings rates came with it.
Average savings rates remained low through the 2010s but began rising again in 2022 as the Bank of England began to raise the base rate once more in an effort to control inflation.
UK inflation rate history
The average inflation rate in the UK reached a 41-year high in October 2022. Meanwhile, between 1995 and 2020, the UK experienced relatively low inflation of around 2%. The average inflation since 1989 is 2.69%.
Out of the last 34 years, 2022 recorded the highest inflation rate at 9.1%, followed by 1991 with 7.5%. The CPI (Consumer Price Index) inflation rate peaked at 11.1% in October 2022, while the CPIH (Consumer Prices Index including owner occupiers’ housing costs) inflation rate peaked at 9.6%.
Matthew Boyle is a banking and mortgages publisher at Finder. He has a 7-year history of publishing helpful guides to assist consumers in making better decisions. In his spare time, you will find him walking in the Norfolk countryside admiring the local wildlife. See full bio
Matthew's expertise
Matthew has written 292 Finder guides across topics including:
Helping first-time buyers apply for a mortgage
Comparing bank accounts and highlighting useful features
Sophie Barber is a content marketing manager for Finder in the UK after previously working as a content manager at a digital marketing agency. She has over 5 years experience in writing and publishing clear, concise and informative online articles for a variety of websites. See full bio
Sophie's expertise
Sophie has written 77 Finder guides across topics including:
Publishing original personal finance research
Creating data-led statistics pages to highlight industry trends
A recent Freedom Of Information request made by the comparison site, Finder, has found that millions of people could be trapped in Help To Buy (H2B) ISAs, with nearly 2.2 million H2B ISAs currently open.
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