Inflation is eroding savings: why savers need to take action now

3 minute read

Savers have been losing money in real terms for 15 consecutive months (up to January 2026), as cash ISA and instant access savings rates continue to trail behind inflation.

While CPI inflation reached 3.0% in January 2026, cash ISA rates have barely shifted - locking in real‑term losses for millions.

Quilter’s latest analysis shows:

Cash ISA rates have fallen by nearly a third (32%) since October 2024, the last time they kept pace with inflation
Average instant access savings accounts are delivering a real‑terms loss of 0.85% a year
£300bn is currently sitting in accounts paying no interest at all, leaving savers fully exposed to inflation.

With global uncertainty putting upward pressure on inflation again, the gap between prices and savings returns looks set to continue.

Graph showing that real cash ISA returns are in negative territory

What savers can do

1. For any short-term and medium-term savings, make cash work harder

Cash savings platforms can help savers access multiple providers and switch easily into the best available rates.

Through Quilter’s CashHub:

Best instant access rate: 3.61% — a real return of £61 per £10,000 saved.
Best fixed-term rate (3+ years): 4.10%, giving savers the opportunity to lock in a 1.1% real return based on today’s inflation.

Rates correct as at 11 March 2026.

2. For longer-term savings, cash ISA savers should consider a stocks and shares ISA

Cash ISAs have consistently struggled to keep pace with inflation over time.

A saver with £10,000 in a cash ISA since 2011 would now have £12,214.75 - just £7,785.16 in today’s money after inflation.

A stocks and shares ISA invested over the same period, held in the IA Global Equity index, could be worth £36,856.35, or £23,515.67 after inflation (before charges).

Expert view: the risk of staying in cash

Holly Tomlinson, financial planner at Quilter, says:

“For well over a year now, savers have been hit by the scourge of inflation as cash savings rates have lagged inflation and look set to for the foreseeable future. People putting their money into these savings accounts are, more likely than not, to be locking in real term losses, reducing their money’s future value.

“Savings rightly play a key role in people’s finances. They offer good short- and medium-term options to park your money, but if you’re to make the most of it then people need to be active.

The good news is, there are options available. Cash savings platforms offer an easy way to get access to above inflation rates, allowing clients to seamlessly manage their money in real time across a number of providers, ensuring they’re getting the best rate out there, while benefitting from the likes of FSCS protection."