Inflation’s down… but your savings could be next

It’s been a curious few weeks for savers; a tale of two trends in the fixed rate tables in particular and a timely reminder that inflation, the Bank of England base rate and savings account rates don’t always move in perfect harmony. The good news is that the resilience of certain pockets of the savings market is providing a golden opportunity for those who are quick to act.

Inflation: heading in the right direction  

The latest figures from the Office for National Statistics (ONS) show that the rising cost of living slowed to 3% in the 12 months to January 2026, down from 3.4% in December last year. That’s a meaningful drop and, on the face of it, very welcome news for households.  

Better still, many forecasters expect inflation to continue to fall this year, potentially reaching the Bank of England’s 2% target by the summer.  

However, what’s good news for borrowers and the wider economy isn’t all good news for savers.  

With inflation easing, the likelihood of further base rate cuts from the Bank of England has increased. Markets are widely expecting a 0.25% cut at the next meeting on 19th March, with an ever increasing possibility of a couple more to follow later in the year.

And that’s where things get interesting.

A tale of two fixed rate tables

Despite the expectation of falling base rates, savings rates have been remarkably resilient. So now could be a good time to lock in some of your cash, to hedge against further base rate and therefore savings rate cuts.  

In the fixed rate bond tables, shorter-term rates have edged down slightly recently, but not dramatically. The top 1-year bond is currently paying 4.23% from Union Bank of India UK, only fractionally lower than the 4.25% we saw from DF Capital before it withdrew its market-leading deal a couple of weeks ago.  

In the 2-year space, rates have also dipped only marginally. Chetwood Bank now tops the table at 4.17%, just shy of the 4.19% and 4.18% that were available recently from Close Brothers, Birmingham Bank and OakNorth Bank before those products were withdrawn.  

But here’s the really encouraging part: longer-term rates have actually ticked up.

Chetwood has also taken the lead in the 3-year table with 4.20%, nudging OakNorth into second place at 4.18%. And in the 5-year table, Chetwood is offering 4.36% AER – the highest 5-year rate we’ve seen since November last year!  

So, while short-term rates may be softening slightly in anticipation of base rate cuts, those willing to lock in, especially for the longer term, are being rewarded.  

A similar pattern in fixed rate ISAs

The fixed rate cash ISA tables tell a very similar story.  

Shorter-term ISA rates have edged down. The top 1-year ISA is now 4.10% from State Bank of India UK, compared with 4.15% just a couple of weeks ago. The average of the top five has also slipped as providers have withdrawn higher-paying deals and replaced them with slightly less generous versions.  

In the 2-year ISA table, Furness Building Society leads at 4.07%, but that’s still below the 4.11% that had been available from Tandem Bank recently.  

The 3-year ISA table has been steadier.  Aldermore remained mostly unchallenged at 4.15%. Close Brothers had briefly knocked Aldermore from its perch offering 4.16%, but this has subsequently been withdrawn.  And unfortunately Tandem and Cynergy which were also offering 4.15% have launched new ISAs paying less, so overall the average has fallen. As a result of this benign behaviour from others, Aldermore has reduced the rate it’s offering to 4.10% - lower but still the best rate!

In the 5-year ISA market, there has been a little more competition, pushing rates up. Castle Trust Bank launched a 5-year ISA at 4.25%, just ahead of Hampshire Trust Bank at 4.24%. Close Brothers then matched the 4.25%, albeit with a higher minimum deposit.  

Once again, the message is clear: if inflation and interest rates continue to fall, those who lock in now, especially for longer, could look back and feel very smug indeed.  

It’s probably worth remembering that whilst at first glance cash ISAs look like they pay a lower interest rate than the equivalent fixed rate bonds, once you strip tax from the advertised rate, cash ISAs often offer far better value to those who pay income tax on their normal savings.    

For example, at the time of writing, the top 1-year fixed rate bond is paying 4.23% AER, whilst the top 1-year fixed rate cash ISA is paying 4.10% tax-free/AER. For those who don’t pay tax on their savings, the bond is clearly the winner as it would provide an extra £13 of gross interest for each £10,000 deposited. 

But if you are a taxpayer, you could earn more in the ISA. The rate on the bond would fall to 3.38% after basic rate tax has been deducted, so a basic rate taxpayer with a deposit of £20,000 would earn £820 in the cash ISA, but just £676 from the bond, if they have already used their Personal Savings Allowance. 

The real danger is inertia  

According to the Bank of England, more than £298 billion is sitting in current accounts earning no interest at all. Zero. Nothing. Not even enough to buy a coffee.  

And the high street bank’s so-called savings accounts often pay some of the worst rates available - well below inflation. If inflation is 3% and you’re earning less than that, the purchasing power of your cash is quietly eroding. But it doesn’t have to be that way. You can do better – much better.  

The first and most obvious solution is to shop around and open the best accounts directly. The top rates in the market are significantly higher than those offered by most high street banks. Yes, it may mean opening accounts with names you’re less familiar with, but provided they are authorised and therefore part of the Financial Services Compensation Scheme (FSCS), your money is safe up to the new limit of £120,000 per person, per banking license.  

The exception is if you choose to hold funds with National Savings and Investments (NS&I), as all money held in the State-owned bank is fully backed by the Treasury, regardless of how much that is, although the payoff is that its rates have become less competitive of late.  

For some, opening and monitoring multiple savings accounts is fine.  For others, it’s precisely the reason they never move their money.  

The rise of the cash platform  

And this is where innovation is finally catching up with savers’ needs.  

Cash platforms – including our own Savers Hub, powered by Insignis – allow you to access a wide range of competitive savings accounts through a single log-in. You can spread large sums across multiple banks, stay within FSCS limits, and manage everything in one place.  

Crucially, you don’t need to keep monitoring maturity dates and constantly scanning the market for replacements. The platform does the heavy lifting by letting you know when money is maturing and if better rates become available.  

As we approach the end of the tax year, it’s also worth remembering that you can open cash ISAs via the platform and transfer in existing ISAs, helping to consolidate what can otherwise become a patchwork quilt of accounts built up since ISAs were introduced back in 1999.  

For diligent savers who have used their allowance year after year, ISA pots can now run into very substantial sums – often spread across multiple providers. Bringing them together onto one platform can dramatically simplify your financial life.  

The bottom line

Inflation is falling. Base rate cuts are likely. Savings rates, for now, are holding up better than many expected, particularly for longer fixes. 

But the real risk isn’t whether you fix at 4.23% or 4.17%. 

It’s leaving your hard-earned cash earning next to nothing because moving it feels like too much effort. 

In a falling rate environment, inertia becomes even more expensive.  

Whether you take control yourself and open the best accounts directly, or use a cash platform to do the legwork for you, there has never been a better time to make sure your savings are working as hard as you do. 

For the best rates available, keep an eye on our Best Buy tables, which monitors the very best rates from the whole of the market. 

But if you are one of those people who are cash rich but time poor, take a look at how our Savers Hub could help you. Request a non-obligatory illustration today or request a demonstration of how the cash platform could help you with managing your savings effortlessly.  

Arrange your free initial consultation

Rates correct as at 27/02/2026.

This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions.  

The Financial Conduct Authority (FCA) does not regulate cash flow planning.