High-interest savings accounts are still struggling to keep pace with rises in the cost of living, mainly because of the current rate of inflation. With precious few accounts offering inflation-busting returns, many Brits have instead stopped saving into instant-access savings accounts altogether, preferring to pay down mortgages and other debts.

High interest savings accounts not keeping pace in real terms

With the Consumer Prices Index (CPI) standing at 4.0 per cent in April, as a basic-rate taxpayer you need to find an account paying an interest rate of 5.01 per cent in order to beat inflation. As a higher-rate taxpayer you will need high-interest savings accounts paying 6.67 per cent.

Indeed, the Guardian recently reported that an investment of £10,000 five years ago would be worth just £9,587 today, allowing for average inflation, interest and 20 per cent tax.

The newspaper found that there are no instant-access savings accounts that will beat or match inflation (taking into account basic rate tax) and no accounts of any type that offer an above-inflation return for higher-rate taxpayers.

Compare savings accounts to maximise your return

If you are a basic-rate taxpayer, you may be considering fixed-interest bonds as the only way to secure an above inflation return. However, unlike instant-access savings accounts you have to commit your cash to a bond for a number of years. With interest rates set to rise over the next couple of years it is also worth considering whether fixing your savings now would be a good idea.

If you are looking for instant-access savings accounts it is important that you shop around for the very best deal. Many good savings rates are available online, although beware of introductory offers that last a short period of time. By all means take advantage of these high-interest savings accounts but remember to switch to another account once your introductory interest rate bonus has ended.