Why your nest egg is growing almost as fast as it was before the 2008 crash, SYLVIA MORRIS explains

Savers saw a slew of cuts in fixed-rate bond offerings last month – the biggest monthly decline in fifteen years.

So you might be surprised to hear me say that savers are ringing in the new year better than they have in three years.

That's because, due to the falling cost of living, there are now more than 1,100 accounts that beat current inflation, according to interest rate monitors Moneyfactscompare.

This time last year, and the January before that, there wasn't one (not one!) single account that made you money in real terms.

But today you can enjoy a real return for the first time since February 2021.

The inflation beast has always been the great enemy of savers. If you earn less interest than the increase in the cost of living, the purchasing power of your savings decreases.

This is the case even if you're earning what looks like a good rate, as high inflation still wipes out any returns you earn in real terms.

Savers have suffered greatly from the last period of high inflation, but that has now changed: interest rates have fallen to 3.9 percent from the recent double figure.

Investec Bank's top one-year bond is offering 5.3 percent, up from 5.7 percent at the start of December – a big drop of 7 percent in just four weeks.

But it's more than the current inflation rate of 3.9 percent – ​​so you'll get a real return of 1.4 percent if inflation stays at this level.

This time last year, the best one-year bond paid 4.25 percent from the banks Atom, Zopa and Cahoot.

But at the time, the cost of living increase was a colossal 10.1 percent and remained above 4.25 percent for most of the year. So even with this top rate, your money would have lost its purchasing power.

February 2021 was the last time you could beat inflation with short-term, fixed-rate bonds and easy-to-access accounts – and by a very narrow margin.

With inflation at a mild 0.4 percent, you could earn 0.5 percent on the best easy-access account and 0.71 percent on the highest one-year fixed-rate bond.

Although rates are down, they are still better than last year. That means if you have a one-year bond that comes up for renewal, you'll still get a better rate.

Inflation is still almost double the Bank of England's 2 percent target, so this is not expected to cut the base rate sharply, which is good news for savers.

Experts expect rates on easy access accounts to remain around their current levels, with Ulster Bank's best offer online at 5.2 per cent. But you only benefit if you have the highest paying account.

Figures from Moneyfactscompare show that the average easy access rate is just 3.17 per cent, or 3.31 per cent on an easy access cash Isa.

Inflation isn't helping either – and it could be even worse if you stick with the regular, easy-access account from a major bank, where low interest rates range from 0.25 percent to 1.45 percent.

The average one-year fixed rate bond is a better 5.13 per cent, while the cash Isa equivalent is 4.99 per cent.

Although interest rates look much worse than before the Great Financial Crisis of 2008, in reality they are not that different.

Then we saw rates that we can only dream of now. One-year fixed-rate bonds paid 6.75 percent and easy-access accounts paid 6.3 percent.

Inflation was around 4 percent, so you would have gotten a real return of 2.75 percent and 2.3 percent respectively on fixed-rate bonds and easy-access accounts, which isn't much higher than today.

Be quick and take advantage of this top rate

Bucking the trend of falling interest rates, Shawbrook Bank has just increased the interest rate for new savers on its one-year fixed rate Isa from 4.6 per cent to 5.01 per cent.

The new Shawbrook rate has taken it to the top of the best buys. Experts advise not to stick around if you see a good fixed interest rate and are happy to tie up your money.

They expect interest rates to fall further this year. And it's unlikely that a top rate like this will exist for long.

You can earn a little more with a regular fixed rate bond, with the best interest rate of 5.3 percent from Investec Bank. Please note: this is taxable if you exceed your personal savings allowance.

This allows basic rate taxpayers to earn up to £1,000 in interest in each tax year without having to pay tax. Higher rate taxpayers will receive a £500 compensation.

If you lose your personal allowance after paying basic tax, the 5.3 percent works out to a lower 4.24 percent, while higher taxpayers will see just 3.18 percent.

You keep the whole 5.01 per cent in a cash Isa because the interest is automatically tax-free.

You can put up to £20,000 into a cash Isa each tax year, which runs from April 6 to April 5 of the following year.

See the best cash Isa rates in our savings tables