ONLY one in 15 savings accounts pay the same or more than the rate of inflation – which last month jumped from 1.2 per cent to 1.6 per cent.

Savings experts say this year looks to remain a "dreadful" time for savers as inflation is expected to continue rising.

Figures from comparison site Moneyfacts.co.uk shows that out of the 669 savings accounts currently available, just 44 – or around one in 15 deals – can beat or match the 1.6 per cent Consumer Price Index (CPI) rate of inflation.

These include Atom Bank's five-year bond paying 2.05 per cent and Ikano Bank's three-year fix paying 1.75 per cent.

The number of interest rates being cut across the savings market has been outweighing the number of rises for the last 15 months, the website said, as the low interest rate environment continues.

In December, around four rates were being cut for every rate that increased. Some 84 rates decreased last month, while just 21 increased.

Rachel Springall of Moneyfacts.co.uk, said: "With inflation expected to rise significantly over 2017, it is sadly going to stay a dreadful time to be a saver.

"While there was a welcome slowdown in the number of cuts to savings rates last month, consumers will remain underwhelmed by the lack of competition for their cash."

Ms Springall said it wouldn't be surprising if we start to see Brits sacrifice making savings in favour of overpaying their debts, "particularly as there is little interest to be gained on most savings accounts currently on the market," she said.

Today, most of the best savings accounts are offered by "challenger" banks, some of which have upped their rates recently.

Ms Springall said: "While savers may feel discouraged, it is still important to keep on top of the savings market, even if just a fraction more can be gained in interest.

"Since the start of 2017 we have seen a small selection of providers making minor improvements to their savings rates, which includes challengers such as RCI Bank, Post Office Money, Ikano Bank and Sainsbury's Bank.

"While this is positive news, there is still a significant way to go before we can see rejuvenation in the market."

Savings account or current account?

With savings rates at historical lows, current accounts are typically paying higher rates of interest than traditional savings accounts.

For instance, Nationwide pays 2 per cent on its Regular Saver account, on balances of £500 a month.

After 12 months, the rate falls to just 0.10 per cent.

The current accounts that pay the most interest

You can get up to 5 per cent with some accounts, but they come with catches.

• Nationwide’s FlexDirect account pays 5 per cent on balances of up to £2,500, but only for the first year. After 12 months, the rate drops to 1 per cent.
• Santander pays 1.5 per cent on balances up to £20,000, but there’s a £5 monthly fee. The 3 per cent cashback on utility bills offered by the account often covers this fee.
• Bank of Scotland offers up to 3 per cent interest on balances between £3,000 and £5,000. Customers will need to pay in £1,000 each month and have two different direct debits set up on the account.
• Tesco Bank pays 3 per cent on balances of up to £3,000. There’s no minimum pay-in on the account to get the interest and customers will also earn ClubCard points for purchases made with the debit card.

That means that savers will earn £8 in interest each month, after basic rate tax is taken off.

Nationwide's FlexDirect current account, on the other hand, pays 5 per cent on balances of up to £2,500. After 12 months, the rate drops to 1 per cent.

That means that you can earn £100 (after tax) each month on balances of £2,500. On balances of £500, you'll get £20 in interest – an extra £12 compared to the Nationwide saver.

Bear in mind that the FlexDirect account requires a minimum deposit of £1,000 each month.

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