Savers need `inflation-proof` savings to protect against debt

Moneysupermarket.com has warned savers to make sure their money grows faster than inflation by checking their savings products` rates do not get `eaten away` by inflation.

Less than a quarter of savings accounts pay enough interest to `fight off` inflation, it has been revealed.

Basic-rate tax payers, according to the price comparison site, would need a savings rate of 1.875% or more to benefit in real terms from their savings, while if higher-rate tax payers wanted to benefit, they would need a savings rate of 2.5%.

A debt management expert for Gregory Pennington commented: "Making regular contributions to a savings account can be a very effective way for people to protect themselves against debt.

"Although savings rates remain relatively low, there are still many accounts available that can provide reasonable returns.

"To fully benefit from their savings, it is important that people `shop around` for a savings account with a good interest rate - not only will this provide a reasonable return on their savings, but it can also offer a lot of protection against debt in the event of any unexpected costs."

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