Erin Yurday
Author
ISAs and inflation: how to work out your real return
07 October 2026
3 min read
Contents
Real return on a cash ISA after one yearCash ISAs and stocks and shares ISAsISA rules for 2026/27The guidance on this site is based on our own analysis and is meant to help you identify options and narrow down your choices. We do not advise or tell you which product to buy; undertake your own due diligence before entering into any agreement.
If the interest on your cash ISA is lower than inflation, your savings grow in pounds but buy less than before. This is known as a real-terms loss.
Consumer prices index (CPI) inflation was 3.1% in the 12 months to August 2026 (ONS). That means something that cost £10,000 a year earlier would cost about £10,310 now.
ClearScore is a credit broker, not a lender.
Real return on a cash ISA after one year
The table below shows £10,000 and £20,000 held in a cash ISA for one year at different interest rates, compared with prices rising by 3.1%. It's a simplified illustration.
Interest rate | £10,000 after 1 year | Shortfall or surplus against the balance needed to match inflation | £20,000 after 1 year | Shortfall or surplus against the balance needed to match inflation |
|---|---|---|---|---|
| Interest rate 1% | £10,000 after 1 year £10,100 | Shortfall or surplus against the balance needed to match inflation −£210 | £20,000 after 1 year £20,200 | Shortfall or surplus against the balance needed to match inflation −£420 |
| Interest rate 2% | £10,000 after 1 year £10,200 | Shortfall or surplus against the balance needed to match inflation −£110 | £20,000 after 1 year £20,400 | Shortfall or surplus against the balance needed to match inflation −£220 |
| Interest rate 3% | £10,000 after 1 year £10,300 | Shortfall or surplus against the balance needed to match inflation −£10 | £20,000 after 1 year £20,600 | Shortfall or surplus against the balance needed to match inflation −£20 |
| Interest rate 4% | £10,000 after 1 year £10,400 | Shortfall or surplus against the balance needed to match inflation +£90 | £20,000 after 1 year £20,800 | Shortfall or surplus against the balance needed to match inflation +£180 |
| Interest rate 5% | £10,000 after 1 year £10,500 | Shortfall or surplus against the balance needed to match inflation +£190 | £20,000 after 1 year £21,000 | Shortfall or surplus against the balance needed to match inflation +£380 |
At an interest rate of 3.1%, your savings would keep pace with prices. Below that, they would lose spending power, even though the balance goes up.
For comparison, based on rates published on Moneyfactscompare on 24 September 2026, the highest easy access rate was 5.00% (including a bonus). Moneyfacts reported the average easy access rate as 2.53% at the start of September 2026. These figures reflect providers listed by Moneyfacts and may not cover the whole market.
Cash ISAs: your balance won't fall, and eligible deposits are protected by the FSCS up to £120,000 per person, per authorised bank or building society. Interest rates can be below inflation, leading to a loss of purchasing power.
Stocks and shares ISAs: returns depend on how the investments perform and when you invest. Capital at risk: the value of investments can fall as well as rise, and you could get back less than you put in. Past performance isn’t a reliable indicator of future returns.
ISA rules for 2026/27
Allowance: you can pay in up to £20,000 a year in total across all your ISAs.
More than one ISA of the same type: since 6 April 2024, you can open and pay into more than one ISA of the same type (for example, two cash ISAs) in the same tax year, as long as the total stays within £20,000. The exception is the Lifetime ISA, where you can only pay into one per year.
Lifetime ISA: up to £4,000 a year, which counts towards the £20,000.
Partial transfers: you can transfer part of an ISA to another provider.
Changes from 6 April 2027: the overall ISA allowance stays at £20,000, but people under 65 will be able to put no more than £12,000 a year into cash ISAs. The full £20,000 cash limit applies from the start of the tax year in which you turn 65. People under 65 also won't be able to transfer money from a stocks and shares ISA (or another non-cash ISA) into a cash ISA. Interest earned on cash held inside a stocks and shares ISA will face a flat-rate charge of 22%. The government plans to lay the regulations in autumn 2026.
Read more:
This article is for general information and isn't financial advice. It doesn't cover the whole market.
Erin Yurday
Author
07 October 2026
3 min read
Contents
Real return on a cash ISA after one yearCash ISAs and stocks and shares ISAsISA rules for 2026/27The guidance on this site is based on our own analysis and is meant to help you identify options and narrow down your choices. We do not advise or tell you which product to buy; undertake your own due diligence before entering into any agreement.
Meet the author
Author
Erin Yurday
Erin was the founder of NimbleFins, a data driven personal finance site. A former derivatives trader and finance expert at the Stanford Graduate School, Erin turns research into plain answers so you can understand your credit.
ISAs and inflation: how to work out your real return
Erin Yurday
Author
07 October 2026
3 min read
Contents
Real return on a cash ISA after one yearCash ISAs and stocks and shares ISAsISA rules for 2026/27The guidance on this site is based on our own analysis and is meant to help you identify options and narrow down your choices. We do not advise or tell you which product to buy; undertake your own due diligence before entering into any agreement.
If the interest on your cash ISA is lower than inflation, your savings grow in pounds but buy less than before. This is known as a real-terms loss.
Consumer prices index (CPI) inflation was 3.1% in the 12 months to August 2026 (ONS). That means something that cost £10,000 a year earlier would cost about £10,310 now.
ClearScore is a credit broker, not a lender.
Real return on a cash ISA after one year
The table below shows £10,000 and £20,000 held in a cash ISA for one year at different interest rates, compared with prices rising by 3.1%. It's a simplified illustration.
Interest rate | £10,000 after 1 year | Shortfall or surplus against the balance needed to match inflation | £20,000 after 1 year | Shortfall or surplus against the balance needed to match inflation |
|---|---|---|---|---|
| Interest rate 1% | £10,000 after 1 year £10,100 | Shortfall or surplus against the balance needed to match inflation −£210 | £20,000 after 1 year £20,200 | Shortfall or surplus against the balance needed to match inflation −£420 |
| Interest rate 2% | £10,000 after 1 year £10,200 | Shortfall or surplus against the balance needed to match inflation −£110 | £20,000 after 1 year £20,400 | Shortfall or surplus against the balance needed to match inflation −£220 |
| Interest rate 3% | £10,000 after 1 year £10,300 | Shortfall or surplus against the balance needed to match inflation −£10 | £20,000 after 1 year £20,600 | Shortfall or surplus against the balance needed to match inflation −£20 |
| Interest rate 4% | £10,000 after 1 year £10,400 | Shortfall or surplus against the balance needed to match inflation +£90 | £20,000 after 1 year £20,800 | Shortfall or surplus against the balance needed to match inflation +£180 |
| Interest rate 5% | £10,000 after 1 year £10,500 | Shortfall or surplus against the balance needed to match inflation +£190 | £20,000 after 1 year £21,000 | Shortfall or surplus against the balance needed to match inflation +£380 |
At an interest rate of 3.1%, your savings would keep pace with prices. Below that, they would lose spending power, even though the balance goes up.
For comparison, based on rates published on Moneyfactscompare on 24 September 2026, the highest easy access rate was 5.00% (including a bonus). Moneyfacts reported the average easy access rate as 2.53% at the start of September 2026. These figures reflect providers listed by Moneyfacts and may not cover the whole market.
Cash ISAs: your balance won't fall, and eligible deposits are protected by the FSCS up to £120,000 per person, per authorised bank or building society. Interest rates can be below inflation, leading to a loss of purchasing power.
Stocks and shares ISAs: returns depend on how the investments perform and when you invest. Capital at risk: the value of investments can fall as well as rise, and you could get back less than you put in. Past performance isn’t a reliable indicator of future returns.
ISA rules for 2026/27
Allowance: you can pay in up to £20,000 a year in total across all your ISAs.
More than one ISA of the same type: since 6 April 2024, you can open and pay into more than one ISA of the same type (for example, two cash ISAs) in the same tax year, as long as the total stays within £20,000. The exception is the Lifetime ISA, where you can only pay into one per year.
Lifetime ISA: up to £4,000 a year, which counts towards the £20,000.
Partial transfers: you can transfer part of an ISA to another provider.
Changes from 6 April 2027: the overall ISA allowance stays at £20,000, but people under 65 will be able to put no more than £12,000 a year into cash ISAs. The full £20,000 cash limit applies from the start of the tax year in which you turn 65. People under 65 also won't be able to transfer money from a stocks and shares ISA (or another non-cash ISA) into a cash ISA. Interest earned on cash held inside a stocks and shares ISA will face a flat-rate charge of 22%. The government plans to lay the regulations in autumn 2026.
Read more:
This article is for general information and isn't financial advice. It doesn't cover the whole market.
Erin Yurday
Author
07 October 2026
3 min read
Contents
Real return on a cash ISA after one yearCash ISAs and stocks and shares ISAsISA rules for 2026/27The guidance on this site is based on our own analysis and is meant to help you identify options and narrow down your choices. We do not advise or tell you which product to buy; undertake your own due diligence before entering into any agreement.
Meet the author
Author
Erin Yurday
Erin was the founder of NimbleFins, a data driven personal finance site. A former derivatives trader and finance expert at the Stanford Graduate School, Erin turns research into plain answers so you can understand your credit.