New bond linked to inflation | City & Business | Finance | Express.co.uk
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The three-year bond promises to pay the Retail Price Index (RPI) inflation rate, which is currently 5 per cent, and another 0.25 per cent. The five-year bond will pay RPI plus 1 per cent
annually. This follows the withdrawal last month of similar accounts from National Savings & Investments as well as the Post Office itself. ** CLICK HERE TO CLAIM A FREE COPY OF ONE OF
OUR MONEY & FINANCE GUIDES ** The bonds are available until January 20, unless they are oversubscribed before this date. The bond can be opened with £500 and no additional deposits or
withdrawals are permitted until the bond matures. Ros Altmann, director general at Saga, said: “Inflation is going to remain a huge problem and if you want to protect the buying power of
your savings you need to look for ways to do this. “The Bank of England has been promising that inflation will fall, but there are no signs of this happening. Everyone needs some protection
against inflation but it’s hard to find ways to do so.” Richard Norman, director of savings and investments at the Post Office, said: “Our bonds have proved hugely popular in the past, so we
urge interested savers to get applications in as quickly as they possibly can. “We will aim to open bonds for as many applicants as we can, but funds are strictly limited and we may need to
withdraw the bond before the official closing date if it is oversubscribed.” Meanwhile, savers with fixed-rate bonds coming to an end need to look at options for their savings: by letting
their cash drift into a low-paying account, they could miss out. For example, someone who invested £15,000 in Turkish Bank’s one-year fixed-rate bond in 2010 would have earned £435 on an
interest rate of 2.9 per cent. Once this bond matures the rate drops to 0.1 per cent, meaning they could be missing out on £420 in additional interest in year two.Kevin Mountford, head of
banking at Moneysupermarket.com, said: “Savers cannot always rely on their banks to remind them their product term has come to an end so they must be vigilant and go as far as writing it in
their diary. “If you fail to act, some providers will automatically enroll you into another bond, tying your savings up or they will place your money in an account paying a poor rate of
interest.”