NS&I index-linked bonds back on sale

12 May 2011

Index-linked bonds from National Savings & Investments are now back on sale but savers should hurry to snap these up before they're taken off the market.

Measured against the retail prices index (RPI), the index-linked bonds pay well above other savings accounts on the market.

The new issue bonds are fixed at five years and you can choose from either an index-linked account, linked to RPI plus 0.5%, or a fixed-interest savings certificate set at 2.25%.

Savers struggling

The popular bonds were taken off the market last July after high demand from savers struggling to find high interest accounts.

With RPI currently at 5.2%, finding an account that can beat this rate is tough. In April there were only 25 accounts available beating inflation for a basic rate taxpayer and the highest on offer currently comes from BM Savings paying 5.05% for a five-year fixed-rate account.

The certificates must be bought through NS&I, either on its website (www.nsandi.com) via one of its call centres or by post, and you can invest anything from £100 to £15,000.

The return of NS&I bonds was first flagged up in the Budget back in March and NS&I predicts inflows of around £14 billion.

Jane Platt, chief executive at NS&I, says it aims to keep the savings certificates on sale for a sustained period of time and to enable as many people as possible to invest in them, but after the popularity of the past bonds, and with the current poor interest rates from other accounts, it's likely these will not be around for long.

Invest sooner rather than later

Patrick Connolly, spokesperson at AWD Chase de Vere, says the reintroduction of these accounts is great news as so many savers currently face the dilemma of losing money in real terms on their cash savings, or putting their capital at risk to try and generate better returns.

He also warns that although NS&I say the accounts will be around for a "sustained period" it's better to "invest sooner rather than later as demand may exceed supply and there is a risk the products may not be around for too long".


Add new comment