Inflation-linked options
The Post Office also has an inflation-linked bond - maturing on 27 May, 2016 - paying 1.5 per cent plus RPI. The interest is paid on maturity and based on RPI each April during the term.
Building societies Saffron, Derbyshire, Yorkshire and Principality have also launched inflation linkers, according to Moneyfacts. The Yorkshire "protected capital account inflation linked 4" is also available as a tax-free cash individual savings account (Isa). It pays 1.5 per cent, plus 100 per cent of any percentage increase in the level of the retail prices index between April 2011 and April 2016.
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Hide AdThe newest inflation-linker is a five-year cash Isa from KRBS (Kent Reliance Building Society), which promises to pay 2 per cent plus the difference in RPI between April 2011 and April 2016. The tax-free status will appeal, but the money has to be locked away for the full term and if inflation doesn't rise, savings will grow by just 2 per cent.