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Inflation linked savings bonds are back!!

A limited addition inflation- linked savings bond has just been launched by Birmingham Midshires, it promises to pay an interest rate of the Retail Prices Index (RPI) – currently 4.8pc – plus 0.25 percentage points, for five years.

You may recall from our previous news article inflation linked offerings from NS&I and National Counties Building Society were met with such high demand, that they sold out in a matter of days!

So with Mervyn King warning households that inflation is set to rise to 5pc this year I would expect demand for the BM Savings bond to be just as high. The bank would not reveal how much it intended to take in but it has warned that it could withdraw the product at any time.

A limited addition inflation- linked savings bond has just been launched by Birmingham Midshires, it promises to pay an interest rate of the Retail Prices Index (RPI) – currently 4.8pc – plus 0.25 percentage points, for five years.

You may recall from our previous news article inflation linked offerings from NS&I and National Counties Building Society were met with such high demand, that they sold out in a matter of days!

So with Mervyn King warning households that inflation is set to rise to 5pc this year I would expect demand for the BM Savings bond to be just as high. The bank would not reveal how much it intended to take in but it has warned that it could withdraw the product at any time.

Unlike the NS&I and National Counties bonds previously offered, the Birmingham Midshires account will not be offered tax free, however I would still but I expect it to be extremely popular.

Savers have to preregister for the account which does not go live until March 28. Interest will then be paid annually on the launch date based on the RPI for January the same year and you are not permitted to withdraw funds until the fund matures.

However be warned that fund held in the BM Savings bond between now and when the bond goes 'live' on March 28 will earn just 0.5pc interest – is this worth it to get some inflation-linked savings?

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