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Post Office extends inflation-linked bond deal

Saver demand has led to the Post Office extending its inflation-linked savings bond. The in-demand five-year bond pays the Retail Prices Index (5%) as well as 1.5 percentage points, while the three-year version pays the RPI plus 0.5% per year.

Who would have thought that bondage could be so painless? You can open a Post Office bond with just £500, with no deposits or withdrawals allowed until the sum matures.

Richard Norman, director of savings and investments at the Post Office, said: 'The high demand we have seen for the Inflation Linked Bond shows that inflation remains a big concern for many savers.

'With the Bank of England forecasting a continued increase in inflation for the rest of 2011, we're pleased to able to extend the offer period for the Inflation Linked Bond and offer more people the chance to take advantage of a guaranteed inflation-beating rate of return on their savings.'

The two bonds will be available until 16 September. If you miss out, don't fear as there are other inflation-linked bonds on the market. National Savings & Investments have a five-year bond that pays the RPI plus 0.5 percent, while the Cambridge Building Society also has a five-year bond that pays the RPI and with 1 percentage point on top. However, there's a minimum investment of £5,000.

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