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The name’s bond

BM Savings will deliver a boost to savers by launching a new savings bond that tracks inflation.

The firm will pay the Retail Price Index rate – currently at 4.8% - then whack another 0.25 percentage points on that for good measure.

BM Savings, a part of Lloyds Banking Group, says the bond will provide 'peace of mind' to savers concerned that high prices are eroding the value of their money.

At the current, high inflation levels, the Inflation Rate Bond offers the best five-year fixed rate outside of a tax-free Isa. But it’s also a gamble. Savers who are locked in to a inflation linked bond will be left with egg on their faces if inflation falls in the coming years.

The bond will be on offer for six weeks – from the from 27 January to 10 March. A minimum deposit of £500 (maximum £1m) is needed. Savers will not be able to touch their cash until 28 March 2016.

John Bianco, BM Savings head honcho, is cooing. He says:

'Our customers have told us they are concerned about the effect inflation is having on their savings pots. With this in mind, we have developed the Inflation Rate Bond to offer peace of mind to savers who are looking to increase their returns in line with annual inflation.

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