The return of one of the best savings accounts of recent years

It's a great day for savers - NS&I has relaunched its five-year, index-linked savings certificates. You can invest up to £15,000, you get an interest rate guaranteed to beat inflation, and you won’t have to pay tax on the interest.

By Ruth Jackson-Kirby

published 12 May 2011

in Features

It's a great day for savers - one of the best savings accounts of recent years is back. National Savings & Investments (NS&I) has relaunched its five-year index-linked savings certificates. These accounts were taken off the market last year due to them becoming oversubscribed, but now they are back. So once again savers can invest up to £15,000 which will then grow at a rate above inflation, tax-free.

These accounts pay savers an interest rate linked to the Retail Price Index (which measures inflation) plus 0.5%. The best bit is that any interest you earn is free from income tax. It's a five-year bond, but you can withdraw your money early - although if you withdraw it within the first year you will not receive any interest.

The interest rate is calculated annually using the change in the RPI index from the start of your investment to that point. See NS&I's website for an illustration of how this works.

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To invest, visit www.nsandi.com or call 0500 500 000. But be warned - these accounts are likely to prove very popular and may get pulled if too many people invest (NS&I works under rules that it cannot dominate the savings market). So best act quickly.

Ruth Jackson-Kirby is a freelance personal finance journalist with 17 years’ experience, writing about everything from savings accounts and credit cards to pensions, property and pet insurance.