Spotlight On: NS&I Index-linked certificates

The deal

NS&I has relaunched its popular Index-Linked Savings Certificates.

The good points

Returns are tax-free and at RPI +0.5 per cent are markedly better than similar five-year bonds. The biggest attraction is that returns are guaranteed to outstrip inflation: no other savings scheme can currently offer to do that or get close.

The bad points

You have to lock your money away for five years to get the return. The new rate is worse than previous issues, which paid RPI +1 per cent. The maximum you can put in is £15,000,

Conclusion

At today's RPI you'd get a return of 5.8 per cent, which is hugely attractive. But the rate is set every year using March's RPI. With the Bank of England confident that inflation will fall back early next year, the rate then could prove to be much less attractive. At the same time, standard savings rates could rise, meaning you could feel a little sick locking yourself into returns that could are worse than you may be able to get elsewhere. However, if you just want to ensure that your savings beat inflation, this is the one for you.