National Savings and Investments (NS&I) is launching a new savings product designed to make customers more aware of the impact of inflation of savings.
Only one in every four savers, 25 per cent, consider the effect of inflation on their savings account, even though it is currently running at 2.9 per cent.
The Inflation-beating Savings range at NS&I consist of three and five-year index-linked Savings Certificates.
The money invested earns a return directly linked to the headline rate of inflation, otherwise known as the Retail Prices Index (RPI) – currently at 2.9 per cent – plus guaranteed rates of interest on top.
This means the returns outstrip inflation. As nothing is taken away in tax, the spending power of your money is increased by the end of the term.
Those most unaware on this topic are savers aged 16-24 - only 10 per cent of people this age are aware of the implications of inflation levels.
Karen Jones, NS&I’s marketing director, said: "This downward trend is something of a worry.
"Even though we are experiencing a period of relatively low inflation, people who invest their money for more than a few years in an account that doesn’t protect against inflation could see the value of their money diminish as inflation takes its toll."
Savings account holders remain oblivious to inflation
Savings account holders remain oblivious to inflation
Thu, 01 Sep 2005
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