BM Savings increases fixed rate on Inflation Rate Bond

BM Savings have increased the fixed rate of interest savers will receive in the Inflation Rate Bond with immediate effect from 0.25% AER/Gross to 1.50% AER/Gross. This fixed rate is paid in addition to the January Annual Inflation Rate (Retail Prices Index).

This new fixed rate of interest is open to both new and existing customers. In addition, BM Savings is writing to customers who have already opened the Inflation Rate Bond to notify them they will automatically receive the increase in rate. The offer period has also been extended to 21st March 2011, so savers can take full advantage of this competitive rate to help them keep in pace with inflation.

John Bianco, Head of BM Savings said: 'The BM Inflation Rate Bond has been extremely popular with savers since it was launched in January. Due to market changes we have increased the fixed rate of interest savers receive in addition to the Annual Inflation Rate. We have also extended the offer period, so even more savers can take advantage and limit the impact of inflation on their savings pots.'

Key Features:

Interest Calculations

The annual rate of gross interest is calculated using the Retail Prices Index Annual Inflation Rate
As well as the interest rate linked to RPI, savers will also receive an additional 1.50% AER/Gross fixed rate of interest
Interest is paid annually on the anniversary of the start date (28th of March). The RPI inflation rate will be taken from the January prior to the annual interest payment
Interest is paid in to a bank account nominated by the saver and cannot be added to the capital
All customers will be notified of the rate which has been applied and the amount of interest paid within 14 days after the payment has been made.
Capital is protected so savers will still receive their original deposit plus the fixed rate of interest even if deflation occurs.

Other Features:

Investment term is five years - the start date is 28th March 2011
Minimum deposit is £500
Maximum deposit if £1million
Can be opened by phone or by post
Additional deposits can only be made during the offer period (as long as the issue remains open).
No withdrawals permitted
Accounts mature on 28th March 2016

Offer period

The offer period runs from 27th January 2011 to 21st March 2011
The start date of the bond is 28th March 2011
From the opening date until the start date, all funds invested will earn a fixed interest rate of 0.50% Interest earned during this period will be paid on 28th March 2011.
Customers have a 14 day cancellation period in which to close their account. This runs from the date the customers cheque is credited to their account.

For more information, visit BMSavings.com.