Principality launches Protected Capital Account

Principality's Protected Capital Account pays interest based on changes in the Retail Prices Index (RPI - an index used by government to measure of inflation) plus an annual enhancement of 0.20%, over its five year investment term.

Principality Building Society has launched its Protected Capital Account, which is managed by Credit Suisse.  The Account gives savers an opportunity to protect the value of their savings from being eroded by inflation .

During the Account's 5 year investment term, interest is calculated on an annual basis, using the percentage change in RPI (negative or positive) over that time.  This will be enhanced by an additional 0.2% each year, so that savers can be sure that they are keeping pace with inflation each year.

Following maturity of the Account on 29 June 2016, savers will receive their full initial investment back.

The Protected Capital Account allows a minimum deposit of £3,000 and a maximum of £85,000. If savers haven't yet used their 2010/11 Cash ISA allowance, they can use it to invest in the Account, provided they invest before 5th April.  They can also invest their 2011/12 allowance and get the benefit of protecting their savings in a tax - free wrapper. ISA transfers are also permitted, up to the maximum ISA holding that a customer has.

Savers whose funds clear before 5 April 2011(11th April 2011 for deposits using the 2011/2012 ISA allowance) and hold the Account until the end of its term will also be awarded with an additional bonus of 0.50%.

Paul Straiton, Principality's Product Manager, said: "We understand that some savers are concerned that the level of inflation is eroding the value of their savings, particularly as RPI has recently hit a 20 year high. For the first time we are delighted to offer savers an inflation beating home for their cash.

"We believe our Protected Capital Account can help savers outpace inflation and increase the purchasing power of their savings.  If savers invest using their cash ISA allowance they can also protect their returns from income tax and capital gains tax, giving extra benefit to all tax payers but particularly to higher rate tax payers."

Savers are urged to act quickly to take advantage of this Account as it may be withdrawn at any time and without prior notice.