According to BM Savings, the five year inflation rate bond (issue 2) and three year inflation rate bond (issue 1) are deposit based accounts which use the annual rate of inflation (as determined by the Retail Prices Index (RPI) annual inflation rate measure) to calculate the annual gross interest rate on savings.
BM Savings will offer customers a fixed rate of interest each year of 1.50% gross/AER on the five year inflation rate bond (issue 2) and 0.75% gross/AER on the three year inflation rate bond (issue 1).
The All Items RPI is an official measure of the level of prices of goods and services bought by most UK households, which can be used to calculate the rate of inflation. It is compiled by the Office for National Statistics (ONS).
Customer’s gross interest rate will match the RPI annual inflation rate and any interest will be paid each year on the anniversary of the start date of the account.
BM Savings claims that investors can save from just £500 up to £1m for each customer (£2 million for joint account holders). Access is not permitted during the term.
