Inflation-beating Isa closes

“Overwhelming” demand from savers has prompted the withdrawal of the only account that guaranteed a return over inflation, less than two weeks after its launch.

National Counties, the Epsom-based building society, said its inflation-beating individual savings account (Isa) had attracted thousands of enquiries, with inflows set to exceed its £25m target.

The five-year account, which pays 1 per cent a year plus the change in the retail prices index (RPI) from now to autumn 2015, was launched following National Savings & Investments’ withdrawal of its popular index-linked certificates last month.

With the latest RPI rate at 4.8 per cent and the consumer prices index at 3.1 per cent, very few accounts now offer a real return to savers.

“Clearly there is a high level of demand for inflation-beating savings,” said the society, which might offer another RPI-linked deal later this year.

National Counties said it would continue to accept applications for the index-linked Isa from savers who had already downloaded or been sent forms. Savers transferring Isas from other providers have until September 30 to switch to the society.

Meanwhile, Principality Building Society this week launched a best-buy instant access Isa paying 2.8 per cent, including a one percentage point bonus for the first year. The Cardiff-based society accepts Isa transfers from other providers.

Santander’s Flexible cash Isa, which offers 3.2 per cent and guarantees to pay 2.7 percentage points over the base rate for the first year, offers the top variable-rate deal. But it is available only to the bank’s current account customers, through branches.

The best fixed-rate Isas range from 3 per cent for one year from Aldermore Bank to 4.25 per cent on Birmingham Midshires’ five-year account.