http://www.leedsbuildingsociety.co.uk/savi...buster_isa.html

Looks good to me, what do people reckon? RPI + 2.5% so currently that makes it 6.8% - and with inflation on the up RPI could well be 5.5% towards the end of the year, so you're looking at 8% then!!

You have to keep the money in there for 2 years, but its unlikely inflation will be down significantly then, so this is looking like a good option.

Anyone spot any downsides to this one, or know any better deals out there?..

The last issue (4) was only RPI + 2% - they closed issue 3 (RPI + 2.5%) just before the current tax year.

Now they've restored the 2.5% bonus, these are looking very, very tasty.

By the looks of it, you can transfer out after 1st August 2009 and you'd have got full index linking plus 2.5% up to that point.

Therefore, as a 1 year account, this probably cannot be beaten unless we get the BoE raising rates a few times and a desperate bank starts offering a 7 or 7.5% ISA...

On the subject of banks being desperate for cash, I notice that one of the articles about Halifax raising its rates says that it's borrowing rates are some of the most volatile in the industry, with the Leeds BS also showing the same rate-hiking behaviour.

On the basis that HBOS has only got 5.x% tier 1 capital and its shares were in trouble on a rumour a few months ago, does borrowing rate volatility and a keeness to up rates as soon as the money markets point the way, denote a financial institution that has too thin capital due to excessive lending and could need to be rescued in the future?

Having said all of that, we now have FSA 100% protection for the first 35 grand, which will be sufficient for most people's cash ISA savings, and the BoE have just been given the ability to slide their hands under any failing institution and lift them above the waterline. So your money should be safe.

Edited for spelling and grammar

Pete95, it is not RPI +2.5%, as you claim, but the percentage change in RPI between 30 April 2008 and 30 April 2009 plus 2.5%. That is, if the RPI on 30 April 2008 and the RPI on 30 April 2009 are the same, then you will only get 2.5%. There are several good examples on the web address you've given that explain the concept. And, if there is a deflation then it will be less than 2.5%. So it is not as good as you think it is.

Rubbish. RPI = retail price INDEX, not inflation.

The RPI is an index of prices and the difference between the value of this index from one year to the next is the inflation rate.

So, RPI at 4.3% means that the ratio of prices this year to last year (RPI May 2008 / RPI May 2007) is 1.043).

This product is as good as it appears to be, IMHO.

AvidFan, I have had a look at Wikipedia to clarify my view on RPI and inflation. It does look that this product is too good to be true, but err ... it is true! Only, in the unlikely case of a deflation, it will not be as good. I will be moving my ISA to it asap, as the LLoyds interest at 5% will soon be rather pathetic in comparison.
No need though to rubbish my view point even if it appears ignorant to you. This forum is not only for experts in finance, but also for those that aim to be experts

Sounds tempting. Anyone have any views on how stable Leeds BS are?

Also, can you pay into this ISA after the opening date - I couldn't see anything that would suggest otherwise.

I would asume you can, but if it becomes very popular Leeds BS may decide to withdraw it. I, myself, lost the opportunity with the Lloyds fixed 6.5 ISA offer, which they brought in around March and they withdrew it mid-April. So, the early bird catches the worm!

According to an article in The Sun a few months back - I posted the link in this forum so you need to do a search - the Leeds is one of the safest building societies in the UK. Apparently virtually all their lending is secured by their deposits. I put a lump sum in with them at 6% at the time on a 6 month bond.

The way IRs are going now I am concerned about my NR 6.49% bond which expires in Jan, and my Lloyds 6.5% fixed ISA which is next April and my 6.50% Co-Op which is also next April. By the end of the year I think rates will be rising. In other words, I can see the benefit of 6 month bonds but not so sure about logner-term ones and, personally, I would not fix for 2 years.

The following extract from http://news.uk.msn.com/Article.aspx?cp-documentid=8680797 supports Masked Tulip's concern of having money fixed in Leeds BS ISA for two years.

If thats the case the Leeds BS ISA will in the second year be less than 4.5% . Will that still be competitve in relation to other offerings? AvidFan can you advice?

If you read the blurb, you can cash this in on or after 1st August 2009, i.e. treat it as a 1 year account, WITHOUT LOSS. Any days you keep the account open after August 1st 2009, you will only be earning 2.5% per annum equivalent if you cash in between August 2009 and July 2010.

Given that the rate you earn between July 2008 and August 2009 is equal to the change in RPI between April 2008 and April 2009 plus another 2.5%, I can't see how you'll lose. All the months from April to now have already had RPI at or above 4%, so that's 3 months of the 12 month "assessment" period already in the bag.

Even the BoE says inflation will continue rising to the end of the year, leaving just 4 months until April 2009 when you MAY see some small reduction in inflation rate - but don't bank on it. And of course in April, we have pay settlements going through, so I'd say this thing is going to come to a head right when the first year's qualifying period for this product is complete.

I personally think this product is a no-brainer - honestly.