The government’s savings arm announced that from 1 October 2018, it would increase the rates on three variable savings products by between five and 15 basis points.

Here’s what’s changing:

• Income bonds: from 1.00% gross/AER to 1.15% gross/1.16% AER
• Investment account: from 0.70% gross/AER to 0.80% gross/AER
• Direct saver: from 0.95% gross/AER to 1% gross/AER.

The move helps to offset its previous disappointing decisions to cut the £1m deposit limit on bonds and announcement that it will cut the rate on its easy access ISA from 1% to 0.75% from 24 September 2018.

Ian Ackerley, chief executive, NS&I, said: “We are pleased to be able to increase the interest rates on our three savings account products.

“NS&I’s operating framework means we have a duty to balance the interests of our savers, the taxpayer and broader market stability, when setting our interest rates.”

NS&I added that since the Bank of England base rate changes in November 2017 and August 2018, it has increased the interest rate on Income Bonds by 40 basis points, Investment Account by 35 basis points and on Direct Saver by 30 basis points.

YourMoney.com view

While savers can get more interest on their cash by opening variable savings elsewhere, such as 1.40% with the Coventry Building Society’s easy access account, one of the big draws of NS&I for millions of savers is that amounts deposited are backed by HM Treasury. Money is therefore 100% capital protected.

Ordinarily, banks come under the Financial Services Compensation Scheme (FSCS) meaning a maximum of £85,000 is returned to savers if the bank goes bust.