A new 'market-leading' National Savings & Investments (NS&I) bond will launch in April to help struggling savers.
Chancellor of the Exchequer, Philip Hammond, confirmed the three-year fixed-rate NS&I Investment Bond will offer a rate of 2.2% on deposits between £100 and £3,000 in yesterday's Spring Budget speech.
The NS&I Investment Bond will launch in April 2017 and will be on offer for 12 months.
The Government claims that the £3,000 limit is enough to cover all the savings of at least half of UK households and is meant to help savers impacted by years of low interest rates.
But is it worth going for?
How it compares
The new three-year fixed rate NS&I Investment Bond can be matched by Atom Bank.
It's offering a three-year fixed rate bond paying 2.2% on balances from £50 up to a maximum of £100,000.
But while you can save more with Atom Bank, it does offer less flexibility.
Unlike typical fixed-rate bonds the NS&I Investment Bond allows early withdrawals, subject to a penalty of 90 days' interest.
If you have £3,000 invested that means you'd pay £16 to access your cash.
If you think rates are likely to rise and are wary of locking up your money for a long time the NS&I Investment Bond is a better option as Atom Bank doesn't allow you to access your cash before the three-year term is over.
How it can be beaten
If you are chasing the best rate for your savings then the new NS&I Investment Bond can be beaten by four other deals right now, which are set out in the table below.
5% (one-year only)
£1 (max: £2,500)
£1 (max: £1,500)
Bank of Scotland Classic Account with Vantage
£3,000 (max: £5,000)
Atom Bank Five-Year Fixed Saver
Five-year fixed-rate bond
Atom Bank Three-Year Fixed Saver
Three-year fixed-rate bond
*Rate will change to 2% on balances up to £5,000 from 11 June 2017
Nationwide's FlexDirect account pays 5% on balances of up to £2,500, fixed for a year. The only condition is you need to pay in at least £1,000 a month.
Bank of Scotland's Classic Account with Vantage pays 3% on balances of between £3,000 and £5,000 so long as you pay in £1,000 a month and have two direct debits set up.
However, this rate will be cut to 2% on balances up to £5,000 from 11 June 2017.
The TSB Classic Plus account pays 3% variable on balances of up to £1,500, providing you credit the account with £500 a month.
If you are after a fixed rate and don't mind locking up your cash, the Atom Bank five-year fixed-rate bond offers a fixed 2.4% return on deposits from £50 up to £100,000.
If you are willing to take risk with your money you could also get better returns from peer-to-peer savings.
For larger balances, there's also the Santander 123 Current Account, which pays 1.5% on balances up £20,000. Note that the bank charges a £5 monthly fee on this particular account.
Why it's important to chase the top rate
It's important to target the best rate you can for your savings to help protect them from inflation.
The latest Consumer Prices Index (CPI) measure of inflation is currently 1.8% but it's predicted to soar over the next year.