You must grab this incredible savings account now – as I fear it won’t be around for long: SYLVIA MORRIS

A savings account from National Savings and Investments (NS&I) is looking like an increasingly good deal – but you may have to move quickly if you want to take advantage.

The one-year fixed-rate bond pays 4.04 per cent – which is more than all but one of the large banks and the five biggest building societies.

The only one to beat it – just – is Co-op Bank, now part of Coventry BS, at 4.09 per cent. 

While other providers have been busy cutting their rates, NS&I has not. It last cut the rate on its one-year bond at the start of September. 

Meanwhile, all other providers – including online banks that consistently dominate the best buy tables – have been hacking back the rates they pay savers.

At the beginning of September, a host of online banks paid around 4.3 per cent to 4.5 per cent, with the best rate coming from Chetwood Bank. But it first cut this rate last month, and on Monday cut it again to 4.3 per cent.

Secure: The new one-year fixed-rate bond from National Savings and Investments pays 4.04% – which is more than all but one of the large banks and the five biggest building societies

Chetwood Bank still pays more than NS&I, but that margin has now fallen to 0.26 percentage points, down from 0.46 points.

Most online providers now hover around the 4.1 per cent to 4.25 per cent level – only marginally higher than NS&I.

But NS&I has a big advantage over other providers. All your money is protected by the Government, rather than the £85,000 limit offered by its rivals, making it attractive to those who have squirrelled away large sums. 

The top rate online currently comes from Marcus, which swam against the tide last week to offer 4.55 per cent, upping its rate from 4 per cent. But I doubt that will last long either.

There are two reasons to think NS&I will cut its rate soon. Firstly, it is already on track to meet its target of pulling in

£12billion, with a leeway of £4billion either side, in its financial year. If it stays near the front of the pack it may draw in more cash than it needs to.

Secondly, NS&I has a mandate to pitch rates that are fair to savers and to make sure that it does not hoover up money which could otherwise go to banks and building societies to fund their lending. If it compares too favourably to its rivals, it could start taking custom from them.

The Co-op account is available online, through its branches or by post. Other High Street options include Coventry BS and Leeds BS, both at 4 per cent. The worst rate comes from Halifax and Lloyds, at just 3.6 per cent fixed for a year.

Smaller High Street building societies which pay marginally more include Newcastle at 4.1 per cent fixed for a year, Loughborough at 4.15 per cent and Bath at 4.2 per cent.