National Savings and Investments has lifted interest rates on its British savings bonds above 5% for the first time in nearly three years.

The updated products replace the bank's previous guaranteed growth and income bonds. Savers can lock their money away for one, two, three, or five years. Growth bonds add interest each year and pay it out at the end of the term, while income bonds distribute payments monthly. The new rates range from 4.99% for a one-year term to 5.17% for a five-year bond.

While these figures beat many standard savings accounts, they still trail the top market offers. Competitors currently pay up to 5.12% on one-year deals and 5.37% on five-year products. Getting the highest percentages sometimes requires signing up with less-well-known providers.

NS&I remains a safe option for larger deposits because it is backed by the Treasury. “most banks only guarantee your savings up to £120,000,” the agency notes, adding that it is “the only provider that secures 100% of your savings above this amount”. Customers can invest between £500 and £1m per person in each bond issue.

Those funds cannot be withdrawn early. Savers who need access to their cash should keep some reserves in flexible accounts. Starling currently offers a table-topping 5% interest rate on its Easy Saver account for balances up to £25,000. This applies to customers who opened a current account on or after October, though earlier sign-ups can still access a 4% rate.

Other providers are also adjusting their offers. Marcus by Goldman Sachs raised its one-year fixed-rate account from 4.3% to 4.75% this week. Experts warn that competitive deals may vanish quickly once providers hit their cash targets. “you can still make more money elsewhere,” said Sarah Coles of AJ Bell, advising savers to compare options carefully.