National Savings & Investments (NS&I) is raising rates on several of its deals - though savers can still get better deals by shopping around.
NS&I is Britain's biggest savings firm, holding around £200billion of our cash.
Now the firm has announced that it will be increasing the interest rates on its Direct ISA, Direct Saver and Income Bonds to 0.35% on December 29.
The rate paid by its easy access accounts, Direct Saver deals and Income Bonds, will go up 20 percentage points, from 0.15% to 0.35%.
The NS&I Direct ISA will pay 25 percentage points extra, going up from 0.10% now to 0.35%.
This deal is a cash ISA .
Last week the Bank of England put up base rate from 0.1% to 0.25% after inflation jumped to its highest level in ten years.
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Base rate is normally factored in to savings rates, but NS&I said the increase in its own rates had nothing to do with the Bank of England.
Instead it is putting up rates to help it raise more money and meet its targets.
NS&I is owned by the Treasury and its primary goal is to raise cash for the government.
It has to make a tricky balance between paying savers enough in interest to keep them signed up and to meet its targets, but not so much that banks lose out.
In practice this means NS&I normally pays interest rates which are good, but not the best available.
The only exception is for its lottery-style Premium Bonds , its most popular product, which has no close rival.
All this means savers can get better deals if they shop around.
Money expert Andrew Hagger said: "NS&I has this morning announced an increase on the rate on its Direct Saver easy access account to 0.35% from December 29.
"It's a much better deal than offered by the high street banks, however the current easy access best buys are still a more rewarding home for your 'rainy day' or emergency cash balance - paying double the NS&I new rate."
The best easy access rate is currently from Investec, which pays 0.71% interest a year - twice as much as NS&I.
However, savers will need £5,000 to open the deal.
Fortunately the next best deal is from Cynergy Bank, paying 0.7%, and consumers need only £1 to set the account up.
The best cash ISA rate is 0.93%, from Shawbrook Bank.
However, for many NS&I customers the best possible rate is just one consideration when taking out a savings deal.
Many like the security of NS&I, which is government backed and therefore extremely safe.
The rates paid by NS&I are also much better than those paid on easy access accounts from high street banks, which hover at around 0.10%.
Additionally, many of the top savings deals at the moment are from lesser-known challenger banks.
Many savers prefer the familiarity of a brand like NS&I, even if it does not pay top rates.
