SINCE interest rates began to plunge a year ago, savers have been resigned to the fact that nest eggs built up over many years might generate little useful income this side of 2011.

Barely 15 months ago, in June last year, savers on three-year fixed deals were getting seven per cent-plus on deposits.

After six base-rate cuts from October to March, money-market funds with managers such as Fidelity and F&C pay only 0.18 per cent to 0.5 per cent. Many savings accounts are in the same ballpark.

At long last, however, savers seeking regular income have got a bit of a break.

National Savings & Investments (NS&I) is launching a new Guaranteed Growth Bond at a market-leading rate of 3.95 per cent gross for its one-year deal.

On growth bonds, interest rolls up until maturity, and NS&I pays 4.25 per cent, 4.40 per cent and 4.6 per cent on two, three and five years respectively.

Income bonds, paying monthly interest, offer 4.15 per cent, 4.30 per cent and 4.5 per cent over two, three and five years. The lower figures are due to the complexities of compound interest.

In both cases, tax is deducted at source, so the bonds cannot be held in an ISA.

The Guaranteed Growth Bond leaves rivals trailing in its wake.

The Post Office, promoting savings products with veteran actor Sir Roger Moore, has such bonds over one, three and five years at 3.70 per cent gross, 4.25 per cent and 4.55 per cent respectively, paying interest on maturity.

The Investec High5 Account – its rate calculated from an average of the topfive paying accounts in Moneyfacts’ tables – pays 3.29 per cent on minimum £25,000 deposits. But there’s a 90-day notice period on withdrawals, or penalty charge of 0.5 per cent of any emergency withdrawals.

As for Nationwide Building Society’s (BS) grandly-titled Champion Saver account, launched in August promising “great value” with a rate decided as the average of the top-five accounts from rivals, the polite thing to say is that it may have taken an early knockout.

It is paying only 2.80 per cent – including a 1.10 per cent bonus vanishing in January 2011.

Andrew Hagger at Moneynet.

co.uk says that NS&I appears to have rediscovered an a p p e t i t e f o r f i x e d - rate retail savings after r a m p i n g up its offers.

“ T h i s product s h o o t s straight to the top of the o n e - y e a r fixed-rate bond buys, a full 0.20 per cent higher than its nearest rival,” he says.

Many holders of NS&I Premium Bonds, where prizes have shrunk to a trickle despite the introduction of £25 prizes, might switch across to bonds for certainty of income.

Building societies, competing hard to attract savers’ money as an alternative to money markets, could see heavy withdrawals.

One big attraction of the NS&I product is the 100 per cent Government guarantee on deposits, whatever economic storms lie ahead.

It also offers easy access – savers need a minimum £500 – and generous withd r a w a l terms if b e t t e r rates come along.

S a v e r s wishing to escape from any new NS&I bond inside the agreed timespan will lose only 90 days’ interest.

Withdrawals on fixed-rate bonds usually face much harsher terms.

For savers locking up money for longer periods, building societies may still have better fixed-rate bonds.

Principality BS pays 5.10 per cent for four years (with a whopping 360 days’ loss of interest on early withdrawals) and Skipton BS promises 5.35 per cent for five years (no withdrawals permitted at all).

But savers who feel a pang of compassion about injuries inflicted on our troops in Afghanistan might also take a look at the Poppy Bond from Coventry BS, paying 4.3 per cent over two years on minimum £500 deposits.

Coventry donates 0.2 per cent of deposits in this account to the Royal British Legion Poppy Appeal, and raised £1.6m this way last year.

■ NS&I Guaranteed Growth and Income Bonds must be purchased direct from NS&I on 0500-007-007 (a change may apply on its former inquiries line 0845-964-5000), online at nsandi.com, and by post but not through Post Office branches. NS&I pays 2.50 per cent on its Direct ISA and Cash ISA for over-50s, under the annual allowance raised to £5,100 for over-50s since October 6.