National Savings & Investments (NS&I) is set to launch a new three-year bond this April in a bid to boost savers’ meagre returns.

The government-backed institution says its Investment Guaranteed Growth Bond will be open to anyone over the age of 16 and, while the rate is yet to be confirmed, is likely to pay an annual rate of 2.2%.

While that would certainly beat all traditional three-year savings accounts, it’s well below what you can get from a top current account.

So is the NS&I Investment Guaranteed Growth Bond worth going for?

How much can I invest?

The minimum investment to open the account is £100 and you can deposit up to £3,000.

You can keep adding to the account throughout its three-year duration until you hit the maximum limit.

Just remember though, the more you invest early the more interest you will earn.

[Read more: Number of Premium Bonds prizes cut: what it means ]

How much can I earn?

As we mentioned earlier, the Growth Bond is expected to pay a rate of 2.2%.

Interest will be calculated daily and added to your balance every year on the anniversary of your opening the account.

That means if you deposit £3,000 into the account the day you open it you could earn £202 over the three years.

How does it compare to other savings products?

No three-year fixed-rate savings bond on the market currently pays anywhere near 2%, let alone 2.2%, so the NS&I bond will certainly be an attractive proposition to many.

However, savvy savers will know that current accounts usually offer the best savings rates around.

For example, the Nationwide FlexDirect current account pays 5% on the first £2,500 held in the account, fixed for the first year.

The Tesco Bank Current Account pays a lower rate of 3%, but it pays out on savings of up to £3,000 and is guaranteed for two years.

What’s more, each customer can hold two accounts so you can effectively earn 3% on £6,000 of savings, fixed for two years.

There are also no penalties for accessing your funds, unlike with the NS&I bond…

What if I need my money before the three years are up?

If you withdraw your money from the Growth Bond, it will be subject to a penalty of 90 days' interest.

If you have £3,000 invested that means you’d pay £16 to take your money out early.

Earn a top rate on your savings: compare accounts

What about tax?

This account is not an Isa so the money your earn via interest is liable to income tax and will count towards your Personal Allowance.

All basic-rate taxpayers are allowed to earn up to £1,000 interest per tax year before income tax is due.

Higher rate taxpayers can earn £500 interest but additional rate taxpayers get no personal allowance.

Is my money safe?

Despite it’s name the Investment Guaranteed Growth Bond does not involve any investments, it is a cash savings account. That means there is no investment risk.

Your cash is also protected because it is offered by NS&I, which is Treasury-backed. That means 100% of your money is guaranteed.

How do I get one?

We don’t yet have a launch date for the Investment Guaranteed Growth Bond beyond Spring 2017.

But when it does go on sale it will be available for one year  and you can apply via the NS&I website.

The account will not be available over the telephone or by post.

Earn a top rate on your savings: compare accounts