Government bank National Savings & Investments (NS&I) has withdrawn its savings deal that guarantees to beat inflation over the term to new customers.

The Inflation-Beating Savings account, where you can save between £100 and £15,000, guarantees to beat the annual Retail Prices Index (RPI) inflation measure by one percentage point, tax-free, if you keep the cash there for the full term of the account (either three or five years).

With RPI inflation currently at 5%, few savings accounts can match the NS&I guarantee, especially once tax is deducted (see the Top Savings guide).

However, inflation measures how prices have risen over the past year, when savers seeking a new account will be more concerned about the next 12 months.

Existing customers are unaffected, and their accounts will run as normal.

How does the account work?

The value of your savings rises on your account anniversary in percentage terms by the annual RPI figure two months before the year is up, plus a bonus.

That bonus starts at either 0.75 or 0.85 of a percentage point, depending on your account length, in year one, but averages one percentage point over the term.

So if your first year ends next July, and May's RPI (two months earlier) is 5%, your savings will grow by 5.75% on a three-year account (see the NS&I inflation-beater MSE News story for a fuller explanation).

Why has the account been axed?

NS&I says sales volumes in recent months across have far exceeded those it anticipated.

While no new applications will be accepted, NS&I will honour postal applications received today.

Top savings accounts

If you're looking for a new deal, the AA and Egg both pay 2.8% before tax with easy access, each including a fixed 2.3% bonus for a year.

Punjab National Bank pays 3.25% fixed for a year if you're prepared to risk the money being locked away for the term (for full details, and alternative accounts, see the Top Savings guide).

Further reading/Key links

Top deals: Top Savings, Cash Isas, Isa Transfers