Nationwide offering 5% interest on current account as competition heats up

A significant present account supplier is providing 5% curiosity on balances as much as £1,500 for the primary 12 months because the battle to draw clients heats up.

Nationwide Constructing Society beforehand provided 2% fastened for 12 months on balances as much as £1,500 on its FlexDirect account, however it’s greater than doubling the speed on supply to five% AER (annual equal price).

The 5% introductory price is offered on new functions opened from June 21. After 12 months, the account pays 0.25% AER.

Members can solely profit from the introductory credit score rate of interest and interest-free overdraft supply as soon as, that means anybody who has beforehand held a FlexDirect account is not going to be eligible for the brand new price.

Nevertheless, if candidates have beforehand held a sole account solely, they’d be eligible for the introductory price on a joint account and vice versa.

Members might want to pay in £1,000 per 30 days, not counting transfers from different Nationwide accounts or Visa credit.

These switching their present account may additionally profit from the Society’s switching incentive, which pays £125 to current members who change their present account to the Society and £100 to new clients.

To qualify, switches have to be constituted of one other supplier utilizing the Present Account Change Service (Cass) and a minimum of two lively direct debits have to be transferred as a part of the transfer to the brand new account.

Debbie Crosbie, chief government at Nationwide Constructing Society, mentioned: “This market-leading price will assist new and current members take advantage of their cash, which is especially vital proper now.

“The FlexDirect present account additionally has an introductory interest-free overdraft to present some peace of thoughts to these struggling financially and releasing them to concentrate on repaying different money owed.”

Nationwide mentioned that, combining the £125 switching incentive with £75 curiosity that individuals may probably obtain from the 5% rate of interest, folks may benefit from a £200 enhance over the course of a yr if they’ve a minimum of £1,500 of their account over the subsequent 12 months.

FlexDirect additionally presents an interest-free overdraft for the primary 12 months, that means eligible candidates can change their overdraft from their current present account supplier or one other Nationwide account.

After the preliminary 12 months, the overdraft rate of interest is 39.9% and the overdraft that somebody is obtainable within the first place will depend upon particular person circumstances.

Rachel Springall, a spokeswoman at Moneyfacts.co.uk, mentioned: “It’s thrilling to see Nationwide supply a market-leading rate of interest on a present account which can entice customers coupled with the switching money incentive.”

She added: “It will likely be attention-grabbing to see whether or not any of its competitors will evaluate their rate of interest presents on present accounts within the weeks to come back.

“Because of the back-to-back base price rises, some suppliers have been adjusting their present account rates of interest, comparable to Santander.

“Customers will discover Virgin Cash paying 2.02% AER/2% gross on balances as much as £1,000 and in addition supply a gorgeous linked saver.

“Elsewhere Halifax can pay a month-to-month reward of £5 on its reward present account, so customers may earn as much as £60 a yr on this selection.

“These customers evaluating up-front switching money will discover extra beneficiant free money elsewhere, comparable to with HSBC (£170) and first direct (£150).

“When evaluating present accounts it’s important customers take note of each any advantages and costs charged to make sure it fits their banking wants.”