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Major bank launches market-leading 5% interest rate on current account savings


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A MAJOR bank has increased the interest rate on its current account to 5% – and it could see customers get up to £200 free cash.

Nationwide has made the announcement regarding its FlexDirect current account.

Nationwide has increased the interest rate on its current savings account

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Nationwide has increased the interest rate on its current savings accountCredit: Getty

It has increased the rate that customers get from 2% to 5% when they open the current account and have cash in there – up to a certain amount.

Interest rates have increased in recent months and the Bank of England hiked the base rate to 1.25% last week.

That’s prompted banks to pass interest rates onto savers – including Nationwide.

You’ll get the interest on balances of up to £1,500 and will need to pay in at least £1,000 a month.

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That means you could earn interest of up to £75 with the account, as long as you have that balance in there for 12 months and don’t let the balance fall below £1,000.

After that the rate will revert to 0.25%. That means after this you won’t earn as much interest, and might want to find a better rate.

Nationwide’s FlexDirect current account is free to use – you won’t have to pay a fee.

There may be eligibility criteria for the account, like having a good credit score, so check these before opening an account.

You’ll also want to check that the account suits your needs, for instance that you can access a branch if you need to, or that it has suitable customer service.

There’s an interest-free overdraft with the account for 12 months, But you won’t get the 5% interest while using this as you won’t be in credit.

You can use the account like any other current account, for example getting you salary paid into it and having direct debits go out.

Not all current accounts pay interest on balances, but some do, just like on savings accounts.

And sometimes they can beat standard saving account rates.

That’s the case with Nationwide’s 5% rate, which beats the best current rate of up to 3.5% available from First Direct, but you’ll have to lock your cash away.

No accounts beat inflation which has soared to 9% and could reach as high as 11%.

That means that your savings could be worth less over time, but getting the best rate you can means you can lessen the impact Martin Lewis advises.

Current accounts have tended to offer better rates than savings products recently.

Extra cash up to £125 for switching

Meanwhile, Nationwide is also currently offering a switching bonus.

If you are already with Nationwide you can switch to the account and get £125. If you are not already a member, you could get £100.

You will also have to switch over two direct debits as well.

A member is someone who has at least one of the following Nationwide accounts:

  • Current account
  • Mortgage
  • Savings account
  • Business savings account

This means if you switch to the Nationwide account as a Nationwide member and get the max bonus of £125, plus £75 interest on a balance of £1,500.

To make the switch you’ll need to use the current account switching service and move over at least two direct debits.

Other terms can apply so check these first so you get the cash.

Check out our top tips for switching current accounts – from a serial switcher who made £400 last year.

Which banks offer switching bonuses?

If Nationwide’s most recent offer is not for you, fear not, as there are others which offer switching deals.

Martin Lewis’ moneysavingexpert.com has revealed five banks that offer up deals.

HSBC

New customers joining HSBC who switch to its Advance account could get £170 free cash.

There’s no minimum monthly pay-in to keep the account, but you will need to put a minimum of £1,500 a month in to get the cash bonus.

You also only get the offer if you are a new HSBC customer and won’t get it if you opened an account with its sister bank, First Direct, since 2019, or HSBC itself.

You have to open an account, and start a switch with 30 days.

You must pay in £1,500 or more in the first 60 days and then the £170 will be paid within 30 days.

First Direct

If you switch to the First Direct 1st Account, you will get a free £150 or £20 just for opening it.

To get the £150 bonus you must open an account, and complete a switch from another current account within three months and pay in £1,000 or more.

The £150 is then paid within 28 days.

You can either request the switch online when applying or later by calling it.

The switch can’t be from a HSBC or First Direct account.

To get the £20 bonus, you have to open an account and use mobile or online banking within three months. The £20 is then paid within the first four months.

Lloyds

If you switch to a new or existing Club Lloyds account, you could get £125.

Not just that, you can also choose one of four perks each year, including: six cinema tickets, 12 digital movie rentals, a Gourmet Society membership, or an annual magazine subscription.

To get the £125 you have to pay in £1,500 or more per month or pay a £3 monthly fee.

You can’t get the cash if you’ve had a switch bonus from Lloyds since April 2020 and you have to switch from a different bank.

And you only have a few days left to make the switch, as the deadline is June 27.

Once you’ve processed the switch, the bonus is paid within three working days.

Virgin

If you don’t have a Virgin account and are switching over to the bank, you could get 20,000 Virgin Red points.

The points can be spent on experiences, gifts or flights.

A 12-bottle case of wine works out as 19,000 points, an afternoon tea is 6,250 and two comedy night tickets will set you back 4,000.

To get the bonus you have to open an account online, then switch within 45 days and pay in £1,000 or more to the M Plus Saver account.

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You also have to to use the mobile app and have two direct debits.

Once this is done, you receive a code to redeem your Virgin points inside 14 days and can then withdraw the £1,000 if you want.

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