Savers hit as building society cuts rate

NATIONWIDE BUILDING Society is cutting its five per cent rate on a flagship account down to two per cent, in another blow for cash savers.

From May 1, Nationwide’s FlexDirect current account will pay interest of two per cent on balances up to £1,500 for the first 12 months. After that period, the rate will revert to 0.25 per cent on balances of up to £1,500. The account has been paying customers five per cent interest on balances up to £2,500 for the first 12 months, followed by a rate of one per cent.

Nationwide said it is its first reduction to the credit interest rate on FlexDirect since the account was launched in November 2012.

Many other providers have slashed their savings rates over the years in the low interest rate environment, while Nationwide had left this rate untouched.

The society said that despite the change, FlexDirect continues to offer one of the highest rates of credit interest on the market.

The move follows the Bank of England’s recent decision to whittle the base to a record low of 0.10 per cent. The rate moved from 0.75 per cent to 0.25 per cent and was reduced further to 0.10 per cent just days later in an emergency response to the coronavirus outbreak.

Nationwide said any FlexDirect accounts applied for before May 1 will continue to receive credit interest of five per cent on balances of up to £2,500 for the remainder of the 12-month period.

Sara Bennison, of Nationwide, said: “We know that this is a tough time for savers, particularly after two cuts in bank rate in quick succession taking it to an historic low of only 0.10 per cent.”

Rachel Springall, of Moneyfacts.co.uk, said the new two per cent rate on the FlexDirect account will still be an “attractive return”.