© Reuters.
The competition for current account holders among UK banks and building societies has intensified this week, with Nationwide Building Society launching a £200 (£1 = $1.23) switching offer and a linked savings account paying an annual equivalent rate (AER) of 8%. This comes as the Bank of England decided on Thursday to freeze interest rates at 5.25% for the first time in nearly two years.
The £200 offer is available to individuals using the Current Account Switch (NYSE:) Service (Cass) and transferring at least two active Direct Debits to their new account. The offer applies to switches to one of Nationwide’s three main current accounts – FlexPlus, FlexDirect, or FlexAccount.
In addition, Nationwide has introduced a new Flex (NASDAQ:) Regular Saver account, exclusively for current account customers, which offers an AER of 8% for 12 months. After a year, the account will revert to an instant access account. However, if four or more withdrawals are made from the Flex Regular Saver within 12 months of the account being opened, the rate on the account will fall to 2.15% AER.
“We want to give people every reason to join and stay with Nationwide. That’s why we are offering new and existing current account customers a top-of-market £200 if they switch their main banking relationship to the society,” said Tom Riley, director of retail products at Nationwide Building Society.
This move comes amid increasing competition in the banking sector. Earlier this week, Lloyds (LON:) Bank launched a £175 switcher offer for new customers who switch from another bank to a Club Lloyds account before November 14. Additionally, TSB launched a new switching offer on Monday, promising potential rewards of over £200 for new customers who switch to a TSB Spend & Save or Spend & Save Plus current account.
According to financial information website Moneyfacts, the last time a cash regular savings account offered a rate as high as 8% was a decade ago in 2013 when it was offered by First Direct. The new offers from Nationwide and other banks come as customer appetite for saving appears to have grown. NatWest reported on Tuesday that the number of fixed-term accounts opened in the first half of 2023 was around 17 times the total recorded in the same period in 2019.
Nationwide’s new online-managed savings account allows members to save up to £200 per calendar month and permits up to three withdrawals within the 12 months after the account is opened. The Flex Regular Saver is only available to members who hold one of Nationwide’s current accounts.
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