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Nationwide to offer 5% on FlexDirect current account

Nationwide to offer 5% on FlexDirect current account
Date of Publication: Friday, 01 March 2013 13:57

Nationwide has raised the stakes in the current account market by offering 5% interest for one year on balances up to £2,500.

 

The society launched its new FlexDirect account in November as an alternative to its long-running Flexaccount (read more).

 

Initially offering 2% interest, FlexDirect customers now stand to earn a bonus 3% for the first year on credit balances up to £2,500 – which will notch them a handy £125 in total.

 

Unlike the Flexaccount, FlexDirect customers must carry out their day-to-day transactions online or by telephone rather than in-branch. FlexDirect customers also forsake the complimentary European travel insurance that has become a hallmark of Nationwide's long-running current account.

 

But customers interested in income will find the potential returns of £125 appealing at a time when returns on savings accounts are pitifully low.

 

Nationwide, Cabot

Nationwide: now offering market-leading current account returns for balances between £1,500 and £4,167.

 

Doing the Sums

Returns with the FlexDirect account are most competitive and productive if a balance is sustained between £1,500 and £2,500.

 

Credit Balance

Best Returns

Maximum Return

Up to £1,000

Halifax Reward

£60

£1,000 - £1,500

Halifax Reward

£60

£1,500 - £2,500

Nationwide FlexDirect

£125 (£100)

£2,500 - £4,167

Nationwide FlexDirect

£125 (£100)

£4,167 - £5,000

Lloyds TSB Vantage / Santander 123 Current Account

£150 (£120)

£5,000 - £20,000

Santander 123 Current Account

£600 (£480)

 

(For more details on these products, check out our current account page.)

 

At £1,500, the £75 interest from Nationwide's FlexDirect (£60 net) matches the flat annual return offered by Halifax’s Reward Current Account. And the conditions of Halifax’s account become stricter in May, making it more difficult to earn the £5 monthly reward.

 

From that point, though, there's a bracket worth several thousands for which Nationwide’s FlexDirect account outguns its rivals for the first year.

 

Even beyond the point at which it stops paying interest, the interest return on Nationwide’s FlexDirect is only matched by Santander and Lloyds TSB (both offering 3% on balances from £3,000) when the credit balance exceeds £4,167.

 

And if Nationwide customers deposited funds above £2,500 into a savings account, where it could continue to generate income, this would further elevate the threshold at which revenue would be improved over rival banks.

 

This might be an important distinction because of the number of complaints that Lloyds and Santander continue to receive for their mis-selling practices and disappointing service.

 

Lloyds received more than 4,000 complaints per day in the second half of 2012, while the head of Santander UK, Ana Botin, took home £4.5 million in pay – a 2.6% rise on the previous year – despite floundering performance.

 

Nevertheless, the Spanish group offers insurmountable interest returns of 3% between balances of £5,000 and £20,000 – a maximum of £480 after tax – which cannot be bettered by any instant access products. Combine this with cashback, moreover, and it's a formidable account for customers willing to take a leap of faith with Santander.

 

The bottom line:

It's still a surprise that current accounts are providing any returns, let alone returns that outperform savings accounts. That's the price banks are willing to pay to acquire new customers.

 

What's more, when current accounts double up as savings accounts, it reduces the need for tightly organised transfers in and out of savings accounts to make the best of every penny.

 

As well as monetary gains in this fiendish climate, this kind of account has its convenience too - even if it's only one less thing to worry about.

 

Keith McDonald

Which4U Editor

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Friday, 01 March 2013 13:57
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Top 5 Current Accounts

Provider
AER
Min Bal
O/D Rate
O/D Buffer
Apply
View Full Table >
3.00%
£1
0%
£100
0%
£1
No Offer
No Offer
3%
£500
No Offer
N/A
No Offer
3%
£500
No Offer
N/A
No Offer
0%
£1
0%
for 4 mths
£1,200

Nationwide FlexPlus Account

Nationwide
  • £10 per month gets you the following benefits:
  • Get 3.00% variable on balances up to £2,500 (no interest for balances £2.5k+)
  • 3 month Fee Free overdraft
  • Commission Free Cash Withdrawals Abroad
  • VISA debit card with every account
  • Travel Insurance - Worldwide travel insurance, including winter sports, golf, business and wedding cover for you and your family.
  • Mobile Phone Insurance - Worldwide cover if your phone's lost, stolen, or damaged.
  • Breakdown Cover - UK & European breakdown cover for you in any private car and also anyone driving your car with your permission.
  • Extended Warranty - Get an extra 12 months warranty for eligible household electrical goods.
  • Identity Theft - Get help and support if your personal data's compromised or your cards are lost or stolen.

Nationwide FlexAccount

Nationwide
  • VISA debit card with every account
  • The age restriction to open the account is 18
  • Manage your account online with an excellent internet banking service.
  • Three-month interest-free overdraft when you switch to FlexAccount
  • Free day to day banking
  • Voted Best Overall Online Provider 2009 by Your Money

Santander 123 Current Account

  • The New 123 Current Account pays cashback on household direct debits
  • 1% Cashback on water and council tax
  • 2% Cashback on electricity and gas
  • 3% Cashback on mobile, home phone, broadband and paid for TV packages
  • New 123 Current Account pays also pays in-credit interest
  • 1% AER on the entire balance, once the customer’s balance is £1,000 or over
  • 2% AER on the entire balance, once the customer’s balance is £2,000 or over
  • 3% AER on the entire balance, once the customer’s balance is £3,000 or over (up to £20,000)
  • £5 per month.
  • Your overdraft fee will be 19.9% EAR plus an unauthorised fee of £1 per day.
  • Get a cheque book and a Visa Debit card. You can use your Visa Debit card in shops wherever you see the Visa symbol and at virtually every cash machine in the UK and many worldwide. It also acts as a £100 cheque guarantee card
  • Get 4 Months Fee-Free Arranged Overdraft when you use the Current Account Switch Service to move your current account to us and receive a Defaqto 5 star rated service.
  • Access to your money 24 hours a day 7 days a week through our e-banking service, 750+ branches, 24-hour telephone banking service, LINK cash machine network or even by post
  • You must setup a minimum of 2 active direct debits
  • You must deposit at least £500 per month
  • You are able to Withdraw upto £300 a day
  • This account is open to NEW and EXISTING Santander customers aged 18 and above (must be UK resident)

Santander 123 Current Account

  • The New 123 Current Account pays cashback on household direct debits
  • 1% Cashback on water and council tax
  • 2% Cashback on electricity and gas
  • 3% Cashback on mobile, home phone, broadband and paid for TV packages
  • New 123 Current Account pays also pays in-credit interest
  • 1% AER on the entire balance, once the customer’s balance is £1,000 or over
  • 2% AER on the entire balance, once the customer’s balance is £2,000 or over
  • 3% AER on the entire balance, once the customer’s balance is £3,000 or over (up to £20,000)
  • £5 per month.
  • Your overdraft fee will be 19.9% EAR plus an unauthorised fee of £1 per day.
  • Get a cheque book and a Visa Debit card. You can use your Visa Debit card in shops wherever you see the Visa symbol and at virtually every cash machine in the UK and many worldwide. It also acts as a £100 cheque guarantee card
  • Get 4 Months Fee-Free Arranged Overdraft when you use the Current Account Switch Service to move your current account to us and receive a Defaqto 5 star rated service.
  • Access to your money 24 hours a day 7 days a week through our e-banking service, 750+ branches, 24-hour telephone banking service, LINK cash machine network or even by post
  • You must setup a minimum of 2 active direct debits
  • You must deposit at least £500 per month
  • You are able to Withdraw upto £300 a day
  • This account is open to NEW and EXISTING Santander customers aged 18 and above (must be UK resident)

Santander Everyday Current Account

  • A simple and straightforward current account that helps make managing your money easy and convenient.
  • 0% EAR (variable) overdraft rate.
  • No Daily Arranged Overdraft Fees for the first 4 months when you switch to us (depending on circumstances. See representative example).
  • After 4 months the Daily Arranged Overdraft Fee will be 50p per day capped at 20 days each monthly statement period (if you don't switch these Daily Arranged Overdraft Fees will start from when your account is opened.)
  • Access to our dedicated Switcher Service - It is important that you feel confident about switching to us and what is involved. Click here for full details of our simple three-step process.
  • Easy access to your account 24 hours a day with our internet and phone banking service. Plus you have access to over 1,300 Santander branches.
  • Get 4 Months Fee-Free Arranged Overdraft when you use the Current Account Switch Service to move your current account to us and receive a Defaqto 5 star rated service.
  • Withdraw upto £300 a day.
  • No interest is paid on your balance.
  • You must be aged over 18 and live permanently in the UK.

Santander 123 Mini Current Account

  • The 1|2|3 Mini Current Account is designed to provide a safe environment to learn money management and take the first steps towards financial responsibility for those aged between 11 and 18.
  • With the 1|2|3 Mini Current Account you'll get:
  • Rewarding interest rates paying 3% AER/2.96% gross (variable) on balances from £300 up to a maximum of £2,000.
  • £100+ = 1% AER
  • £200+ = 2% AER
  • £300 - £2000 = 3% AER
  • 24/7 access to your account via Online, Mobile and Telephone Banking.
  • Access nationwide via our branch network.
  • Free text and email alerts about your account.
  • The choice of a cash card or a Visa debit card.

Santander 123 Mini Current Account

  • The 1|2|3 Mini Current Account is designed to provide a safe environment to learn money management and take the first steps towards financial responsibility for those aged between 11 and 18.
  • With the 1|2|3 Mini Current Account you'll get:
  • Rewarding interest rates paying 3% AER/2.96% gross (variable) on balances from £300 up to a maximum of £2,000.
  • £100+ = 1% AER
  • £200+ = 2% AER
  • £300 - £2000 = 3% AER
  • 24/7 access to your account via Online, Mobile and Telephone Banking.
  • Access nationwide via our branch network.
  • Free text and email alerts about your account.
  • The choice of a cash card or a Visa debit card.