How £5,000 is the magic quantity to save lots of at Nationwide: SYLVIA MORRIS
Great news for 3.85 million Nationwide customers. They will see a £100 payout land in their current accounts between June 13 and 28.
The payment by Britain’s largest building society is called Fairer Share and this marks the second consecutive year.
You need to have had a current account open on March 31 this year and also have at least £100 in a savings account or outstanding on your mortgage.
In addition, there are a whole host of conditions depending on which type of current account you have, when you opened it and the number of transactions.
There’s no doubt that for Nationwide savers this is a welcome addition to the interest you earn.
Conditions: To land Nationwide’s £100 payout you need to have a current account open on March 31 this year. You need to also have £100 in a savings account or on your mortgage
But I think plenty could do better by moving some of their easy-access savings to a stronger account. Nationwide’s basic easy access rates are well below the industry-wide average of 3.11 per cent.
Nationwide’s basic easy access rates are well below the industry-wide average of 3.11 per cent.
Its Instant Access Saver pays 2.25 per cent on sums up to £10,000. With £5,000 in your account, that will earn you £112.50 interest in a year.
Add in the £100, which is taxable in the same way as interest on savings accounts, and you end up with £212.50 which hikes your rate to 4.25 per cent — not bad for a branch-based easy access account.
The best deals elsewhere pay 4.81 per cent (Family BS) and 4.96 per cent (Kent Reliance).
At £10,000 the rate is 2.3 per cent so your total interest including the payout is £330, or 3.3 per cent.
So my recommendation is to keep no more than £5,000 in the account and move any additional money elsewhere.
Nationwide will let you know if you qualify by Friday.
It is also offering a new bond on balances up to £10,000 to all its 16 million members at a top rate of 5.5 per cent fixed for 18 months and it is offering a £200 ‘welcome’ payment to those who switch to its current account.
This beats the £175 offer from Lloyds Bank launched yesterday.
The dual incentives appear to be working. Nationwide netted 163,363 new current account customers in the closing three months last year, according to figures from Pay.uk.
This is miles ahead of its nearest rival Barclays at 12,823 and Lloyds the next best at 5,000.
The problem with Fairer Share is only around a quarter of Nationwide members are eligible.
It is dishing out a total of £385 million to eligible members, up from £340 million in a similar payout last year.
Why NS&I’s rate rise was hush-hush
National Savings & Investments has quietly increased the rate on two of its variable accounts.
As of last Thursday, its Direct Saver Easy Access Account pays 4 per cent, up from 3.65 per cent.
The Income Bonds — an easy-access account which pays interest monthly and tends to be popular with pensioners — is up from 3.59 per cent to 3.93 per cent.
Both new and existing savers will benefit from the rate rise.
Its tax-free Direct Isa, however, appears to be stuck at a lowly 3 per cent. Last month I predicted NS&I would have to do something to attract savers to meet the high funding target of £9 billion it has been set.
NS&I planned to announce the changes last week with the usual fanfare, but the election announcement scuppered that plan.
As a Government agency, it cannot be seen to do anything that might influence your vote.
