The Nationwide Building Society hiked the interest rate on its FlexDirect current account to 5% from 2% on balances up to £1,500.
The mutual is also offering an incentive of £125 to existing Nationwide customers to switch to this account while new customers will get a £100 reward for signing up.
The lender has moved in response to the Bank of England’s recent quarter-point increase in its key lending rate. Thus far, Britain’s best-known high street banks – Lloyds, Barclays, NatWest/RBS and HSBC – have yet to match Nationwide’s move.
According to the moneysavingexpert.com website, Nationwide’s current account is offering an interest rate that is well ahead of the next best account, Virgin Money, which offers 2.02% variable interest on balances of up to £1,000. People aged between 16 and 19 can get an interest rate of 2.5% on the TSB’s under 19s account.
The last time Nationwide offered this level of interest on its current account was in April 2020.
“It’s another example of our mutual difference and giving back to our members,” the building society said on its website.
The account also offers 12 months interest-free credit and an interest-free overdraft, although customers who have had a FlexDirect account before won’t receive the 12-month credit interest offer or the interest-free overdraft offer again; however, they will get the offer on a new joint account, as long as they have not shared a FlexDirect account with the person before.
“Being able to offer highly competitive rates is one of the biggest benefits of mutuality. This market-leading rate will help new and existing members make the most of their money, which is particularly important right now. The FlexDirect current account also has an introductory interest-free overdraft to give some peace of mind to those struggling financially and freeing them to focus on repaying other debts,” said Debbie Crosby, the chief executive officer of Nationwide.