Nationwide to make big change to millions of bank accounts in weeks and customers need to check now

NATIONWIDE is making a huge change to millions of accounts in weeks and savers will be worse off.

The nation’s biggest building society is slashing the interest rates on almost 90 savings accounts from February 1.

The move follows the Bank of England’s (BoE) earlier decision to cut the base rate from 5% to 4.75% in November, before maintaining it in December.

The base rate influences the interest rates banks offer to customers on a range of products like mortgages, credit cards and savings.

While mortgage holders celebrate lower rates, as it reduces borrowing costs, savers are left with the short end of the stick.

However, as borrowing costs drop, savings providers, including Nationwide, have chosen to lower interest rates on some savings accounts.

Whether you’re affected or not will depend on the type of savings account you have.

For instance, with fixed term accounts, the interest rate you get on your savings is locked in for a set period of time so they’re not affected.

With others – often easy access accounts – the rate can change anytime.

As such, Nationwide will lower rates by between 0.10% and 0.26% on 89 variable rate easy and instant access savings and cash ISA products from February 1.

Tom Riley, Nationwide‘s director of retail products, said: “We have worked hard to limit the impact of the recent rate cut on our savers and have taken the decision to hold rates on some of our most popular accounts, such as our leading Flex Regular Saver.

“Following these changes, our savings range will remain competitive. We returned a record £950million in member financial benefit in the first half of this year and we’ll continue to give savers every reason to put their money with Nationwide.”

What’s changing?

Nationwide is slashing the interest rate on 55 non-ISA savings accounts.

The majority of these accounts are easy-access, which means that customers can withdraw their money whenever they choose without penalty.

However, some accounts will temporarily reduce the amount of interest offered in the months where a withdrawal are made.

Many accounts with interest rates of around 2.05% will be reduced to approximately 1.80% from February 1.

For example, accounts such as Branch Easy Access, Cashbuilder Book, Cashbuilder Card, Direct Easy Access, and numerous others fall into this category.

Additionally, some accounts will see smaller reductions, such as the 1 Year Triple Access Online Saver and various “Smart” accounts, with decreases of 0.10% and 0.25% respectively.

However, Nationwide is making a single interest rate increase on one account from February.

The Branch Single Access account rate will increase by 0.75% from 2.8% from 3.55.

Unlike the regular saving accounts highlighted above, individual savings accounts (ISAs) offer tax-free savings on up to £20,000 a year.

You do not pay tax on any money within an ISA, regardless of how much interest you earn.

Nationwide is also slashing the interest rate on 34 ISAs.

Again, most of these are easy-access accounts, which means that customers can withdraw their money whenever they choose without penalty.

Most variable cash ISAs at Nationwide will have their interest rates cut by 0.25%.

This includes commonly held ISAs such as the Branch Easy Access ISA, various “Easy” ISAs (Easy Access, Easy Cash, Easy Saver, e-ISA), Direct Cash ISA, Inheritance ISA, Instant Access ISA, Instant ISA, Instant ISA Saver, ISA Bond ex TESSA, Online ISA Issue 8, and Web ISA.

While some other accounts also see reductions, these are generally smaller, such as the 0.10% decrease on the 1 Year Triple Access Online ISA and the 0.10% drop on Branch Reward ISA and Loyalty ISA. 

If you currently have money saved in any of these accounts, you might want to consider moving your money to a different account with a better interest rate.

High street banks often offer lower interest rates compared to newer online banks.

These challenger banks often have lower operating costs, allowing them to offer more competitive interest rates to attract customers. 

Several providers are currently offering interest rates of up to 4.86% on their easy-access products.

What’s are the best savings rates?

If you’re looking for a savings account without withdrawal limitations, then you’ll want to opt for an easy-access saver.

These do what they say on the tin and usually allow for unlimited cash withdrawals.

The best non-ISA easy-access savings account available is from GB Bank via savings platform NuWealth, which pays 4.86% – and you only need to pay a minimum of £500 to set it up.

This means that if you were to save £1,000 in this account, you would earn £48.60 a year in interest.

However, the best easy-access cash ISA from Plum surpasses this rate, offering a return of 5.01%.

This means that if you were to save £1,000 in this account, you would earn £50.10 a year in interest.

If you’re looking to grow your savings and don’t need regular access to your funds, a fixed-term bond or a regular savings account could be a better option.

Fixed-term bonds offer a fixed interest rate for a set period, providing predictable returns, while regular savings accounts encourage consistent saving habits with potentially higher interest rates than standard easy-access accounts. 

We’ve explained below how each type of savings account works.

Plus we’ve explained how to find the best savings rates.

What’s next for savings rates?

Savings rates usually rise and fall with the Bank of England’s base rate.

This was cut for the second time in four years from 5% to 4.75% in November, but then rates were held at 4.75% in December.

The next interest rate announcement is on February 6.

If interest rates continue to fall, it spells bad news for savers, whose rates typically fall when the Bank’s rate is cut.

However, in the meantime, opting for a fixed bond can be a useful bet to help ride out future cuts to the base rate.