Just over a year ago, on 21 September, Nationwide launched an 8% regular saver account.
It was one of the highest-paying savings accounts on the market at the time, and a big step up from the 4.5% interest that the account previously paid.
The regular savings account was wildly popular, and the UK’s biggest building society kept it on sale for almost five months. On 8 February this year, Nationwide dropped the rate to 6.5%.
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Many savers took advantage of the account as soon as it launched, opening it last autumn. This means the 12-month duration is coming to an end, leading customers to wonder what their options are.
The Bank of England base rate has now fallen to 5% (compared to 5.25% a year ago), and markets are expecting another interest rate cut either next month or in December. Savings rates have understandably tumbled, for example Chase recently cut the rate on its easy-access account for the second time in two months.
According to Moneyfacts, the average rate on a one-year fix has fallen from 5.42% on 1 October 2023 to 4.31% on 1 October 2024.
So, faced with this different environment, what should savers do? Should they open another regular saver account, and if so, what’s the best rate at the moment? What about leaving the money with Nationwide? Or perhaps switch to a one-year fixed-rate account? And are there any cash bonuses on offer that could help during this time of falling interest rates?
We delve into all of this to work out what Nationwide customers should do whose 8% regular saver has finished, or is about to mature.
What are the best regular saver accounts right now?
You may be surprised to learn that you can still get 8% interest on a regular saver account. However, there is a catch. The length of the term is only six months.
The account in question is offered by Principality Building Society. Savers can pay in up to £200 a month (up to £1,200 during the fixed period), and be paid the 8% fixed interest when the account matures. No withdrawals are allowed during the six-month term.
If you don’t want to tie your money up for a whole year, this could be a good option. However, note that when the account does mature, in say April if you open it today, savings rates could have fallen again. So you may have to accept a lower rate wherever you decide to park your cash next year.
Also note that some regular savers do allow withdrawals, so if you think you may need access, a 12-month account that allows withdrawals could be a better bet. But you will have to accept a lower rate than 8%.
The next-highest interest rate on a regular saver account is 7%. This is offered by First Direct, Co-operative Bank, and Skipton, and they all run for 12 months.
With First Direct, you can pay in between £25 and £300 each month. You need to have a current account with the bank, and no withdrawals are allowed.
With the Co-op regular saver, you can pay in between zero and £250 a month . Again, it’s exclusively for current account customers. However, it differs to most other regular savings accounts, because you can make as many withdrawals as you like. The trade-off is that the interest rate is variable so could change during the 12 months.
Skipton Building Society also offers 7%. There is no minimum monthly deposit, while the maximum is £250. You must have been a member of the building society before 11 January 2024. No withdrawals are allowed.
So, if you wanted a 7% regular saver and weren’t a customer with any of the above, you could open a current account with Co-op or First Direct and qualify for the savings account. But you wouldn’t be able to with Skipton, as savers must already be members.
Deciding between Co-op and First Direct could come down to whether you want withdrawals, whether you prefer a fixed interest rate, and if you want to save a higher amount each month.
| Account | Is the interest fixed or variable? | Maximum monthly deposit | Withdrawals allowed? |
|---|---|---|---|
| First Direct | Fixed | £300 | No |
| Co-op | Variable | £250 | Yes, unlimited |
| Skipton | Fixed | £250 | No |
Does Nationwide still offer a regular saver?
Yes, it does. The building society now pays 6.5%. The criteria is similar to the 8% one: you’ll need to have a current account with Nationwide, there is no monthly minimum deposit and you can save up to £200 per month.
The account allows up to three withdrawals. On your fourth withdrawal, the rate will drop to 2.15%.
The 6.5% interest is only a bit less than the 7% rates offered on the best 12-month regular savings accounts. If you want the quickest, simplest account to open, you may prefer to stick with Nationwide as you know you’re eligible for the account and you’re familiar with it, plus it’s easy to open in your online banking or on the app.
It’s also good to know that you can make a few withdrawals without affecting the interest rate.
Rachel Springall, finance expert at Moneyfactscompare.co.uk, tells MoneyWeek: “If customers are satisfied with the service they have had, then this rate is still very competitive in the market.”
The downside is that, like the Co-op account, the rate is variable. Nationwide could choose to reduce the 6.5% rate at any time, especially if the Bank of England base rate gets cut again.
Nationwide v First Direct: how the interest compares
You may be thinking of switching to First Direct to grab a 7% regular saver, rather than settling for Nationwide’s 6.5% deal.
We asked Moneyfactscompare.co.uk to crunch the numbers to see how the interest compares if you saved £200 for a month for one year. With First Direct, you would have a total sum of £2,492.98 at the end of the 12 months.
With Nationwide, you would have £2,486.20. This is a difference of just £6.78.
If you want to save more each month (you can save up to £300 with First Direct), and the peace of mind that it’s a fixed, rather than variable, rate, you may like to move your money to First Direct. But if those things aren’t important to you, for the cost of less than £7 you may prefer to sit tight and stay with Nationwide.
What about moving to a different type of savings account?
Now that your Nationwide regular saver has matured, maybe you don’t need to open another one, and a different sort of account would suit you and your cash better.
The first thing to consider is whether you need access to your cash. If you don’t, a one-year savings account could work well. This guarantees you a set interest rate for the whole year (which could be helpful if savings rates fall elsewhere in the market). But you won’t typically be able to access your money.
We round up the best one-year savings accounts.
Or, if you do want to be able to withdraw money, there are still some decent easy-access savings accounts around, despite the summer base rate cut.
Note that these rates can change at any time, so even if you open a 5% account, the rate could fall shortly after, so you’ll need to be ready to switch to a different account to maintain a competitive return.
We round up the best easy-access savings accounts.
Springall comments: “Picking the right savings account depends on how soon a saver needs access to their cash. There are some short-term deals to consider, such as easy-access accounts, notice accounts or fixed bonds of terms less and a year. If savers are unsure, they could always grab a regular savings account that does not have a fixed term, or a simple easy-access account that offer full flexibility.”
If you like the idea of winning prizes with your money - rather than a regular amount of interest - then you could consider Premium Bonds.
Are there any switching bonuses that could boost my savings?
Yes, there are a few switching bonuses on offer for customers transferring their current account. You may then qualify for a regular saver with that bank or building society.
For example, Nationwide is paying £175 to customers who switch a non-Nationwide bank account with at least two active Direct Debits, and then close that account.
The interesting thing about this deal is that it’s open to existing Nationwide customers, as well as new customers. So, even if you have a current account with the building society, and perhaps enjoyed the 8% regular saver, if you have an account with a competitor you could move it across and get £175 free cash.
If you’re eyeing up First Direct’s 7% regular saver, you could switch to the bank and also get a £175 bonus. Meanwhile, you could get up to £150 for moving to the Co-op (which also has a 7% regular saver).
Make sure you check the small print and understand the criteria to get the switching bonus, as well as how the current account works that you are opening.
Springall notes that while the First Direct 7% account may look appealing, “customers have to open and fund a first direct 1st Account (current account). It is worth pointing out that there are lots of regular savers that are linked to current accounts, but not all of them require regular funding”.
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