Nationwide races ahead of competitors with five per cent rates

One of the UK’s biggest high street banks is offering savers a five per cent interest rate as competition among lenders to secure deposits heats up.

Nationwide today has upped its rates on its FlexDirect account on balances up to £1,500 for the first year from two per cent, a more than double increase.

The five per cent introductory rate is available to fresh applicants from June 21. After 12 months, the account drops to 0.25 per cent.

New switchers could also pocket from Nationwide’s switching incentive of £100. Existing customers can grab £125.

The move is likely to start a bidding war among the likes of Nationwide, Lloyds, HSBC and Barclays to pass on the Bank of England’s five successive rate rises to grab households’ deposits.

Rates are now 1.25 per cent, a 13-year high and up from just 0.1 per cent last December.

Debbie Crosbie, chief executive at Nationwide Building Society, said: “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,” she added.