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The Building Society announced changes to the Nationwide FlexDirect account earlier this year. It saw the interest rate offered reduce from five percent AER (4.89 percent gross) to two percent AER (1.98 percent gross), as well as changes to the rules.
It was the first reduction to the credit interest rate on the FlexDirect account since its launch in November 2012.
Nevertheless, FlexDirect has continued to offer one of the highest rates of credit interest on the market.
Now, the account pays credit interest of two percent AER (1.98 percent gross) on balances of up to £1,500.
However, this is not an offer which customers will receive indefinitely.
Rather, not now only applies for the first 12 months.
After the one-year period, the interest rate will never to 0.25 percent AER (0.24 percent gross) on balances up to £1,500.
As such, it may be customers want to note the date that their interest rate will drop.
To get the rate, there are some requirements customers will need to meet.
They will need to pay in £1,000 per month, and this cannot include transfers from other Nationwide accounts or Visa credits.
This rate can be accessed by customers via the first account they open in just their name.
Furthermore, if they want to share another account with someone else, Nationwide will pay the two percent rate on the first joint account opened with them.
However, if a person has had a FlexDirect account before, they won’t be able to access this offer again.
Following the cuts being announced in April this year, Sara Bennison, who oversees Nationwide’s products and propositions, said: “We know that this is a tough time for savers, particularly after two cuts in Bank Rate in quick succession taking it to an historic low of only 0.10 percent.
“In order to preserve the long-term sustainability of the Society for all our 16 million members, we have had to take these decisions on the interest rates we can offer on a number of our accounts.
“We have tried to remain as competitively priced as possible, with our FlexDirect account, for example, remaining one of the best in the market for credit interest and our savings prize draws helping people into good savings habits.”
Anyone who applied for FlexDirect accounts prior to May 1 are continuing to receive credit interest of five percent AER (4.89 percent gross) on balances of up to £2,500 for the remainder of their 12-month introductory period.
However, once this period ends, existing account holders have their credit interest rate reduced to 0.25 percent AER, on balances up to £1,500 – something which came into effect in July.
Should the balance exceed £1,500, then customers should be aware they will earn no interest on any part of the balance which is over £1,500.
They will be able to continue earning interest on the first £1,500 of their balance each month, however.
Virgin Money holders can also earn a similar interest rate, of 2.02 percent AER (two percent gross per annum variable) on their balance, however this is only up to £1,000. The interest is paid monthly.
These customers are also able to open a linked savings account, which currently pays 0.50 percent AER/gross per annum variable, with the interest in this account being paid quarterly.
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