NATIONWIDE is cutting interest rates on a host of its savings accounts for the first time in four years.
The building society is slashing rates across the board following the Bank of England‘s (BoE) decision to drop base rate from 5.25% to 5%.
Base rate is the rate charged to high street banks which is then reflected in mortgage and savings rates.
Nationwide, which serves around 17million customers, says it will lower rates by between 0.10 to 0.20 percentage points from November 1.
It is the first time the building society has cut rates on its savings accounts since 2020, when the BoE last dropped interest rates.
Rates will fall on regular savings accounts, children’s accounts, limited access and easy access savings accounts.
Five of Nationwide’s 24 savings accounts won’t see any change in interest.
Its Continue to Save regular savings account will fall from 2.50% to 2.30% at the start of next month.
Meanwhile, its 1-year Triple Access Online Saver 15 will fall from 4.25% to 4.10%.
Its Instant Access Saver 10 account will be cut from 2.40% to 2.20% – a 0.20 percentage points drop.
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 not reduce rates on those accounts encouraging a regular savings habit.
“Following these changes, our savings range will remain competitive, and we’ll continue to give savers every reason to put their money with Nationwide.”
The full list of Nationwide’s savings accounts and whether their rates are being cut is in our table below.
| Product Type | Account | Previous Headline Rate | New Headline Rate | Change |
|---|---|---|---|---|
| Regular Savings | Start to Save 2 | 5.50% | 5.50% | 0.00% |
| Help to Buy | 3.50% | 3.35% | 0.15% | |
| Flex Regular Saver 2 | 8.00% | 8.00% | 0.00% | |
| Flex Regular Saver 3 | 6.50% | 6.50% | 0.00% | |
| Continue to Save | 2.50% | 2.30% | 0.20% | |
| Children’s | FlexOne Saver / FlexOne Regular Saver | 5.00% | 5.00% | 0.00% |
| Child Trust Fund / Smart Junior ISA | 4.00% | 3.80% | 0.20% | |
| CTF Maturity ISA / Junior ISA Maturity | 4.00% | 3.80% | 0.20% | |
| Smart Limited Access | 3.50% | 3.30% | 0.20% | |
| Future Saver1 | 3.50% – 4.00% | 3.30% - 3.80% | 0.20% | |
| Smart Saver | 2.50% | 2.30% | 0.20% | |
| Smart | 2.50% | 2.30% | 0.20% | |
| Limited Access | 1 Year Triple Access Online Saver 15 | 4.25% | 4.10% | 0.15% |
| 1 Year Triple Access Online ISA 14 | 4.25% | 4.10% | 0.15% | |
| LTY Single Access ISA | 3.75% | 3.65% | 0.10% | |
| Single Access Saver / Single Access ISA | 3.00% | 2.80% | 0.20% | |
| Limited Access Saver / Limited Access Online Saver | 2.50% | 2.30% | 0.20% | |
| e-Savings Plus | 2.50% | 2.30% | 0.20% | |
| Triple Access Saver / Triple Access ISA | 2.50% | 2.35% | 0.15% | |
| Instant Access | Flex Instant Saver | 3.25% | 3.25% | 0.00% |
| Loyalty Saver / Loyalty ISA | 3.75% | 3.60% | 0.15% | |
| Flexclusive ISA / Flexclusive Saver2 | 2.30% – 2.40% | 2.10% – 2.20% | 0.20% | |
| Instant Access Saver 10 | 2.40% | 2.20% | 0.20% | |
| Instant access savings accounts (e.g. Instant Access Saver, Instant ISA Saver, CashBuilder)3 | 2.25% -2.35% | 2.05% – 2.15% | 0.20% |
The announcement from Nationwide comes as a number of other banks cut rates on savings accounts.
Santander recently slashed the rate on its easy-access savings account from 5.2% to 4%.
Chase, CHIP and The Co-operative Bank have also cut rates since the BoE’s decision to lower base rate to 5% in August.
Sarah Coles, personal finance expert from Hargreaves Lansdown, said: “It’s not a big surprise to see Nationwide cut rates, because we’ve seen them fall across the savings market as a whole.
“It remains relatively competitive for a high street bank, which is vital for those people who absolutely need to bank in a branch.
“Having said that, it leaves plenty of accounts looking distinctly lacklustre.”
What is the base rate and how does it affect the economy?
NINE members of the Bank of England's Monetary Policy Committee meet eight times each year to set the base rate.
Any change to the Bank’s rate can have wide-reaching consequences as it directly influences both:
- The cost that lenders charge people to borrow money
- The amount of savings interest banks pay out to customers.
When the Bank of England lowers interest rates, consumers tend to increase spending.
This can directly affect the country’s GDP and help steer the economy into growth and out of a recession.
In this scenario, the cost of borrowing is usually cheap, and the biggest winners here are first-time buyers and homeowners with mortgages.
But those with savings tend to lose out.
However, when more credit is available to consumers, demand can increase, and prices tend to rise.
And if the inflation rate rises substantially – the Bank of England might increase interest rates to bring prices back down.
When the cost of borrowing rises – consumers and businesses have less money to spend, and in theory, as demand for goods and services falls, so should prices.
The Bank of England is tasked with keeping inflation at 2%, and hiking interest rates is a way of trying to reach this target.
In this scenario, the losers are those with debt.
First-time buyers will lose out to cheaper mortgage rates, and those on tracker or standard variable rate mortgages are usually impacted by hikes to the base rate immediately.
Those on a fixed-rate deal tend to be safe if they fixed when interest rates were lower – but their bills could drastically increase when it’s time to remortgage.
The cost of borrowing through loans, credit cards and overdrafts also increases when the base rate rises.
However, the winners in this scenario are those with money to save.
Banks tend to battle it out by offering market-leading saving rates when the base rate is high.
Should you switch?
If you’re a Nationwide customer with one of the affected savings accounts, you might be considering switching to another bank.
According to Moneyfacts, the best easy access account is currently with Ulster Bank which is offering a 5.20% interest rate, although you have to put in a minimum of £5,000.
Customers could try Cahoot’s 5% savings account which you can start adding to with just £1.
The best regular savings account is with Principality Building Society, which is offering 8% interest.
Meanwhile, the most competitive Children’s account is with Saffron Building Society which is 5.55%.
Sarah suggested for those looking to get a better limited access account Coventry BS’ Triple Access Saver is offering 4.83%
She suggested looking at challenger instead of major banks to get some of the best rates on other accounts too.
“You’ll get a far better rate by looking beyond the high street, and considering online bank accounts or online cash savings platforms.
“You can track down the best performers using a price comparison site.
“However, if you know this isn’t something you’ll have the energy for on a regular basis, you can use an online cash savings platform, like Raisin or Active Savings.
“These have competitive rates from a large number of banks, and let you switch between different accounts from different banks without having to complete fiddly paperwork, and with just a handful of clicks of the mouse.”
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