Nationwide to slash FlexDirect interest – but newbies still have three weeks to grab 5% for a year

If you want to bag the 5% interest FlexDirect currently pays on balances up to £2,500, you've until Thursday 30 April to apply and lock in that rate for a year. From Friday 1 May onwards it'll pay new customers 2% interest – and only on smaller balances. 

The account's ongoing interest rate, which it starts paying 12 months after an account is opened, is also dropping.

The FlexDirect rate cut announcement follows similar moves by rival interest-paying current accounts Santander 123 and TSB Classic Plus, which are also dropping their rates in May. And it comes after the Bank of England cut the base rate to a record low of 0.1% last month in response to the economic shock caused by the coronavirus pandemic. 

Nationwide's also making a raft of other changes, including pausing its 'Recommend a Friend' scheme and cutting the interest on its popular Help to Buy ISA from 2.5% to 1%. See our round-up of Nationwide's savings cuts below.

For a full rundown of our top-pick current accounts, see our Best Bank Accounts guide. And for help searching out the best savings interest rates, see Top Savings Accounts.

How is Nationwide's FlexDirect changing for new customers?

Here's a summary of how the changes will apply to new customers:

• If you apply for a FlexDirect account by Thursday 30 April, you'll get the 5% rate fixed for a year. This is paid on balances up to £2,500.

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  o earn any interest you must pay in at least £1,000/month, equivalent to a £12,500 annual salary – and you won't be able to get the 5% offer if you've had a FlexDirect account before. For full info on the account and how to apply, see Best Bank Accounts. 

• If you apply for a new FlexDirect account from Friday 1 May, you'll only get 2% fixed for a year. What's more, interest will only be paid on balances up to £1,500 (down from £2,500). This means the maximum interest new FlexDirect customers will be able to earn in their first year is dropping to about £30, compared with about £125 currently.

  To earn the 2% interest rate you can't have had a FlexDirect account before (if you have, you'll get 0.25%) and as now you must pay in at least £1,000/mth to get any interest.

• The building society is pausing its 'Recommend a Friend' scheme from today (6 April). This was one of the most generous refer-a-friend switch incentives out there – if an existing Nationwide customer recommended a friend who switched, the existing customer and the friend who switched each got a free £100. Anyone who completed a switch before 6 April will still get the £100, as will their friend.

• The ongoing interest any new customers will earn after their first year will be 0.25% variable (down from 1% variable). This will be the case for everyone who applies for a new account from now on. The rate will also only be paid on balances up to £1,500 (down from £2,500 currently). 

If you're a potential new customer, the FlexDirect account remains our top pick right now for current account interest. As long as you apply by 30 April, you'll get 5% interest fixed for a year on up to £2,500 (0.25% on up to £1,500 after). If you already have (or have had) the Nationwide account, Lloyds and Bank of Scotland currently offer accounts paying up to 2% interest, though this is only on a portion of your balance, not the whole amount.

When the Nationwide FlexDirect rate drops on 1 May, we'll reassess our top picks. For full info, see interest-paying current accounts.

How is FlexDirect changing for existing customers?

If you're an existing customer, you WON'T see any immediate change to your interest rate. Here's what's happening:

• If you're still within your first 12 months, you'll continue to earn 5% interest on up to £2,500 until the end of those 12 months. As before, you'll need to keep paying in at least £1,000/mth to qualify for any interest.

• If you're outside your introductory 12 months, you'll continue to earn 1% interest on up to £2,500 until 30 June 2020. From 1 July 2020, your rate will drop to 0.25% and you'll only earn interest on the first £1,500 in your account. The minimum pay-in of £1,000/mth still stands.

How are Nationwide's savings accounts changing? 

Nationwide's also announced big rate cuts across its savings range, including its Help to Buy ISA. This was one of our top picks before these ISAs closed to new applicants last November – its rate is being cut from 2.5% to 1%. 

We've outlined this and all the other cuts in the table below.

Nationwide says it'll be writing to affected savers with more than £100 saved to notify them of their new rates.

If you have ANY savings with Nationwide, check your rate to see if you can earn more in top savings or top cash ISAs.

If you have a Help to Buy ISA, the options for switching are now limited, though you may want to check if transferring into a Lifetime ISA would work for you.

What does Nationwide say?

Sara Bennison, who oversees Nationwide's products and propositions, said: "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."