FlexDirect currently pays 5% interest for 12 months on balances up to £2,500 but from next week, it will only pay 2% on balances up to £1,500.

People who want to bag the 5% deal have until 30 April to apply. Those who get in before the deadline will get the higher rate for the first year.

After the 12-month introductory period, the account interest rate will fall to 0.25% on balances up to £1,500 for all customers.

Existing customers will continue to receive 5% if they are still within their first 12 months or 1% if they’re outside the 12-month period. They will then get 0.25%.

End of the 5% deal

Nationwide was the last remaining provider to offer a 5% savings deal after M&S, HSBC and First Direct all reduced rates on their regular savings accounts in the autumn.

While the Nationwide cut will be disappointing for hard-pressed savers, the 2% offer is still competitive for new customers.

Rachel Springall, finance expert at data firm Moneyfacts, said: “TSB is reducing its credit interest rate on the Classic Plus in May from 3% to 1.5%, and Santander’s 123 Account will be cut in the same month from 1.5% to 1.0%, so Nationwide will continue to offer a better rate given the changing market.

“It may not be the best environment for savers right now, but it’s vital they are not discouraged to find a better deal or put some money away for emergencies.”

Lloyds Bank is also offering 2% interest on its Club Lloyds current account but only on balances between £4,000 and £5,000.

Anna Bowes, co-founder of website Savings Champion, said: “Anyone who can open one of these accounts before the deadline could earn an extra £95 gross over the next 12 months compared to putting their £2,500 in the best easy access account paying 1.20%.”

However, she pointed out that savers should make sure they can meet the funding requirements of these current accounts, otherwise they will end up earning less interest than they could elsewhere.

Nationwide FlexDirect requires at least £1,000 to be deposited each month, while Club Lloyds charges a £3 monthly fee unless a monthly deposit of £1,500 is made.

Nationwide cutting rates across the board

Nationwide is slashing rates on almost all products next month in response to the two Bank of England base rate cuts in March.

As well as FlexDirect, it is cutting its Help to Buy ISA from 2.5% to 1%, its FlexOne Regular Saver from 3.5% to 1% and its junior ISA from 3% to 1%. See Nationwide savings cuts for the full list of changes.

Sara Bennison, who oversees Nationwide’s products and propositions, said the building society had made the decision to cut rates “to preserve the long-term sustainability of the Society for all our 16 million members”.