Nationwide to pull 5% savings account: what are the alternatives?
The Flex Regular Online Saver account pays 5% AER variable interest for 12 months and allows savers to save up to £250 a month.
The news will not affect the 750,000 existing account holders, who will be able to save into the product until they reach their maturity date.
The regular savings account is available to Nationwide current account customers who have a FlexOne, FlexStudent, FlexGraduate, FlexDirect or FlexPlus account. It’s also available to FlexAccount customers if they have been paying in at least £750 a month for the last three months or have switched in the last four months.
Nationwide said is was withdrawing the account because it was not reaching its intended market.
The account was launched to help those who are new to saving to get into the habit. However, 86% of accounts have been opened by existing savers. On average, account-holders had around £20,000 saved with Nationwide in other accounts.
Nationwide has no immediate plans to launch a replacement product.
Anna Bowes, co-founder of rate monitoring site Savings Champion, said: “It’s disappointing to see this regular savings account being withdrawn, especially as it is linked to the current account which also pays 5% AER on deposits of up to £2,500 for the first 12 months.
“Often the best regular saver accounts are linked to current accounts which usually don’t pay interest and could potentially charge a fee.
“But there are also accounts that are not linked to a current account, so anyone can open.”
Alternative regular savings accounts
Regular savings accounts require savers to put money away each month. They often offer attractive interest rates but come with strict terms and conditions, such as limiting withdrawals and imposing a minimum monthly deposit amount.
If you don’t adhere to these conditions, you could earn less interest than you were expecting.
First Direct, HSBC and M&S Bank all pay 5% AER interest on their regular savings accounts but they are only available to current account customers.
If you’re after a non-linked regular savings account, Virgin Money pays 3% AER with a minimum monthly deposit of £1 until 1 May 2020, or you can earn 2.5% with Yorkshire Building Society, which requires a deposit of at least £10 a month.