Nationwide current account pays market-leading 5% interest

You can now get 5% interest on current account balances up to £2,500 with Nationwide's FlexDirect account.

Nationwide now has the market-leading current account as it increases the amount of interest it pays to 5%, from 2%.

It will pay this amount on balances up to £2,500 for 12 months at which point the interest rate will revert back to 1%.

This is a brilliant offer as it beats any other current account offers and any one-year savings rates.

The deal

New and existing customers can now get 5% interest on balances up to £2,500 in their Nationwide FlexDirect account.

There will also be no overdraft charges for the first 12 months, after which point a hefty fee of 50p a day will be applied on arranged overdrafts of more than £10.

To open a FlexDirect current account customers need to deposit at least £1,000 per month and this can be done online or in a branch.

How does it compare?

Several other current account providers offer interest on in-credit balances. The closest contender to the Nationwide deal comes from Halifax at £5 per month, or £60 a year.

What’s the catch?

As the 5% interest rate only lasts for 12 months, you’ll need to be happy switching your account at this point in order to continue getting a decent interest rate.

It’s also possible to put more money into some of the other current accounts, such as the Santander 123 account. With this account you’ll earn 3% on balances between £3,000 and £20,000 so although the rate isn’t as high, you can earn interest on a far greater sum of money.

Is it any good?

With a dismal savings market where rates are averaging around the 2% mark, this increase from Nationwide is welcomed.

The deal beats any other in the current account market and it is also way ahead of any one-year fixed-rate savings bonds.

Therefore it’s an impressive deal for those people willing to switch accounts after 12 months.

More on current accounts and savings:

Get cashback with your current account

The best and worst packaged current accounts

The top fixed-rate savings bonds

Agribank: New bank will pay 3.6% on your savings

New 18-month Marie Curie savings bond paying 2% launched