Hotting Up: Competition Among High Street Banks and Building Societies to Attract Savers
Key Highlights :
The competition among high street banks and building societies to attract savers is hotting up, with Britain’s biggest building society launching a £200 switching offer and a linked savings account paying 8% interest. Nationwide Building Society’s offer is available to people switching to one of its three main current accounts – FlexPlus, FlexDirect or the FlexAccount. At the same time, it has introduced a new Flex Regular Saver account, exclusively for current account customers, paying 8% AER (annual equivalent rate) for 12 months.
The last time a cash regular savings account was offering a rate of 8% was a decade ago – in 2013 – when first direct was offering a fixed-term regular saver with a rate of 8%. Members can save up to £200 per calendar month in Nationwide’s new online-managed savings account, which allows up to three withdrawals within the 12 months after the account is opened.
According to Tom Riley, director of retail products at Nationwide Building Society, “We want to give people every reason to join and stay with Nationwide. That’s why we are offering new and existing current account customers a top-of-market £200 if they switch their main banking relationship to the society. We’re also rewarding our current account customers with a market-leading rate of 8% AER on our Flex Regular Saver.”
Rachel Springall, a finance expert at Moneyfacts, said “Regular savings accounts work differently to easy access accounts, so it’s important customers read through the account’s criteria to ensure it is right for them.” She added that “it is great to see Nationwide offering a lucrative £200 free cash offer to entice customers, which could be useful for those looking for a cash boost amid a cost-of-living crisis.”
This week, Lloyds Bank launched a £175 switcher offer for new customers switching from another bank to a Club Lloyds account before November 14. There is a £3 monthly fee to maintain the account, waived each month when £2,000 or more is paid in. Club Lloyds customers can benefit from perks including cinema tickets, a magazine subscription, cashback when shopping at selected retailers, and access to preferential rates when ordering travel money.
Account holders can also access the Club Lloyds Monthly Saver, which pays 6.25% AER and allows customers to save between £25 and £400 each month. With a further Bank of England base rate rise expected on Thursday, the appetite for saving appears to have grown among some banks’ customers.
NatWest reported on Tuesday that the number of fixed-term accounts opened in the first half of 2023 was around 17 times the total it recorded in the same period in 2019. More than 82,000 fixed-term savings accounts were opened in the first half of this year, the bank said. This compares with 4,700 in the first half of 2019, according to NatWest’s data.
TSB also launched a new switching offer on Monday, saying new customers who switch to a TSB Spend & Save or Spend & Save Plus current account can potentially receive over £200, subject to customers fulfilling certain terms and conditions. New customers using Cass can potentially receive £150 from TSB. Customers can also potentially earn £10 in cashback each month for the first six months with a Spend & Save account, totalling £60. For Spend & Save Plus, the same cashback is potentially available for the first six months and then it will revert to £5 cashback a month, totalling £90 in the first 12 months.
Choosing the right current account depends on someone’s spending habits as there are a variety of different accounts out there with their own benefits and charges. Consumers who are searching for a rewarding bank account may wish to choose one that offers cashback on spending or even on their monthly bills – there are even accounts that pay a monthly reward when certain eligibility criteria is met. On the other hand, those consumers who may dip into their overdraft would be better off choosing an account with a competitive overdraft tariff or even an account with an interest-free buffer. Those consumers who plan to make frequent trips abroad can also find accounts that don’t charge them for using their debit card in an ATM or in store, so they can avoid paying out on transaction fees compared to a more traditional bank account.
Switch current accounts is easy to do using the Current Account Switch Service and some banks will pay an upfront free cash incentive to entice customers. However, it’s the overall package of an account that should be weighed up before someone commits to switching their current account. With high street banks and building societies competing to attract savers, customers are in a strong position to find an account that suits their individual needs and offers the best value.
