Nationwide offers £100 cash perk for new current account customers - on top of 5% interest on balances

By Emma Gunn for Thisismoney.co.uk

Published: 05:15 EST, 14 September 2015 | Updated: 07:33 EST, 16 September 2015

Nationwide is offering £100 cash to new customers signing up to its FlexDirect account.

The current account already pays 5 per cent interest on balances of up to £2,500 and offers an interest-free overdraft for the first 12 months. 

The move follows similar attempts by TSB, Halifax and First Direct to beef up their switching incentives last week.

To qualify for the £100 incentive switchers must apply through comparison site, Money Supermarket. 

Quids in: Savvy switchers can grab a £100 cash sweetener plus 5 per cent in credit interest when switching to Nationwide's FlexDirect account

Quids in: Savvy switchers can grab a £100 cash sweetener plus 5 per cent in credit interest when switching to Nationwide's FlexDirect account

Applicants will receive their cashback by way of a £100 cheque through the post within 30 days of account activation. 

Since faster switching rules came into force in 2013 banks and building societies have been battling it out to tempt in new customers with increasingly generous sign-up bonuses and in-credit interest deals.

Last week saw several providers revamp their accounts further to lure in new customers.

Both Halifax and First Direct boosted the cash sign up bonus they offer while TSB introduced a new cashback perk worth up to £60 a year.

Halifax increased the amount it pays to new customers signing up to its bank accounts before 18 October from £100 to £125.

First Direct also bumped up the amount gives switchers from to its First Account from £125 to £150.

Customers signing up to TSB's Classic Plus account also benefit from a new perk as the bank this week announced that it will now pay five per cent cashback on up to £100 of contactless spends each month.  

HOW THIS IS MONEY CAN HELP

Is it worth signing up for Nationwide's FlexDirect Account? 

The FlexDirect deal pays out 5 per cent interest on balances up to £2,500, the highest rate currently available on a current account. However there is a catch: the 5 per cent rate only lasts for the first year.

Customers can collect up to £125 in gross interest in the first 12 months (£100 after 20 per cent tax payers and £75 for higher-rate payers).

Holders signing up through Money Supermarket could therefore earn up to £200 in the first year if you include the £100 cash sweetener.

It also operates a Refer a Friend scheme, whereby both parties will receive £100 if an existing customers successfully recommends friends or family to the bank. 

It also gives a fee-free overdraft for 12 months.

Watch out 

In order to collect your 5 per cent interest account holders must deposit a minimum monthly income of £1,000.

After the first year the interest rate drops to just one per cent, so it may be worth looking elsewhere after a year for a better return on your money. 

Those who find themselves frequently drifting into the red will want to avoid keeping the account beyond the first year however as the building society carries hefty overdraft penalties.

It charges a flat-rate fee of 50p per day on arranged borrowing over £10.

Unarranged amounts clock up fees of 50p for overdraft amounts of up to £10, while going into an unarranged overdraft after the first £10 costs £5 a day.  

Current Accounts Of The Week

HOW DOES IT COMPARE? 

How does it compare? 

The biggest cash sweeteners:

First Direct and Clydesdale and Yorkshire Banks currently top the tables for the largest 'golden hello' available for new customers.  

Clydesdale and Yorkshire Banks both also pay £150 to switchers. Both require a minimum monthly deposit of £1,000 a month in addition to two direct debits but their Current Account Direct offerings pay interest of 3 per cent on balances of up to £3,000 and cheap overdraft interest of 9.9 per cent.

First Direct's pays £150 to new customers who switch to its First Account. On top of that, the bank is so confident in its customer service that it will give you a further £100 if you chose to close the account within the first 12 months.  

Halifax promises a slightly smaller sign-up bonus at £125, however its Reward Account gives an additional £5 per month. To qualify customers must stay in credit, deposit £750 a month into the account and switch over at least two direct debits.

HSBC is currently giving £100 to switchers to its Advance Account. The bank also offers a Save Together feature on its accompanying Loyalty Cash Isa, which promises to pay an extra £120 on top of interest earned. The account requires a £1,750 monthly minimum deposit.

Currently M&S Bank is offering £100 in vouchers to switchers moving to its new Current Account. The account comes with no minimum monthly deposit or annual fee, a low cost overdraft, reward points and a £100 fee-free overdraft buffer.

The Premium Current Account also offers £100 M&S vouchers, plus for a £10 a month fee it offers added extras such as access to preferential rates and a boosted earning rate on loyalty points and vouchers to spend in stores throughout the year.

The Co-op, too, has introduced a £100 cash incentive for new customers plus will also donate £25 to charity on your behalf. Accountholders must deposit at least £800 and switch over two direct debits but the account also comes with a decent £200 fee-free overdraft.  

What about in-credit interest?

Nationwide FlexDirect is one of the highest-paying accounts for those with a smaller balance, but remember, this is just for the first year.

Choosing which interest-paying current account is right for you will hugely depend on how much cash you can transfer into the account each month and how large a balance you can keep.

Santander's 123 current account is the best option for those with larger balances. It pays 1 per cent on between £1,000 and £2,000, 2 per cent between £2,000 and £3,000 and 3 per cent on balances between £3,000 and £20,000.

It also pays up to 3 per cent tiered cashback on household bills. Holders get 3 per cent on spending on mobile, home phone, broadband and paid-for TV packages, 2 per cent on electricity and gas bills and 1 per cent on Santander mortgages, water and council tax bills. However, it does charge a monthly £2 fee.

TSB has recently introduced a new perk to its Classic Plus Account paying 5 per cent cashback on up to £100 a month's worth of contactless transactions. 

The bank already offers 5 per cent interest on balances of up to £2,000 plus access to a regular saver also paying 5 per cent. There is no annual fee, however it requires a minimum monthly deposit of £500.

Lloyds Bank's Club Lloyds current account offers tiered interest of up to 4 per cent for balances between £4,000 and £5,000. But you will have to pay in at least £1,500. 

Smaller amounts receive lower interest. The bank pays 2 per cent interest on balances between £2,000 to £3,999.99 and 1 per cent on amounts of £1 to £1,999.99. 

Tesco Bank's Current Account gives customers 3 per cent interest on balances of up to £3,000. Spending on the account's debit card also clocks up Tesco Clubcard points. It pays one Clubcard point for every £4 spent in Tesco stores plus £8 you spend out of Tesco,

The bank charges a £5 monthly fee but this is waived if account holders deposit £750 a month into the account.

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