Nationwide Building Society has unveiled a new savings offer that could see some of its customers £800 better off over the next two years. The initiative is designed to encourage savers to deposit funds into a fixed-rate savings account, where their money will earn interest at a guaranteed rate, provided it remains untouched for the duration of the term.
The new Fixed Rate Online Bonds, Fixed Rate Branch Bonds, and Fixed Rate Cash ISAs are available to both new and existing customers. These accounts can be opened through various channels, including Nationwide’s website, mobile banking app, or in-branch services, offering flexibility for those looking to secure a higher return on their savings.
This announcement comes as financial institutions across the UK seek to attract long-term deposits by offering competitive interest rates in response to rising inflation and economic uncertainty. But is this deal as beneficial as it sounds?
A Fixed Return Over Two Years
One of the most attractive elements of this offer is the fixed interest rate available on these accounts. While many banks have been increasing savings rates in recent months, Nationwide’s proposition stands out for those willing to commit their money for a longer period without making withdrawals.
According to financial comparison site Raisin, the average UK savings account balance currently stands at £9,633.30. If a customer were to deposit this amount into one of Nationwide’s new fixed-rate accounts, they would earn approximately £800.94 in interest over a two-year period, provided they do not access their funds before the term ends.
Notably, these accounts are accessible with a minimum deposit of just £1, making them available to a broad range of savers. Those who choose the Fixed Rate Cash ISA will benefit from a tax-free interest return, which could be particularly appealing to individuals looking to maximise their earnings without incurring additional tax liabilities.
Travel Insurance Warning for Holidaymakers
Alongside its savings announcement, Nationwide has also issued a reminder about the importance of travel insurance, particularly as many people begin booking holidays for the upcoming seasons. The building society is urging customers to review their policies and ensure they are adequately covered before embarking on trips abroad.
Marta Edwards, Head of Current Accounts at Nationwide, emphasised the financial risks associated with travelling uninsured. She stated: “As we enter a busy period for booking holidays, people should ensure they have the right insurance in place once their holiday is booked. As our research shows, many people risk travelling without any cover and, while they will hopefully not need it, it can be an expensive gamble.”
Nationwide has highlighted that the average cost of a declined travel insurance claim is approximately £1,200, which can be a significant financial burden for those who find themselves needing medical assistance or facing unexpected trip cancellations.
For customers looking for comprehensive travel coverage, Nationwide’s FlexPlus current account includes worldwide family travel insurance as part of its benefits package. Edwards added: “Nationwide’s FlexPlus current account provides worldwide family travel insurance as one of its perks, and we would encourage customers to talk to us about any upgrades they might need and any pre-existing conditions they have to ensure that their cover is appropriate.”
A Good Deal for Savers?
With interest rates rising across the savings market, Nationwide’s offer could be an attractive option for those willing to lock their money away. A fixed return is competitive, especially given the low-risk nature of these accounts compared to investments in the stock market.
However, the requirement to keep funds untouched for two years might not suit everyone. Those who anticipate needing access to their savings before the term ends may find easy-access accounts or short-term fixed-rate bonds more suitable.
The addition of tax-free interest on the Cash ISA could be a significant benefit for higher-rate taxpayers, as it ensures that all interest earned remains outside the scope of income tax. For basic-rate taxpayers, the savings allowance may already cover interest earnings, but those with substantial savings balances could still find the ISA option worthwhile.
