Review of Nationwide Flex Direct Current Account

Written by Karen Bryan

nationwide flex direct 300x140 Review of Nationwide Flex Direct Current AccountI was attracted to the Nationwide Flex Direct current account by the 5% fixed rate paid for the first 12 months. Unfortunately the maximum balance for the 5% rate is only £2,500; you get no interest on anything above the £2,500 threshold. Plus you have to pay in at least £1,000 a month to be eligible to receive the 5% interest.

Another reason I thought it might be worth opening a Nationwide Flex Direct account was that I’d then have access to exclusive products, e.g. slightly higher rates of interest paid on a Cash ISA account.

I had to judge whether I should open a Flex Direct account. I could earn £125 gross interest (£100 net after paying 20% basic rate income tax)  if I kept £2,500 in the Flex Direct account for 12 months from the date of opening. The highest rate currently available on instant savings accounts is 1.75% from ICICI Bank UK, which would only give me £43.75 gross interest (£35 after paying  20% basic rate income tax). Therefore I’d be £65 better off by opening a Flex Direct Account than having the money in an ICICI Bank UK instant access account.

I’d set up a standing order from an account with another bank (internal Nationwide transfers don’t count toward the £1,000 minimum monthly payment) to pay in the £1,000 a month into the Nationwide Flex Account. Then another standing order to withdraw the £1,000 from the Flex Account back into an instant access savings account. There’s no point in keeping a penny above the £2,500 threshold in the Flex Direct. As the transfers in and out of the Nationwide Flex Account would all be automated, I could just set them up and forget about it.

I’m not sure if I’ll bother opening a Nationwide Flex Direct current account. You can over-complicate your finances.

I already have two current accounts. A Halifax Reward Current Account which pays me a £5 (net for basic rate taxpayers) monthly bonus as long as I pay in £1,000 a month (which can include internal transfers) and have 2 monthly direct debits set up. My other current account is a Santander 123 Cashback Current Account which pays 3% variable (gross) on balances between £3,000 – £20,000. The Santander account has a monthly charge of £2 and I have to pay in a minimum of £500 a month into that account (excluding internal transfers). I get cashback on household direct debits such as 3% on telecoms and 1% on council tax.

I’ve also reviewed the Nationwide Flex Plus Current Account.

Update 14 August 2013 – I’ve opened a Nationwide Flex Direct in order to get the fixed rate of 5% on a balance of £2,500.With interest rates so low, I decided that the rate of interest was too good to forgo. I made an initial deposit of the full £2,500. The minimum £1,000 monthly payment into the Flex Direct account is made by standing order from my Halifax Reward Current Account. The day after it’s paid in the Flex Direct account, the £1,000 is automatically transferred into my Nationwide Regular Savings Account which pays 2.5% variable, as long as the balance of the account increases between £500-£1,000 per month.

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