## Nationwide Regular Savings Account

Written by Karen Bryan

**Update 4 March 2015** – The rates of interest paid on the Nationwide Regular Savings account will drop to a maximum of 2% on 1 April 2015.

When I was researching fixed rate regular savings accounts, I came across the Nationwide Regular Savings Account. It’s quite different to most regular savings accounts, as the rate of interest which you earn each month is dependent on the amount by which the overall balance increases each month. The rate of interest paid on most savings accounts depends on the balance in the account. If you pay in between £500 – £1000 a month to the Nationwide Regular Savings Account, the current rate of interest paid is 2.5%. I only wish that rate of interest was fixed.

However be aware it’s the overall increase in the total balance which determines the rate of interest paid. If you put in £500 in one month but also withdraw £400 in the same month, then there is only a £100 increase in the total balance, so the rate of interest paid will only be 1.35%.

Another big difference with the Nationwide Regular Savings Account is that you can make unlimited withdrawals. So, if the rate of interest paid did drops, you can transfer the money out into an account paying a higher rate of interest.

As the 2.5% rate of interest is higher than is paid on almost any other instant access accounts and even two year fixed rate savings accounts, I was tempted to open a Nationwide Regular Savings Account.

The call to action was that I’d also been thinking about opening a Nationwide Flex Direct Current Account, which would pay a fixed rate of interest of 5% on a balance of up to £2,500 a year. As you need to pay in a minimum of £1,000 a month into the Flex Direct Account to qualify for the 5% interest, I thought I could transfer that £1,000 monthly payment straight out of the current account into the Regular Savings Account.

I already have a dormant Nationwide Current Account which I stopped using years ago when Nationwide ditched free overseas usage, so it was quite straightforward to open the Flex Direct and Regular Savings Account.

At current rates of interest, paying £1,000 a month for 12 months into a Nationwide Regular Savings Account would earn me an additional £45 gross, £36 net (after deduction of basic rate income tax) compared to keeping £12,000 in an ICICI Bank HiSave SuperSaver Account, paying 1.75%. I’ll earn an additional £65 net by keeping a balance of £2,500 in a Nationwide Flex Direct Account, compared to the ICIC bank account., which, at the moment, is the highest paying instant access account.

Therefore, I’ll be more than £100 better off by opening these two Nationwide accounts. Plus, I’ll have the certainty of the 5% fixed rate on the Flex Direct Current Account,

*Interest rates corrent on 5 August 2013.*