Are you in search of a present account that not solely means that you can deal with your payments and on a regular basis spending, but additionally pays you a little bit little bit of curiosity in your cash? Present account rates of interest are often very low, and even non-existent, however there may be one account that provides an unimaginable 5% curiosity. That determine is greater than twice as a lot as is paid on most financial savings account!

Meet the Nationwide FlexDirect Account

The account in query is the Nationwide FlexDirect account, which launched in late 2012 and commenced providing an rate of interest effectively above the market common in March 2013. If you have already got a Nationwide FlexAccount, then changing to the brand new FlexDirect is simple – merely make the request on-line utilizing your standard on-line banking system and your account might be converted inside a number of days, maintaining the identical account quantity and type code. FlexDirect can also be open to new clients, who can apply on-line, by telephone, or in a Nationwide department.

Too Good to Be True?

Maybe 5 p.c curiosity strikes you as sounding just a bit too good to be true? Nicely, it should be mentioned that there are a number of limitations. The headline fee of 5% is barely paid on the primary £2,500 within the account; any extra steadiness over that quantity earns no curiosity in any respect. If you’re dissatisfied after studying that reality, keep in mind that 5% curiosity on £2,500 nonetheless nets you £125 in a single yr, so the return is sort of definitely definitely worth the couple of minutes that you just spend organising the account.

The opposite unhealthy information is that the 5 p.c fee is an introductory fee; it solely lasts for the primary 12 months. After the primary yr, the rate of interest drops to an unremarkable 1%. Nevertheless, by that point good savers will have already got discovered a brand new high-paying account to maneuver their cash into.

What You Must Do to Earn Curiosity on a FlexDirect Account

There’s only a single requirement to maintain your account eligible for five% curiosity: maintain paying at the least £1,000 into the account every month. The cash should come from an exterior supply, resembling an account held by one other financial institution. Having your wage paid into your FlexDirect account is a simple strategy to meet this requirement.

The cash you’re taking out of the account has no affect in your eligibility for curiosity funds, so you may transfer the £1,000 that you’re required to pay in straight again out once more for those who solely need to use the FlexDirect as a supply of curiosity quite than as your primary present account. You additionally get a Visa debit card with the account, which you should use to withdraw money without spending a dime from Nationwide and Hyperlink money machines, or to spend cash in outlets and eating places through a chip and PIN cost.

An Added Profit for Nationwide FlexDirect Clients

There’s yet another profit that you just achieve whenever you open a FlexDirect account. Nationwide clients with one in all these accounts are eligible to use for a Flexclusive ISA, which pays 2% curiosity on financial savings as much as £5,760. Certain, 2% is just not as spectacular because the 5% you are getting in your FlexDirect present account, however the massive benefit of an ISA is that each one the curiosity earned on the sort of account is totally tax free.

The Verdict

Regardless of its limitations, the FlexDirect account nonetheless beats most different present accounts by way of the curiosity it pays. If you’re in search of present account rates of interest that reward you for storing a bigger sum of money, then the Santander 123 account is more likely to be a greater choice, as this account pays curiosity on balances of as much as £20,000. Nevertheless, the Santander 123 account does include a month-to-month price, so it’s in all probability not value it for those who solely have a small sum of money to retailer and spend.