Nationwide Increases Savings Rates to 5%

Nationwide Building Society has announced an increase in interest rates across its fixed-rate savings accounts and cash ISAs, with top offerings reaching as high as 5%.

The building society is now offering fixed-term products for periods ranging from one to five years. The maximum rate of 5% is available on a five-year fixed-rate bond or cash ISA. For shorter terms, the rates are slightly lower, with a one-year fix offering 4.75%.

Nationwide has stated that its fixed cash ISA rates will match or exceed the rates offered on its equivalent fixed bonds. This means the choice between a bond and an ISA should primarily depend on whether an individual has utilized their annual tax-free ISA allowance.

Fixed-rate bonds do not have a tax-efficient wrapper. Consequently, any interest earned beyond the personal savings allowance in a given year will be subject to taxation. This makes cash ISAs a more advantageous option for savers who anticipate exceeding their allowance.

This move by Nationwide follows a trend of increasing savings rates across the market, with many providers offering some of the highest rates seen in years. For instance, Trading 212 is offering an easy-access cash ISA at 4.83%, which includes a 1.23% bonus for the first 12 months.

Rate Comparisons

While Nationwide's new rates are competitive, particularly for a high-street institution, they do not represent the absolute highest available from all providers. For context, the building society's offerings can be compared to leading deals from other institutions:

Fixed-Rate Bonds Comparison:

| Term | Nationwide Rate | Top Rate | | --- | --- | --- | | One Year | 4.75% (£1+) | Al Rayan Bank – 5.15% (£10,000+) | | Two Years | 4.85% (£1+) | Oxbury Bank – 5.21% (£1,000+) | | Three Years | 4.9% (£1+) | Chetwood Bank – 5.23% (£1,000+) | | Five Years | 5.00% (£1+) | GB Bank – 5.37% (£1,000+) |

Fixed-Rate Cash ISAs Comparison:

| Term | Nationwide Rate | Top Rate | | --- | --- | --- | | One Year | 4.75% (£1+) | Zopa – 5.00% (£1+) | | Two Years | 4.85% (£1+) | Tandem Bank – 5.08% (£1+) | | Three Years | 4.9% (£1+) | Tandem Bank – 5.13% (£1+) | | Five Years | 5.00% (£1+) | Leek BS – 5.3% (£1,000+) |

Examining Current Savings

With fixed rates currently strong, savers are advised to review their existing accounts. Research from Moneyfacts indicates that the top fixed-rate savings accounts have been consistently offering 5% or more since 2023. Even for those who prefer not to lock their funds into a fixed term, easy-access accounts are also providing competitive rates. For example, Cahoot offers a 12-month easy-access savings account at 4.52% with unlimited withdrawals.

Easy-access cash ISAs have also seen significant competition, with providers like Chip, Plum, and Trading 212 vying for top positions. Plum's Easy-Access Isa offers 4.84% (including a 2.27% 12-month bonus), Trading 212 offers 4.83% (with a 1.23% 12-month bonus), and Chip Cash Isa provides 4.82% (with a 1.32% 12-month bonus). These accounts are flexible, allowing withdrawals and redeposits within the same tax year without impacting the ISA allowance. However, savers should carefully check terms and conditions, as transferring out of some accounts may result in forfeiture of accrued interest, and transfer-in rates can be lower.