Is this the UK’s best bank account?
For years I’ve been recommending to my readers to check out Nationwide’s FlexDirect account. It’s my main bank account (out of the 14 or so I have), which must say something. And I’m not the only fan.
Which? magazine recently awarded it Banking Brand of the Year 2020 – beating the other finalists First Direct and Starling. And in a poll in the Be Clever With Your Cash Facebook community, you picked also picked it as the best bank.
There are a few reasons for this. Partially it’s down to a recent track record of offering the highest interest rates and free cash. It also ranks well as an ethical bank and scores highly for customer service (74% great at MSE).
But does it still stand up? This year we’ve seen the referral offer paused, regular saver axed and interest rates cut. And what about the app and web banking service, especially when compared to challenger banks Starling and Monzo?
Here’s what you get with the FlexDirect, and whether I think it really is the UK’s best bank account.
Rather watch than read (or do both?) Here’s my video review on YouTube
What is the Nationwide FlexDirect account?
The FlexDirect account is a current account from the Nationwide Building Society. It’s free to open and use, though you do have to pay in at least £1,000 a month to get the interest.
There’s a network of branches you can access across the UK, and there’s also a phone support line.
Here are the main features to consider when looking at Nationwide’s FlexDirect.
FlexDirect interest & savings
Though it’s a far cry from the 5% rate offered up until earlier this year, the 2% interest via the FlexDirect account is much, much better than any other easy access account. In fact it’s a higher rate than all savings accounts apart from some regular savers.
It has its limits. You only earn money on the first £1,500. Above this you get 0%. This means if you have the full amount possible in the account for 12 months you’ll make £30.
That doesn’t sound hugely exciting – and it’s a big drop from the £125 you could earn before the change.
However you can boost this if you’re in a couple. You can each have an account, and then open up a joint account too, meaning you’ll earn the 2% on £4,500.
You have to pay in £1,000 every month to qualify for the interest. This can’t be from another Nationwide account.
The rate also only lasts for one year. After that it drops to 0.25%. And it’s for first time account holders too.
But, unlike every other easy access account, the rate is fixed. That means you will get 2% for the entire year – it can’t be cut once you’ve opened the account (but only for that first year of course).
If you have any money in another savings account this year you’ll know the variable rates really have been variable. So despite it being low compared to previous years, I think it’s still the best account for savings right now.
Sadly, the regular saver for account holders which also offered 5% closed last year. It has since been replaced by the Start to Save account. This lets you pay in between £50 and £100 a month and earns 1%. You are also entered into a draw to win £100 every three months. So far I’ve not had any luck!
Like all the other banks, Nationwide increased the overdraft interest rate as part of the new rules. So if you go overdrawn you’ll pay a huge 39.9%.
However, unlike the other banks, the Nationwide FlexDirect account comes with a 0% overdraft for the first 12 months. This can be a massive bonus for anyone regularly overdrawn.
Let’s say you’re £500 overdrawn for three weeks out of every four. Moving that to a 0% overdraft will save you £150 a year in interest!
Sadly it is just for those 12 months, so really it’s best to use that year to pay off the overdraft so you start the second year with a positive balance – and stay there.
You can get an overdraft up to £2,750 with this account. You can find out how much you’ll get through an eligibility check on the Nationwide website. This runs what is known as a “soft check” on your credit report, so if you decide not to go ahead it won’t impact your score.
FlexDirect referral scheme
Though Nationwide has never offered a bank switching incentive – it’s refer a friend scheme was one in all but name.
The Recommend a Friend scheme used to offer both you as and your friend £100 each if they signed up and switched over an old bank.
Not only did I get my bonus for joining, but over the years I probably made another £1,000 or so!
It was this bonus, combined with the high interest and overdraft, that in my opinion pushed this account head and shoulders above the rest.
But the offer was “paused” in April 2020 to allow the building society to “focus on existing members who have been impacted by coronavirus”.
Well, seven months later it’s still on hold – and it’s hard to say if it’ll return. Fingers crossed.
So far so good. Now the bad. I hate the app.
My big frustration is that you need a card reader to set up a new payee. This might add an extra layer of security, but it’s not something most of the other banks I use require.
This genuinely is one of the main reasons I’m thinking of moving my main banking to Starling.
Otherwise the app is fine, but doesn’t have any of the extras you’d get with the challenger banks.
You can activate a couple of features to help you save. One, Impulse Saver lets you add money to your savings account from the homescreen of the app.
The other is a round up feature, as you see with Monzo and Starling. If you turn this on a small amount of money will be transferred each time you spend. So say you spend £1.20 on your debit card, 80p will go to savings.
Something I’ve been thinking about more this year has been how the money I keep in a bank is being used. It’s not sitting in a vault, it’s being invested and loaned by the bank. And that could mean it’s used for things I really don’t agree with – from supporting arms manufacturers through to funding new oil pipelines.
If this bothers you too then Nationwide is regarded as one of the best options. A big part of this is that it’s a building society rather than a bank, which means it has to use 75% of its holdings to lend to home buyers.
That prevents it lending large amounts to unethical sources – but it also has a positive investment policies. For example your money will not be invested in fossil fuels.
Nationwide is also a mutual – meaning it’s owned by and run for the benefits of it’s customers (or members) rather than shareholders.
Ethical Consumer rates Nationwide ahead of all the other major banks, so it’s a good bet if you want to put your money somewhere other than low scoring banks such as HSBC, Natwest, Barclays, Lloyds, Santander and co.
Should you open a Nationwide FlexDirect account?
Anyone who has a hefty and regular overdraft should check this account out ASAP. That year at 0% could save you a ton of cash.
For savers who’ve never had the account then it’s worth it to get the interest – though you might want to hold off until the referral scheme is back (if it does return).
It’s also a great account to go for if you’re concerned about how your money will be investing.
However, in terms of using the app and online banking I’d personally look at someone like Starling or Monzo bank.
It could be that you use Nationwide just for your savings/overdraft in year one, but do your spending from a different account. That way you’d only need to set up this second account as a payee and not worry about finding the card reader each time you want to send money.
Then once you’re in year two you might want to think about switching it to a different bank.
Check out my massive list of the other incentives and features offered by all the banks here. This includes the best free cash for changing bank.
Elsewhere my favourites are: