5% credit interest on the Nationwide FlexDirect Current account – how does it stack up?

The Nationwide Building Society FlexDirect Account has been given a major overhaul from 1st March 2013 with improved terms for credit interest and overdraft charges.

Customers opening the account will now benefit from 12 months free for authorised overdrafts.

On top of this the daily fee for authorised borrowing has been reduced from £1 per day (capped at £20 per month) to 50 pence per day, uncapped. This makes the account much more competitive, particularly for those with an overdraft of £1,000 or more, however if you’re only ever overdrawn by a few hundred pounds, there are cheaper options elsewhere, including Nationwide’s own FlexAccount or the 1st account from First Direct (where the first £250 is interest free).

For those looking to earn some interest on their credit balance, the interest rate for the first 12 months has been more than doubled from 2% to 5% on the first £2,500 of your balance. Whilst it could be a nice little earner for the first 12 months and a better deal than you’ll find on any savings account at the moment, you need to bear in mind that after year one the credit interest rate drops back to a more mundane 1%.

If credit interest is your bag, is this account right for you, or should you be banking elsewhere? – Santander 123, Lloyds TSB Vantage and Halifax Reward are all worth a closer look.

The link below will show you a comparison table to help you decide, as there’s not one account that works best for all – and much depends on the average credit balance you keep in your account.

Current account credit interest comparison 1 March 2013