Nationwide Building Society have cut their 5% introductory rate on current accounts to 2%.
The Building Society said from 1 May Nationwide’s FlexDirect current account will only pay interest of 2% of balances up to £1,500 for the first year, after which the rate will go down to 0.25% on balances up to £1,500.
Currently Nationwide pays customers 5% interest on balances of up to £2,500 for the full year, there after down to a rate of 1%.
This comes after the Bank of England’s decision to whittle the base to a record low, 0.10%.
Sara Bennison, who oversees Nationwide’s products and propositions, said: “We know that this is a tough time for savers, particularly after two cuts in bank rate in quick succession taking it to an historic low of only 0.10%.
“In order to preserve the long-term sustainability of the society for all our 16 million members, we have had to take these decisions on the interest rates we can offer on a number of our accounts.
“We have tried to remain as competitively priced as possible, with our FlexDirect account, for example, remaining one of the best in the market for credit interest and our savings prize draws helping people into good savings habits.”
Rachel Springall, a finance expert at Moneyfacts.co.uk, said the new 2% rate on the FlexDirect account will still be an “attractive return” for new customers in the current market.
She said: “TSB is reducing its credit interest rate on the Classic Plus (account) in May from 3% to 1.5%, and Santander’s 123 account will be cut in the same month from 1.5% to 1.0%, so Nationwide will continue to offer a better rate given the changing market.”