Nationwide unveils top fixed-rate savings offer - should you take it up?

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Nationwide has introduced a new market-leading fixed-rate savings account promising a guaranteed return that beats inflation.

The 5.3 per cent rate on a 30-month bond from Britain's largest building society is higher than the best one-year, two-year and three-year fixed rates in This is Money's independent savings tables, and even some five-year deals.

There are a few catches, though. The account is open only to existing Nationwide members and Virgin Money customers, after Nationwide's purchase of the bank.

The maximum deposit is £10,000, and someone who puts in the full amount on day one would earn £1,382 in interest over the full 30 months.

This comes after Nationwide data found that three-fifths of bank and building society customers think the best savings rates are reserved for new customers.

In addition, 73 per cent of savers say they have felt ignored by their bank or building society despite being loyal customers.

Richard Stocker, Nationwide's head of savings, said: 'Our research shows people want loyalty to be recognised, and too many feel the best deals today are reserved for new customers.'

How does the rate compare with other deals?

The 5.3 per cent return is better than the top two-year and three-year fixed-rate bonds.

Vida Savings currently offers the best two-year fixed rate at 5.26 per cent, while Chetwood Bank leads the three-year market at 5.25 per cent.

There are five-year fixed-rate accounts that beat Nationwide's 30-month bond, with GB Bank currently offering the top rate at 5.37 per cent.

However, that means locking your money away for much longer than 30 months.

Deposits into Nationwide's account must be between £1 and £10,000, and savers need to fund the account within 14 days of opening it, either in branch, online or through the app.

Each of the other accounts mentioned requires a minimum opening deposit of £1,000, though they usually allow much larger balances if you have the funds.

For instance, Vida Savings accepts up to £500,000, although Financial Services Compensation Scheme protection stops at £120,000.

Nationwide raised rates on a number of savings products only recently, including fixed-rate bonds and cash Isas.

Markets have also been expecting the Bank of England to lift base rate to 4 per cent from 3.75 per cent, which would likely prompt further savings rate increases in the weeks ahead.

Rachel Springall of Moneyfacts Compare said: 'It’s fantastic to see Nationwide rewarding the loyalty of its customers alongside Virgin Money customers.

'Paying 5.3 per cent, it is an inflation-busting guaranteed return... it will likely be an attractive choice for existing customers.

'The perks of being a Nationwide customer don’t end with its savings account. Nationwide has pledged to keep its branches open until at least early 2030.

'On top of this, customers have a chance to receive a Fairer Share payment of £100, and Nationwide is currently offering a £175 current account switching incentive.'

These are fixed-rate bonds not tax-free Isas

The Nationwide deal is appealing, but any interest above your personal savings allowance will be taxed in the tax year the bond matures.

That makes it important to make full use of your tax-free Isa allowance each year.

Tax on savings interest is being increased to 24 per cent for basic-rate taxpayers, 44 per cent for higher-rate taxpayers and 49 per cent for additional-rate taxpayers.

The personal savings allowance remains unchanged at £1,000, £500 and zero respectively.

The best rate on an easy-access cash Isa is currently offered by Trading 212* at 4.87 per cent variable, including a fixed 1.27 per cent bonus for 12 months.

If you would rather avoid a time-limited boost, Hargreaves Lansdown's cash Isa* is available at 4.52 per cent variable.

You can also find fixed-rate Isas at 5 per cent and above, including Zopa's one-year fix at 5 per cent.

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