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Nationwide has launched new savings product with 4% interest rate

Daily Express logo Daily Express 07/02/2023 Patrick O'Donnell

Nationwide Building Society has confirmed the launch of new fixed rate online and branch bonds for both one year and two years. These savings products were made available to customers as of last week on January 31, 2023. With some of the products having a four percent interest rate, savers will be wondering what it means for them amid high rates of inflation.

With this latest launch from Nationwide, the new savings products have the following interest rates:

  • One Year Fixed Rate Online Bond - 3.75 percent AER
  • Two Year Fixed Rate Online Bond - Four percent AER
  • One Year Fixed Rate Branch Bond - 3.75 percent AER
  • Two Year Fixed Rate Branch Bond - Four percent AER.

READ MORE: 'World beating' Isa savings option yields 6.6% with more to come

Nationwide © GETTY Nationwide Base rate explained © EXPRESS.CO.UK Base rate explained

These new savings accounts are available to the building society's customers for balances of £1 or more.

Savers can choose to open the Online Bonds either through Nationwide's website, internet banking or through the financial incision's banking app.

Fixed Rate Bonds can be opened by customers by visiting one of Nationwide's branches.

With this rollout, all previous one, two and three year Fixed Rate Online Bonds, one and two year Fixed Rate Bonds and Inheritance ISA have been withdrawn from the market.

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Despite this latest offering, experts are voicing their concerns regarding the impact of inflation on people's savings.

Currently, the latest Consumer Price Index (CPI) rate for December 2022 came to 10.5 percent.

While this is a slight drop from the month before, it remains extremely high, and is resulting in the price of goods and services shooting up.

The Bank of England has raised the country's base rate in response which has been passed onto savings products by high street banks and building societies.

READ MORE: Recession fears continue despite UK economy growing

ISA explained © EXPRESS.CO.UK ISA explained

Rio Stedford, a financial planning expert at Quilter, has warned that returns are still being worn away despite this rate boost.

She explained: "High inflation can erode the value of savings over time in real terms, while higher interest rates help to grow your savings at a greater rate.

"However, if for example inflation is 10 percent but your bank is only paying a savings interest rate of five percent, then you are essentially losing five percent of your money.

"This can make it more difficult to meet financial goals, such as buying a home or saving for retirement."

The finance expert shared how savers can make the most of their savings accounts even with inflation diminishing returns.

Ms Stedford added: "To combat the effects of inflation, individuals may need to save more or invest their money in financial vehicles that provide a higher return.

"Although the stock market has had a difficult year, historically, investing has provided inflation-beating returns over the long term."

The Bank of England's MPC is next set to meet on March 23, 2023.


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