Money Insider: Nationwide's price rise masks a customer focus

Debit cards issued with Nationwide Building Society's FlexAccount have been a hugely popular, low-cost option for overseas travellers for many years. However, changes are afoot.

From 1 November, the charge for using a Nationwide debit card abroad is rising to 2 per cent for all transactions, plus an extra £1 fee for cash withdrawals. At present, the only charge is a 1 per cent transaction charge in countries outside the Visa European region.

Although this is a steep increase, the charges remain lower than the fees, typically 2.75 per cent to 2.99 per cent, that you would incur with current accounts from the main high-street banks.

So is this just another high-street financial provider looking to boost its bottom line at the expense of its customers? While it will drive additional revenue for the UK's biggest building society, it is worth looking at the reasons why it is so unpopular.

Firstly, Nationwide's profitability is being hit to the tune of about £450m a year because it is sticking to its guarantee that the standard variable rate (SVR) charged on its mortgages would never be more than 2 per cent above the Bank of England's base rate. Since March 2009, therefore, customers coming to the end of fixed-rate or discounted deals have found themselves on a variable rate of just 2.5 per cent.

As you would expect, most of them are content to stay there until they see any hardening evidence that the base rate will increase. The second issue Nationwide is facing is that although it has about five million FlexAccount customers, only a quarter of these accounts are used as a main current account. The rest just make use of the low-fee debit card once or twice a year when they holiday overseas.

However, with both these issues, Nationwide has tried to do the best for its loyal customers. It could have followed a controversial move by the Skipton Building Society and cancelled the SVR guarantee owing to "exceptional circumstances" – but it didn't. Instead, it kept its promise of offering base rate plus 2 per cent for existing customers, and introduced a new SVR of 3.99 per cent for all new customers taking out a mortgage from last April.

Nationwide customers who use the FlexAccount as their main current account will quite rightly feel aggrieved that the cost of using their card abroad is suddenly going to increase. However, to soften the blow, they will now receive free multi-trip European travel insurance, worth up to £80 on a joint account.

Nationwide might be the country's biggest building society but, even when faced with some of the most testing times in its 162-year history, it remains true to the mutual spirit of trying to reward customer loyalty.

Northern Rock starts Little Rock for the under-16s

Child trust Funds were one of the first casualties of the Government's cost-cutting strategy, and it was a hammer blow to the children's savings market when this popular scheme was axed.

However, quick off the mark and recognising a new opportunity, Northern Rock launched its "Little Rock" fixed-rate bond this week.

Accounts for under-16s can be opened in branches or by post from as little as £1. The maximum balance limit is £20,000. As with bonds in the adult savings market, no withdrawals are permitted before the fixed term of the bond expires. However, with an excellent interest rate of 5 per cent gross, this three-year account is likely to attract serious interest from parents seeking a home for their children's cash.

Tesco Clubcard tops 0 per cent table

By extending to 13 months its introductory offer of 0 per cent interest on purchases, Tesco Bank's Clubcard now sits atop the best-buy table, nudging Sainsbury's Finance and Virgin Money – both of which offer 12 months at 0 per cent – into joint-second place.

If you use the Tesco card wisely, you can save a packet in interest charges. For example, a £1,000 purchase on a Tesco card with minimum 3 per cent repayment each month will save you £161.43 in interest over the 13-month, interest-free deal, compared with the standard rate of 16.9 per cent APR.

The trick is to be disciplined and ensure you have money set aside to clear the balance at the end of the introductory term, otherwise interest charges will wipe out any Clubcard rewards you have earned.

If it's an interest-free balance transfer card you're after, NatWest and RBS have increased the terms on their Platinum credit cards to a market-leading 16 months.

Even though the 0 per cent credit-card market is starting to pick up, lenders are still licking their wounds from bad debt write-offs, so you will need an A1 credit history to bag any of these best-buy deals.

Andrew Hagger is a money analyst at

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at

Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

    £24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

    Ashdown Group: Business Analyst - Financial Services - City, London

    £50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

    SThree: Trainee Recruitment Consultant

    £18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...

    Day In a Page

    General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

    Chuka Umunna: A virus of racism runs through Ukip

    The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
    Yemen crisis: This exotic war will soon become Europe's problem

    Yemen's exotic war will soon affect Europe

    Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
    Marginal Streets project aims to document voters in the run-up to the General Election

    Marginal Streets project documents voters

    Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
    Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

    The real-life kingdom of Westeros

    Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
    How to survive a social-media mauling, by the tough women of Twitter

    How to survive a Twitter mauling

    Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
    Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

    At dawn, the young remember the young

    A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
    Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

    Follow the money as never before

    Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
    Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

    Samuel West interview

    The actor and director on austerity, unionisation, and not mentioning his famous parents
    General Election 2015: Imagine if the leading political parties were fashion labels

    Imagine if the leading political parties were fashion labels

    Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
    Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

    Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

    The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence
    Public relations as 'art'? Surely not

    Confessions of a former PR man

    The 'art' of public relations is being celebrated by the V&A museum, triggering some happy memories for DJ Taylor
    Bill Granger recipes: Our chef succumbs to his sugar cravings with super-luxurious sweet treats

    Bill Granger's luxurious sweet treats

    Our chef loves to stop for 30 minutes to catch up on the day's gossip, while nibbling on something sweet
    London Marathon 2015: Paula Radcliffe and the mother of all goodbyes

    The mother of all goodbyes

    Paula Radcliffe's farewell to the London Marathon will be a family affair
    Everton vs Manchester United: Steven Naismith demands 'better' if Toffees are to upset the odds against United

    Steven Naismith: 'We know we must do better'

    The Everton forward explains the reasons behind club's decline this season
    Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

    Michael Calvin's Last Word

    Praise to Wenger for having the courage of his convictions