Nationwide announces interest rate hike – but is it beating inflation? | Personal finance | Finance

The news comes as savers search for the best ways to protect and strengthen their finances during the cost of living crisis. One of the factors compounding the cost of living problem is inflation, which is at a 40-year high of 9.1%. Experts believe the UK’s inflation rate could reach 11%, which is worrying households.

As a result, banks and financial institutions, such as Nationwide, are issuing new issues of existing products and raising interest rates in a bid to help savers.

Earlier this week, the construction company confirmed that it was launching a new issue of its one-year triple access online saver.

This particular account allows savers to make up to three withdrawals within the 12 month period.

Any further withdrawals will reduce the interest rate to 0.10% for the remainder of the period.

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After 12 months, the account automatically switches to one of Nationwide’s instant access accounts.

On top of that, the construction company has confirmed that it is increasing interest rates on its loyalty accounts.

Existing members using Loyalty Saver, Loyalty ISA and Loyalty Single Access ISA accounts will see their rates increase by 0.25% to 1.25% gross/AER starting August 1, 2022.

While none of these rates match the 9.1% inflation affecting savers, they compare well to similar products on the market.

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As of last week, the new rates increased by the Nationwide Building Society are:

1 Year Fixed Rate ISA – 1.40% AER/Tax Exempt (Fixed)

1 Year Fixed Rate Bond/Line Bond – 1.40% AER/gross per annum (fixed)

Two Year Fixed Rate ISA – 1.70% AER/Tax Exempt (Fixed)

Two Year Fixed Rate Bond/Line Bond – 1.70% AER/gross per annum (fixed)

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With inflation beating the rate of many savings accounts, including those run by Nationwide, savers are worried about the possible returns they will get.

On this, Alice Haine, personal finance analyst at Bestinvest, said: “Savers who might have celebrated the last quarter-point hike in the Bank of England’s base rate to 1.25% will not not party very long.

“As banks and building societies slowly increase the savings rates they offer, this is little comfort to savers who are already seeing their savings gobbled up by rising prices – leading to a real rate of inflation negative on their savings.

“However, it’s always important to have money stored in an easy-to-access savings account as an emergency backup for any unexpected expenses, so research the best rates to make sure every penny works too. hard as possible.

“If you can afford to lock in money for a longer time horizon, like five to 10 years, then investing in an ISA or SIPP could be an inflation-fighting strategy.”

Stephen V. Lee