Nationwide payment: how can you get building society’s £100 offer? New bond and savings rates explained

Nationwide Building Society is set to hand a significant chunk of its profits back to customers through cash payouts and better savings rates.

The UK’s second largest mortgage lender doubled its profits to £2.2 billion over the 12 months to 4 April, thanks in large part to the growth in interest rates. This performance, which it described as its “strongest on record”, means around £1 billion will be returned to its members.

It comes as the UK banking sector has faced criticism from MPs and campaigners for its slowness in passing improved savings rates through to consumers. Interest rates have risen 12 consecutive times since the end of 2021 as the Bank of England has sought to clamp down on inflation.

Although we are seeing the strongest savings rates in more than a decade, people across the UK have actually been losing money due to the record rate of price rises in the economy. Inflation is expected to drop significantly throughout 2023, which still means prices will be rising - just at a slower pace.

So, what has Nationwide announced - and how can you see whether or not you’re eligible for the payout it is offering?

What is the Nationwide £100 and savings rates news?

As customer-owned financial institutions, building societies can offer more socially innovative products and incentives than run-of-the-mill high street banks. We’ve seen this recently with Skipton Building Society’s 100% mortgage and Leeds Building Society’s tie-in with credit rating firm Experian.

Given their ownership structures are not contingent on shareholders, it means you should see greater benefits from any profits they make if you have money with them. This explains why Nationwide is paying half of its profits back to its customers (or ‘members’ as it refers to them) in the form of hard cash and improved savings rates.

These are the specific benefits Nationwide has said its customers will now be able to take advantage of as a result of the £1 billion pot:

• Nationwide Fairer Share Payment

A £340 million pot will be shared out among eligible members of Nationwide. It should mean you get £100 in your Nationwide current account if you qualify (we’ve explained the rules below).

The building society says the money will automatically drop into the current account you hold with them in June. It will give out more detail in communications it will be sending out to members from Friday (19 May).

• Nationwide Fairer Share Bond

From Friday (19 May), existing Nationwide members (roughly 16 million people) can access a 4.75% two-year bond. This investment can be opened in branch, on the Nationwide app or via internet banking.

This sort of investment locks away your cash for the entirety of the fixed period, but its rate is currently paying out well above a typical easy-access savings account (which is in the region of 4%). It also compares relatively well with the best two-year bonds on the market, which tend to be around the 4.95% mark, according to Moneyfacts.

• Higher savings rates

Nationwide has already hiked its savings rates by up to 0.35% in May. It has suggested its latest profits tally will feed through into better rates over the course of the next financial year. The lender has also renewed its pledge to offer fair pricing on mortgages.

As well as these three changes, the building society says its strong balance sheet has already allowed it to invest in its systems and branches, offer cashback on supermarket shopping, and give £9.6 million to good causes. It has pledged to give £4 million in grants to local causes in 2023.

Are you eligible for the Nationwide Building Society £100?

Nationwide’s £100 offer is only available to some of its customers. To qualify, you need to hold a qualifying current account along with either an eligible savings account or a qualifying mortgage product.

To be eligible, current accounts and savings accounts have to have contained at least £100 in total at the close of play on any day in March 2023. Meanwhile, the mortgage holder must have owed Nationwide at least £100 on a residential property by the end of March.

You also have to have held these accounts or products before 31 March 2023. If it means you have missed out on this year’s money, the building society says it intends to make these sorts of payments annually, so long as it doesn’t detract from its financial strength. To see if you’re eligible, visit the Fairer Share section of Nationwide’s website.

Given interest rates are likely to start to come down at some point over the next year, this £100 payout could prove to be a high-water mark. It should also be viewed in the context of some of the bank ‘bribes’ on offer for switching current accounts, with several high street banks currently offering £200 just to transfer your everyday banking across to them.