Good or not? Nationwide

Written by Rebecca O'Connor on 8th August 2016

A new feature from Good With Money, Good or Not? takes a look at the values AND value offered on current products by specific providers. First up, it’s Nationwide.

If Nationwide was at school, it would be the prefect.

To some, its whiter than white reputation is toe-curlingly annoying.

To others, it’s the finest example we have of a mainstream business that does its best to work for everyone.

At Good With Money, we’re generally fans. But do its products live up to its values?

Mutuality

A lot is made of Nationwide‘s mutuality – which means ownership by customers rather than shareholders – and how this leads to benefits for everyone.

All building societies are mutuals, so we tend to rate them higher than banks for fairness generally.

Mutuality is in theory a fairer company structure because it removes the pressure on company boards to always be answerable to shareholders.

Shareholders always want greater returns, which can often be delivered at the expense of customers (just look at the mis-selling scandals at the big banks and the financial crisis of 2008, caused by sub-prime lending, all ultimately caused by the drive to make ever-increasing profits). Profits are also often delivered at the expense of the planet (i.e. by fossil fuel companies) and by taking advantage of people (i.e low-paid workers).

If the customers are also effectively the shareholders, this conflict of interests should – in theory – not occur. So the mutual can just get on with running the business, without the constant pressure to cut costs and make more revenue according to external targets.

Although it must still maintain a profit, this is considered a more sustainable and steady way to structure a company and Nationwide is one of the biggest examples of it in the UK.

Environmental record

The building society has just been endorsed for the third year by the Carbon Trust for its emission reduction plans and it also happens to have a range of community projects to boost its positive impact in local neighbourhoods.

Products – how do they compare?

Whatever your view of its perfect prefect image, you might be interested to know that Nationwide’s products fare pretty well on price too.

Andrew Hagger Lo-Res2

Andrew Hagger of, Moneycomms, the personal finance researcher, says: “No one provider offers the very best deals across the full range of personal finance products, but Nationwide is pretty competitive overall.

“Its strongest areas are personal loans, credit cards and current accounts although it fares less well on some savings products (like most high street providers) and is less competitive in the mortgage space.

It looks after its existing customers better than the big banks with its excellent Flexclusive regular saver, Select Credit Card plus enhanced rates on ISAs and £250 cashback for mortgage customers if they renew their Nationwide mortgage – so loyalty does pay with Nationwide.”

Let’s take a look (where you see a  butterfly icon small, this denotes a deal that is good for your pocket, people and planet).

Mortgages

2-year fixed rate at 80 per cent loan-to-value

Best Buy – Leeds Building Society 1.60% £999 fee (SVR 5.69%) – monthly repayment on £170k mortgage = £688 a month

Nationwide B S – 1.64% no product fee (SVR 3.74%) – monthly repayment on £170k mortgage = £691 a month.

Leeds Building Society is also a mutual. The monthly cost of choosing Nationwide over Leeds is just £7 a month.

3-year fixed rate at 90 per cent loan-to-value

Best Buy – Yorkshire Building Society 2.94% no product fee (SVR 4.99%) – £801pm (above scenario)

Nationwide 3.04% no product fee (SVR 3.74%) – £500 cashback for FTBs – £809pm (above scenario)

The monthly cost of choosing Nationwide over Yorkshire BS: £22.

5-year fixed rate 75% loan-to-value

Best Buy – First Direct – 2.18% no product fee (SVR 3.69%) – £735 pm

Nationwide2.54% no product fee (SVR 3.74%) – £766pm

The monthly cost of choosing Nationwide over First Direct: £31.

Overall verdict on competitiveness of Nationwide mortgages? Average. “Won’t trouble the best buys,” says Hagger.

 

Savings Accounts

Following the Bank of England base rate cut, see our blog on why low rates mean you may as well choose a savings account from an ethical provider now.

Nationwide offers the joint best buy deal on Junior ISAs at 3.25%.

If you fill up your junior ISA annual limit of £4,080 for the 2016/17 tax year with deposits of £340 a month at the above rate, your pot will be worth £4,141.33 at the end of the year.

butterfly icon small     Verdict on Junior ISA: No brainer if you are after a cash Junior ISA. Good With Money note: While cash junior ISAs are very low risk, it is worth considering the greater returns that are possible through investing in a stocks and shares junior ISA, particularly if your children are young and your investment time horizon is long term. Read our guide to junior ISAs here.

Fixed rate bonds

Best 1-year fixed rate bond: 1.50% United Trust Bank – Nationwide currently pays 1.00%

On a £1,000 investment, you’d be £5 down on the deal after a year if you chose Nationwide.

Best 3-year fixed rate bond: 1.90% Ikano Bank – Nationwide BS pays 1.30%

On a £1,000 investment, you’d be £21 down on the deal after 3 years if you chose Nationwide.

Easy access savings

Shawbrook Bank best buy at 1.25%: Nationwide BS Instant access Saver 0.50%

On a £1,000 lump sum deposit, you’d be £7 down on the deal after a year if you chose Nationwide.

Regular savings

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Excellent Flexclusive regular saver paying 5% (max pay in £500 per month) for current account customers – “an excellent deal”.

If you paid in the maximum amount over a year, £6,000, you’d earn £139 in interest.

Overall verdict on Nationwide savings: Hagger says: “With the exception of Junior ISA and Flexclusive Regular saver – not very competitive.”

Personal Loans

On a personal loan of £7,500 x 36 months:

Ikano Bank is a best buy at 3.2% APR, £218.62 per month

HSBC 3.3% APR, £218.94 per month

Nationwide customers pay 3.4% APR, £219.26 per month

The cost of choosing a Nationwide personal loan over the very cheapest is a marginal £7.68.

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Overall verdict on Nationwide personal loans: “Very competitive”.

 

Credit Cards

Only offers two cards but it’s Select Credit Card (for current account customers only) is:

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one of the best all round credit cards on the market” 

0 per cent on balance transfers and purchases for 12 months – no balance transfer fee – earn unlimited 0.5 per cent cashback and no commission fees abroad.

 

Current Accounts

FlexAccount and FlexDirect accounts are very competitive for overdraft costs and the latter also pays 5 per cent on credit balances up to £2,500 in the first year (drops to 1 per cent after that). 

Its best account is the multi award winning FlexPlus account – comprehensive car breakdown cover, worldwide family travel insurance, mobile phone cover, 12-months’ extended warranty plus 3 per cent credit interest on balances up to £2,500 – all for £10 per month – best value packaged bank account by a country mile!

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Verdict on current accounts: “Excellent”, says Hagger.