Nationwide FlexDirect 5% interest account - am I doing it wrong?

Halloumi4ever

Hello there! 

In February I signed up for the FlexDirect account with Nationwide (just before they reduced the %) however I must be doing something wrong as I'm not getting the 5% every month (or I misunderstood how it works...)

If the maximum amount to which the interest applies is £2500, then 5% of 2500 would be £125, correct? 
However, previous months I received £7 interest and this month I got £10.

I've been doing what I read on here: I paid 2500 into the account, at the end of the month I move it to a different account, and then pay it back into Nationwide. 

I have checked with the nationwide agent and I'm definitely eligible for 5%.

Anyone knows what's going on? 

Thank you! 

Ed-1

Halloumi4ever said:

Hello there! 

In February I signed up for the FlexDirect account with Nationwide (just before they reduced the %) however I must be doing something wrong as I'm not getting the 5% every month (or I misunderstood how it works...)

If the maximum amount to which the interest applies is £2500, then 5% of 2500 would be £125, correct? 
However, previous months I received £7 interest and this month I got £10.

I've been doing what I read on here: I paid 2500 into the account, at the end of the month I move it to a different account, and then pay it back into Nationwide. 

I have checked with the nationwide agent and I'm definitely eligible for 5%.

Anyone knows what's going on? 

Thank you! 

Sounds like you are getting 5% AER to me. AER being the annual equivalent rate. The gross rate is 4.89% (to allow for compounding as it's paid monthly) so you'd get 1/365 of 4.89% per day on your balance at the end of that day. So if you had £2,500 in for a full 31 day month you'd get £2,500 x 4.89% x 31/365 = £10.38.

bradders1983

£10 before tax is correct...

https://www.landc.co.uk/calculators/interest-calculator/

£8 if you pay tax at basic rate.

[Deleted User]

If you;re moving money in and out of the account, then the amount of interest you get is going to vary, as it's calculated on your daily balance.

I doubt you're supposed to get 5% each month,  That would be a rate of over 60%, which would be rather good in today's market, as their current AER is 2%.  

bradders1983

i do hope the OP wasnt expecting £125 every month though 😀

Zanderman

Halloumi4ever said:

....
If the maximum amount to which the interest applies is £2500, then 5% of 2500 would be £125, correct? 
However, previous months I received £7 interest and this month I got £10.
.....
Anyone knows what's going on? 

5% of 2500 would be £125 - yes that's correct.
That's the annual interest rate (AER)
Each month you get one month's worth of the annual interest rate.
So, divide the annual £125 by 12 months....
And it's about £10 each month
Which is what you're getting.
(if you got less in other months you must have has less than 2500 in the account for some of the days in the month - interest is calculated on daily basis, so the amount each day is critical)

surreysaver

Its 5% a year, not 5% a month. Its paid monthly, so you'll get 1/12 on average of the annual interest each month 

blue.peter

I started my account in January, and received £10.38 yesterday. Looks right to me. As others have pointed out, it's 5%/year, not 5%/month.

Halloumi4ever

😅 Apparently I misunderstood, I did think it was very generous 🤣

Their agent told me it's calculated daily, so I always keep the money in the account, just do the out and in again once a month, to register as a 'pay in', as money has to be paid in every month.

Well, that answered my question - thank you all!