Several current account interest rates set to be slashed in May

Savers face a wave of interest rate cuts on current accounts in May.

A top rate of 5% is disappearing from the market from Friday.

From May 1, Nationwide Building Society’s FlexDirect account will pay 2% interest on balances up to £1,500 for the first year, where it currently offers 5% interest on balances up to £2,500 for the first year.

It is the first reduction to the credit interest rate on FlexDirect since the account was launched in November 2012.

Any FlexDirect accounts applied for before May 1 will continue to receive credit interest of 5% on balances of up to £2,500 for the remainder of their 12-month introductory period.

Financial information website Moneyfacts.co.uk said that, while customers have just a few days left to take advantage of Nationwide’s 5% rate, other providers are also poised to cut their rates.

From May 2, the rate on TSB’s Classic Plus account on balances up to £1,500 will fall from 3% to 1.5%.

And from May 5, the interest rate on Santander’s flagship 123 account falls from 1.5% on balances up to £20,000 to 1%.

The Bank of England base rate has been slashed to 0.1% as part of the emergency response to the economic impact of coronavirus.

Rachel Springall, a finance expert at Moneyfacts.co.uk, said: “These cuts will be another blow to savers who are seeing interest rates plummet across the savings market as it will become more difficult to get a competitive return on their cash.

“But current accounts could still be a salvation for savers regardless, as the top high-interest current accounts can pay better rates than most of the standard saving account market.”

She added: “During these uncertain times, it’s important consumers take time out to ensure they have the most suitable account for them to weather the storm. It’s quick and simple to switch an account using the current account switch service (Cass), and they may be financially better off to do so.”