Why your interest rate can go up and down

The interest rate on your savings account or ISA can sometimes go up or down. Find out why this happens, as well as what you can do if it changes.

Interest rates explained

An interest rate is the amount you get:

  • charged if you borrow money – for example, on credit cards, a loan or a mortgage
  • paid if you save money – for example, a savings account or an ISA

The two types of interest rate are:

  • fixed rate
  • variable rate

A fixed rate is where the rate stays the same for a set amount of time. So, whether you’re borrowing or saving, what you pay or get paid won’t change for the agreed term.

A variable rate is where your interest could go up or down. This could happen for a number of reasons. For example, when the Bank of England changes the base rate.

Bank of England base rate explained

The base rate – also known as the bank rate – is very important to all of us. It sets the amount of interest the Bank of England pays to banks and building societies.

The base rate also influences how much banks and building societies charge people who borrow money – and in turn, how much interest is paid to those who save money.

The base rate also helps regulate inflation. So, when the base rate goes up or down, it is generally in response to a change in the economy.

How we’re able to pay you interest

As a building society, we were set up to help people save money and buy homes. We work by lending the money that members save with us to members who borrow from us.

The interest we receive from our borrowers allows us to pay interest to our savers. We also use it to run our Society.

Why your interest rates can change

Because of the way we work, we need to balance the interest rates we give our savers with the rates we charge our borrowers. The costs of running the Society need to be covered too.

This means:

If there’s a change – for example, to the base rate
We may need to lower or increase the interest rates we charge our borrowers. If we do, we may also need to lower or increase the rates we pay our savers.

If other banks and building societies change their rates
We may need to make changes too, so we can still attract new savers and borrowers, as well as keep those already with us.

If the cost of running our Society goes up
We may need to pay our savers less interest or charge our borrowers more.

Our terms and conditions set out all the reasons why we could make changes to your savings interest rate.

Accounts that could be affected

Accounts with a variable rate
Your interest rate could change. That’s because we regularly review all of our accounts with variable interest rates.

Accounts with a fixed rate
Your interest rate will not change for the agreed term.

What you can do

If your interest rate drops, you may be thinking about whether your account is still right for you.

Here are some options you have:

See if another Nationwide account suits you better
Check our range of savings accounts.

Keep your savings in the same account at the lower rate
In which case, you don’t need to do anything.

Move your savings to another provider
If you choose this, we’ll support you through the move (though we’d be sad to see you go).

Check how to close your account with us.

Manage your money. Whenever, wherever

If you haven’t already, you might find it helps to register for Internet Banking.

Download the Banking app to check in on your savings safely and securely, whenever, wherever.

You could also sign up to our SavingsWatch service. It means you can stay up to date with your interest rate and other changes to our savings range which might benefit you.