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Nationwide is introducing a new £175 offer to switch to its current account from September 25. The offer is one of only two available on the market, with First Direct offering the same since last week.
The switching offer applies to the FlexDirect, FlexPlus and FlexAccount accounts.
It comes as the building society also offers £50 interest-free buffer in November, removing charges for people who dip into their overdraft by only a small amount.
The buffer will apply, subject to eligibility, to overdrafts on the society’s three main current accounts – FlexPlus, FlexDirect and the FlexAccount – and the exact launch date in November will be confirmed nearer the time.
The FlexDirect account gives 5 per cent credit interest on balances up to £1,500 for the first 12 months and has also been offering an interest-free overdraft for the first 12 months.
From Wednesday, those who open a new FlexDirect account will continue to get the 5 per cent credit interest rate and will also receive 1 per cent cashback for the first 12 months on debit card purchases, capped at £5 per month and subject to terms and conditions.
The previous interest-free overdraft offer will be withdrawn for new FlexDirect account openings, but if an existing customer is benefiting from an interest-free overdraft offer, this will continue until the end of their 12-month period, Nationwide said.
And then, from November, subject to eligibility, FlexDirect customers, plus those with a FlexPlus or FlexAccount customers, will receive the new £50 interest-free buffer.
The FlexPlus account charges a monthly fee in return for benefits such as insurance and breakdown cover. The fee is currently £13 per month, but this will increase to £18 per month from December. There is no account fee on the FlexDirect or FlexAccount current accounts.
Rachel Springall, a finance expert at Moneyfactscompare.co.uk, said: “The £175 free-cash perk is a joint-market leading sum with First Direct, so it will be interesting to see if any other providers launch a switching incentive to compete for business in the weeks ahead.
“The FlexDirect (account) will pay up to £5 per month in cashback, but this is not diluted by any account management fee, which is a plus.”
Ms Springall also highlighted TSB’s Spend & Save Plus Account, which charges a £3 fee while customers can earn up to £5 per month in cashback.
She added: “As an alternative, the Chase Current Account currently pays more cashback on spending, as it will pay 1%, capped up to £15 per month for new customers.”
Ms Springall said Nationwide’s £50 interest-free buffer could be useful to some people as the Christmas shopping season draws nearer.
She said: “This safety net can make a difference for those who might overspend by a small amount.”
Ms Springall suggested that, in general, current account holders should weigh up the benefits they use as well as the charges for using their account “to see if it’s working hard enough”.
