Nationwide has announced that it will cut interest rates for its low earning current account holders.

While those who pay in over £1,500 each month will continue to enjoy a 3.5 per cent rate, interest will drop to as low as 0.1 per cent for low earners with the cash card account from August.

A spokesperson for the building society was quoted by the Independent as saying: "These new rates are set at a level that brings us more in line with the market."

Financial consultancy firm Defaqto's head of banking David Black, however, told the newspaper the practice of filtering out low earners in favour of more profitable customers was becoming common.

"Banks are more likely to be able to cross-sell other profitable products to customers earning a reasonable amount," he said.

Earlier this month Nationwide raised its range of mortgage rates by between 0.25 and 0.5 per cent.

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