The building society says anyone applying to moving a loan of at least £3,000 (with at least a year to run) from Barclays, Lloyds TSB, NatWest, RBS, HSBC, Halifax and Bank of Scotland, before September 30, 2005, will receive the £50 cheque.
Nationwide Director Steve Clode says: "Unlike credit cards and current accounts, personal loan customers tend to remain with one provider for the life of the loan, which often means they are losing hundreds of pounds through paying higher rates than they need to."
Nationwide has promised to charge all its new customers an interest rate of 6.7% on any loan balances transferred and there is no requirement to purchase payment protection insurance policies.
However some industry experts have criticised the move suggesting that borrowers could end up being out of pocket if they are not careful. Borrowers will need to check how much it would cost to settle their existing loans. Many providers charge at least one month's interest in early repayment penalty fees and this charge may end up being greater than the £50 offered by Nationwide. Some have said that increased competition in the market could soon mean lenders offer zero per cent interest on loan transfers, as with credit cards.