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HSBC regular savers: your options once its 5% interest rate ends

Written by: Paloma Kubiak
A swathe of people will see their HSBC 5% regular saver deal come to an end in the next few months as the product matures. Here are the best options for your money.

HSBC often touted its current account switch bonus and generous linked regular saver rate.

At one point, customers switching their everyday banking to HSBC could bag £200 and could open its regular saver account paying 5% interest on up to £250 a month, fixed for a year.

But since October 2019, the regular saver rate has been slashed to 2.75% for new customers and its latest switch bonus offers a lower £175.

While many existing customers will continue to benefit from the 5% regular savings interest rate for the 12-month fixed term, for others, the product may be maturing in the next few months.

At the end of the term, the savings and interest will be transferred to any instant access savings account customers may hold or one will be opened for them, paying as little as 0.10%.

Therefore, customers coming to the end of their fixed term may want to know where next to house their money.

Rachel Springall, finance expert at data site Moneyfacts, said: “It’s important that savers make the time to shop around for a decent return on their nest egg. Fixed term regular savings accounts are a great vehicle to inspire a savings habit if someone needs a bit of force to save, as they require frequent deposits. In twelve months’ time, if someone is diligent enough then they can have enough cash saved for a holiday or other savings goal.

“The savings market is very volatile at the moment and the top rates don’t tend to last very long, so speed to apply is key. There are also murmurings of a base rate cut which will be frustrating news for savers so it’s important to keep an eye on things.”

The top deals

Below Moneyfacts details the top deals for your savings:

Kent Reliance and Saffron Building Society both offer 3% on their regular savings accounts but they can only be opened in branch. Kent Reliance pays 3% variable on deposits up to £500 a month. If you miss a payment, the account will be closed and funds will be transferred to its easy access savings account. However, it does allow penalty-free withdrawals.

Saffron Building Society’s fixed rate 12-month bond pays 3% on up to £250 a month. Existing customers can also open the account by post.

The Bank of London and Middle East (BLME) pays an expected profit rate of 1.85% on its 18 month bond. The minimum investment is £1,000. If you may need your money sooner, the Sharia-compliant bank pays an expected profit rate of 1.80% on its one-year bond.

Away from Sharia savings, the Union Bank of India pays 1.80% on its 18-month bond.

Moneyfacts’ best buys on two-year and three-year fixed deals are again BLME, which pays an expected profit rate of 1.95%, closely followed by Gatehouse Bank with an expected profit rate of 1.90% on their two-year deals. They offer a respective 2.10% and 2% on their three-year deals. All have a minimum investment level of £1,000.

UBL UK also pays 2% on it’s three-year bond but it has a minimum investment of £2,000.

If you’re looking to switch away from HSBC and you want a bank which offers a regular saver, then First Direct offers a £100 switching bonus and a regular saver paying 2.75%. While part of the HSBC group, switchers will still be eligible for the cashback. The M&S Bank monthly saver account also pays 2.75% on its 12 month bond on a maximum £250 a month deposit for customers who have a current account.

Nationwide and TSB also run ‘refer a friend’ schemes, offering £100 to the existing customer and £100 for the new recruit who switches their current account. With Nationwide’s FlexDirect current account, customers who pay in at least £1,000 a month get 5% interest on balances up to £2,500 for the first 12 months, falling to 1% at term end.

The TSB Plus account offers 3% on balances up to £1,500.

As with most of the switching sweeteners, you need to meet certain criteria so make sure to read the T&Cs before making the move.

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