HSBC and First Direct slash Regular Saver rate from 2.75% to 1%
HSBC and First Direct have today dropped the interest rate offered on their Regular Saver accounts from 2.75% to 1% for new customers.
The HSBC Regular Saver is a linked product available to current account customers who have its Premier, Advance, Bank Account, Bank Account Pay Monthly, Student or Graduate account.
For those who already have the Regular Saver, it pays 2.75% AER (maximum £3,000) and customers will continue to receive this rate until maturity in 12 months’ time. This rate is down from 5% AER offered before October 2019.
However, HSBC has now updated its Regular Saver page to confirm new customers opening the account as of today (Tuesday 24 November) will receive 1% AER on between £25 and £250 saved each month (maximum £3,000).
For existing customers on the higher 2.75% rate who are coming to the end of the 12-month term, the money will be deposited into the HSBC Flexible Saver or its Premier Saver account, both paying 0.01%.
But they will be able to re-open the HSBC Regular Saver paying the lower 1% rate once the account matures. Withdrawals from the Regular Saver aren’t allowed.
For customers paying in £25 a month each month over the year, the balance will be £301.63 – just £1.63 interest.
For those paying in the maximum £250 a month over the course of the year, they will have a balance of £3,016.25 – gaining £16.25 interest in the period.
If customers don’t pay in the maximum allowed in any month, they can carry over the unused amount and ‘catch up’ in future months.
An HSBC spokesperson, said: “The impact of being in a low interest rate environment is well known. But there are a number of different factors that influence the interest rates of savings accounts and each provider will have their own reasons for the products they offer and the associated interest rates.
“Those customers who signed up to a Regular Saver at 2.75% will continue to receive that rate, and those who open an account now will still receive a competitive rate on their regular savings.”
First Direct, part of HSBC, has also cut the rate on its Regular Saver account from 2.75% to 1% on deposits between £25 and £300 a month (maximum £3,600). For savers putting away the maximum £300 a month, they would earn £19.50 interest over the year.
In September, HSBC launched a £125 current account switch incentive to new customers moving their everyday banking to it. This cashback deal was pulled last week.
‘Cut is no real surprise’
The HSBC Regular Saver interest rate cut comes on the same day that NS&I’s rate reductions come into effect, in another blow to beleaguered savers.
Anna Bowes, co-founder of website Savings Champion, said: “It’s no real surprise that the banks have now pretty much all cut or ceased offering their competitive regular saver accounts – even though savers who wanted access to the best rates would have needed to be current account holders with the same banks.
“Coventry Building Society is still offering Regular Saver (3) paying 1.55% AER and this is open to anyone who would like to save up to £500 per month. However, this is a variable rate, so it could be changed in the future.
“And NatWest has its Digital Regular Saver paying 3% gross/3.04% AER on up to £50 per month – exclusively for their current account customers. This too is a variable rate and this rate is only paid on a balance of up to £1,000.
“Saving into a regular saver account is a good way to improve your saving discipline, especially if you set up a standing order for just after you receive your salary. That way it can become like another bill – but one that you can benefit from in the future.”