HSBC has once again chopped the rate on its popular regular saver account available to current account customers.
The bank and its offshoot First Direct have cut the rate from 2.75 per cent to 1 per cent. Up until last October, they paid 5 per cent, while as recently as 2016, First Direct offered 6 per cent.
With HSBC, savers can put in between £25 to £250 a month, while at First Direct it is £300. It is likely to have proven a popular home for those Britons who have been able to squirrel more money in the pandemic.
On the maximum £3,600 allowance for First Direct customers, it works out as a cut in interest from £99 a year to £36. For HSBC customers on the full £3,000, they will be paid £30, down from £82.50.
HSBC and First Direct customers will lose as much as £63 a year in interest after the cuts were brought in
HSBC snuck out the change, which came into effect at midnight, unannounced on the same day heavy cuts from Treasury-backed National Savings & Investments affecting 25million savers came into effect.
However, some customers were possibly prepared for the news, after they were sent paperwork last week dated 24 November telling them the interest rate was 1 per cent.
HSBC last week refused to confirm whether the cut to its regular saver was coming, with customers told it was a ‘technical error’.
Both it and First Direct failed to respond to This is Money yesterday when asked whether there would be a cut meaning we couldn’t alert readers beforehand for them to get in before it closed its doors.
M&S Bank, another managed by HSBC, took its regular saver paying the same interest rate off-sale on 12 November.
HSBC and First Direct customers who got in before midnight last night will still receive 2.75 per cent, but everyone who applies from now on will get the lower rate.
Those who already have the account will be unaffected until the 12 months is up.
It is a blow to savers suffering from rock bottom rates as these regular savings accounts, which lock customers’ money away for a fixed period in return for a greater payoff, are some of the last decent rates available from Britain’s biggest high street names.
HSBC cut its basic easy-access account to just 0.01 per cent earlier this year.
The cap on how much can be saved each month and the fact money can’t be accessed straightaway also means they are often described as a good option for people trying to get into the savings habit, with the best rates often only available to banks’ current account customers.
The best account available to everyone is offered by Coventry Building Society.
It pays 1.55 per cent and doesn’t require a minimum deposit each month, with savers able to put away up to £500.
A raft of other providers have cut rates on these accounts in recent years, or have scrapped them altogether.
The account with Britain’s second biggest mutual can be opened online, by post or over the phone and savers would earn around £93 in interest after the 12-month term if they stashed away the full £6,000 allowed by the account.