Why all HSBC customers should earn 4% on their cash

HSBC customers will have access to a market leading 4 per cent instant-access savings rate from Thursday.

The bank, which serves nearly 15million customers in Britain, is increasing the rate on Online Bonus Saver instant-access account for balances up to £10,000.

Not only is this higher than any instant-access savings rate on our best buy savings tables, it’s far higher than what many HSBC customers are likely earning on their rainy day savings.

No-brainer: HSBC’s Online Bonus Saver is essentially an instant-access deal paying 4 per cent on balances up to £10,000.

At present, HSBC banking customers earn no interest on any cash held in their current account.

Meanwhile, those relying on HSBC’s standard easy-access rates will be earning as little as 1.3 per cent using its Flexible Saver.

Since the start of the year, HSBC has upped the rate on its Bonus Saver account, first from 3 per cent to 3.25 per cent, and then, from 3.25 per cent to 3.5 per cent in April.

The new 4 per cent rate will mean someone holding £10,000 in this account will now earn £400 of interest over 12 months – if the rate remains the same.

That’s £400 more each year than a HSBC customer with £10,000 vegetating in their bank account and £270 more than someone using the standard easy-access deal.

On balances over £10,000, the account offers 2.3 per cent – still higher than its Flexible Saver rate. 

One drawback is that the 4 per cent rate only applies for any month in which no withdrawals are made.

During a month in which a withdrawal is made or the account is closed, savers earn 1.3 per cent.

This means savers who sign up would be wise to treat this account as their emergency fund, rather than everyday savings they can dip in and out of.

What about other banks?

HSBC is not the only bank offering access to exclusive savings rates with bigger returns.

Barclays banking customers who sign up to its Blue Rewards scheme are able to benefit from an exclusive easy-access savings deal paying more than 5 per cent interest.

The Barclays Rainy Day Saver account pays 5.12 per cent on balances up to £5,000. That could equate to more than £250 in interest after one year.

However, it’s worth pointing out that cash held above the £5,000 cap will only earn 0.7 per cent.

The other drawback is that savers will need to pay £5 a month to become a Blue Rewards member. 

However, that does come with other advantages such as £5 monthly cashback for having two direct debits paid out of the bank account.

Good deal: The Barclays Rainy Day Saver account pays 5.12 per cent interest on balances up to £5,000. That could equate to more than £250 in interest after one year.

Given that Barclays’ Everyday Saver pays just 0.7 per cent whilst it also offers zero in-credit interest to its bank account customers, this should also be a no-brainer for all Barclays banking customers.

Another bank where customers need to check if they can make their savings work harder is Santander.

Santander’s linked savings deal is offering customers who hold a Santander Edge current account 4 per cent interest on balances up to £4,000. No interest is paid on balances above that level.​

Someone maintaining the maximum balance in this account will earn £162 over the course of a year.

It’s worth noting that the 4 per cent interest rate includes a 0.5 per cent bonus rate for the first 12 months after opening – so after a year the rate will be 3.5 per cent.

Santander’s linked savings deal is offering customers who hold a Santander Edge current account 4 per cent interest on balances up to £4,000.

The Edge current account does come with a £3 monthly charge, although it should be easy enough to make this back. The account also offers cashback of up to £20 per month on both debit card spending and direct debits.

There is 1 per cent cashback on essential grocery shopping and transport-based debit card spending. This is capped at £10 a month.

There is a further 1 per cent cashback on household bills paid via direct debit covering council tax, gas and electricity, mobile, landline, broadband and paid-for TV packages. Once again, this is capped at £10 a month.

Those that don’t have an Edge account will have to settle for either the Everyday Saver paying 0.85 per cent or the eSaver, which pays 2 per cent.

Those with a 1|2|3 Current Account or Select Current Account will also earn 2 per cent of in-credit interest on balances up to £20,000, albeit both come with monthly fees.

This post first appeared on Dailymail.co.uk