HSBC is making a major change to eight of its bank accounts within weeks.
The bank and lender is slashing interest rates on a number of its savings accounts from June 3.
It comes after the Bank of England (BoE) reduced its base rate from 4.5% to 4.25% this month – the fourth cut since 2020.
The base rate is charged to smaller high street banks and any falls are usually echoed in savings rates.
HSBC is reacting to the base rate change by dropping rates on eight of its savings accounts, but the drops come into effect on different dates.
The interest rate on its Online Bonus Saver is being cut on July 21 from 4% AER to 3.75%, for balances between £1 – £50,000.
Meanwhile, anyone with the same account and a balance over £50,000 will see the rate cut from 1.5% to 1.3% on the same date.
The interest rate on the bank’s Flexible Saver is also being cut from 1.35% to 1.3% from July 21.
Anyone with a Help to Buy ISA and balance over £12,000 will see their interest rate reduced from 1.35% to 1.30% from June 3.
HSBC non-Premier customers will see the interest rate on the Loyalty Cash ISA cut (standard rate) from 2.15% to 2.10% from June 3.
Meanwhile, the rate on the same ISA (loyalty rate) for non-Premier HSBC customers will drop from 2.35% to 2.30% on the same date.
The full list of affected accounts and the new rates coming into force can be seen via: www.hsbc/savings/interest-rates.
A spokesperson for HSBC said it was “firmly focused on supporting customers with their savings”.
They added: “We provide overall value on our savings accounts that goes beyond interest rates to provide flexibility, convenience, simplicity and organisational and financial stability for customers who want to save with a trusted high street brand.
“There are several factors taken into account when setting savings rates.
“We have designed our savings accounts to make it easy for our customers to start and maintain a savings habit so they can save towards longer term goals.
“We also proactively remind customers of the need to review their savings, highlighting products that might also be suitable for them and where they could benefit from a higher rate.”
MAJOR BANKS CUTTING RATES
HSBC joins NatWest and Nationwide in cutting rates on its savings accounts as the BoE continues to slash its base rate.
Nationwide is cutting interest rates on over 60 savings accounts from June 1 including a number of ISAs and easy access accounts.
NatWest is also cutting rates on a number of accounts from the end of this month.
Meanwhile, The Sun exclusively revealed how Virgin Money is lowering the interest rate on its M Plus Saver account next month.
If you’ve got a savings account with an interest rate set to drop, it might be worth shopping around for a better deal now.
Check out comparison sites like moneysavingexpert.com and moneyfactscompare.co.uk to browse the best on the market.
According to Moneyfacts, Chip is offering the best rate on an easy access savings account, with a rate of 4.77%.
Meanwhile, the best easy access cash ISA is with Trading 212 and offering a rate of 4.86%.
Always look beyond just the headline interest rate on any savings account though.
Some offer additional perks which can make them more cost-effective and suited to you, based on your circumstances.
For example, the Club Lloyds Silver account comes with a £11.50 monthly fee and extra £3 monthly Club Lloyds fee that’s waived every time you pay in £2,000 or more in each month.
However, the account comes with AA breakdown cover, European and UK family travel insurance and mobile phone insurance.
SAVING ACCOUNT TYPES
THERE are four types of savings accounts fixed, notice, easy access, and regular savers.
Separately, there are ISAs or individual savings accounts which allow individuals to save up to £20,000 a year tax-free.
But we’ve rounded up the main types of conventional savings accounts below.
FIXED-RATE
A fixed-rate savings account or fixed-rate bond offers some of the highest interest rates but comes at the cost of being unable to withdraw your cash within the agreed term.
This means that your money is locked in, so even if interest rates increase you are unable to move your money and switch to a better account.
Some providers give the option to withdraw, but it comes with a hefty fee.
NOTICE
Notice accounts offer slightly lower rates in exchange for more flexibility when accessing your cash.
These accounts don’t lock your cash away for as long as a typical fixed bond account.
You’ll need to give advance notice to your bank – up to 180 days in some cases – before you can make a withdrawal or you’ll lose the interest.
EASY-ACCESS
An easy-access account does what it says on the tin and usually allows unlimited cash withdrawals.
These accounts tend to offer lower returns, but they are a good option if you want the freedom to move your money without being charged a penalty fee.
REGULAR SAVER
These accounts pay some of the best returns as long as you pay in a set amount each month.
You’ll usually need to hold a current account with providers to access the best rates.
However, if you have a lot of money to save, these accounts often come with monthly deposit limits.
