Customers of First Direct and HSBC should act fast if they want to earn 6% on their savings as the banks are cutting the rates on their market-leading regular savings accounts tomorrow.
First Direct will cut the rate on its regular saver from 6% to 5% at 6am tomorrow, while HSBC will cut the rate on its regular saver from 6% to 5% for Premier and Advance customers at 00.01 tomorrow.
If you’re an existing current account customer – which you need to be to access both accounts – you need to sign up before the rates change. You can apply for both of these accounts online. (We explain more about how the accounts work below.)
Existing customers are unaffected by the move until their 12-month deal is up. However, if you want to reopen another regular saver with either bank after this, you’ll have to do so at the new 5% rate.
HSBC is also cutting the rate on its regular saver from 4% to 3% for those with its Bank and Graduate accounts tomorrow.
Meanwhile M&S Bank, which is part of the HSBC Group alongside HSBC and First Direct, cut the rate on its regular saver today from 6% to 5%. Again, this only affects new customers – existing customers will continue to earn 6% until their 12-month deal is up.
What are the accounts?
First Direct’s regular saver pays 6% (5% from tomorrow) for those who save £25 to £300 a month for a fixed 12 months, while HSBC’s regular saver pays 6% (5% from tomorrow) for 12 months provided you deposit between £25 and £250 each month.
With both accounts, even if you don’t save the maximum £250 or £300 each month, you can still save up to £3,000 over the year with HSBC and £3,600 over the year with First Direct.
Once the 12 months fixed term is up, your balance is moved into one of the banks’ savings accounts – which one depends on whether you have a savings account with the banks already. These accounts only pay between between 0.05% and 0.10% though, so do switch to a higher paying account as soon as possible.
However, to get HSBC’s regular saver at 6% in the first place you have to have an HSBC Premier or Advance current account, which each come with their own eligibility requirements.
To access First Direct’s regular saver, you must hold its ‘1st Account’.
Are the accounts still worth it at 5%?
If you’re happy with the service you get from HSBC and First Direct, 5% is still the best interest rate you can earn from a regular saver.
If however you’re happy to switch away from the banks, you can also earn 5% from Nationwide’s regular saver if you deposit between £1 and £500 each month for 12 months.
To get this account, you must be a Nationwide current account customer.
What do the banks say?
The banks wouldn't disclose why they're reducing rates, although a slew of providers across the market have already cut savings rates following the Bank of England's decision to cut the base rate from 0.5% to 0.25%.
An HSBC spokesman says: “We regularly review all our accounts and do not make any reductions to savings rates lightly. We believe our products provide good value for customers, and while we have not reduced the rate on our Regular Saver account for four years it remains very competitive.”
An M&S Bank spokesperson says: “From 29 September, the M&S Monthly Saver rate will change to 5.00% AER/gross (fixed for 12 months) for new M&S Current Account customers. Existing customers will continue to receive a rate of 6.00% AER/ gross until the one-year anniversary of their account opening.”