HSBC has thrown the gauntlet down to other banks and building societies with the launch of an eye-catching ISA add-on.
“Save together” offers savers £10 a month on top of 1.5% interest on their Cash ISA balance.
The deal effectively offers savers a free £120. But is there a catch?
The detail
Save Together runs in conjunction with HSBC’s existing ISA, the Loyalty Cash ISA.
From 1st March HSBC Advance customers who pay in at least £25 a month into a Loyalty Cash ISA will receive an extra £10 a month for 12 months, on top of 1.5% AER interest. Savers who prefer to pay a lump sum can deposit a minimum of £300 and still receive an extra £10 a month.
Payments can include transfers in from another ISA. The payments of £10 will be made as additional interest payments and do not contribute towards your annual ISA allowance.
The deal effectively means that someone who saves £300 will receive interest at 41.5% AER for a year.
The small print
To take advantage of Save Together, savers need two accounts: a HSBC Advance current account, and a Loyalty Cash ISA.
To be eligible for an Advance account you need to pay in £1,750 or more each month. There’s no monthly fee.
HSBC’s Loyalty Cash ISA offers customers HSBC’s best possible on-sale ISA rate (currently 1.4% to 1.6% AER variable, depending on type of current account held) for 12 months each time they top up their account. Top ups of £1 or more secure the loyalty interest rate for a further 12 months and earn interest tax-free on the saver’s entire Cash ISA balance. The current ISA rate for Advance customers is 1.5%.
To be eligible for Save Together you must keep both the Advance account and Loyalty Cash ISA open for the full 12 months and either pay in a lump sum of £300 into the ISA or at least £25 a month. You can only take advantage of the offer once, although if you hold an Advance account jointly with someone else you can both use Save Together.
HSBC says it can change this offer at any time by giving 30 days’ notice. It also says it can withdraw the offer completely with two months’ notice – so in theory it could scrap the whole thing in a couple of months’ time.
It’s a bribe… and there are better ones
If you’re already an HSBC Advance account holder, Save Together is a no brainer. You should open a Loyalty Cash ISA (if you don’t have one already) and start paying in £25 a month from March onwards.
If you don’t have an HSBC Advance account, it’s not so straightforward. In effect the £120 works as a switching incentive – and there are better ones out there for current accounts.
For example, Clydesdale Bank and Yorkshire Bank are offering a whopping £150 for anyone who switches to one of their current accounts and deposits at least £1,000 within 31 days of the switch completing.
[SPOTLIGHT]Halifax is offering a £125 switching incentive if you take out its Reward current account, plus a £5 reward for each month you pay in £750 or more. That adds up to a £185 reward in the first year with £125 of that upfront.
First Direct offers £100, but you’ll need to pay in £1,000 or more a month to keep the account fee-free. First Direct repeatedly tops the polls for customer service and will also pay you an additional £100 if you don’t like it and leave.
Co-operative Bank will pay you £100, as well as make a £25 donation to charity if you take out one of its current accounts, while M&S Bank is offering a £100 gift card as a switching incentive to its fee-free current account.
I just want a decent ISA
If you don't want to switch your current account, but do want to secure the best rate of interest on your money, then the table below covers the leading ISAs across the various terms.
| ISA | Term | AER | Minimum deposit |
| Coventry BS Fixed Rate ISA | Rate fixed until November 2018 | 2.25% | £1 |
| Aldermore Bank Fixed Rate Cash ISA | Three years | 2% | £1,000 |
| Post Office Online ISA | Two years | 1.95% | £500 |
| Virgin Money Fixed Rate E-ISA | One year | 1.65% | £1 |
| NS&I Direct ISA | Instant access | 1.50% | £1 |