HSBC offers bonus cashback when taking out a new credit card
The bank is paying £25 to Advance customers that sign up for a deal.
HSBC is trying a new tactic to tempt its current account customers into taking out a new credit card.
The bank is offering a cash incentive of £25 to those that sign up to the HSBC credit card and then make a purchase or complete a balance transfer.
The offer is only open to existing HSBC Advance customers and is available until 7th August. But is it worth going for?
What you can get
The HSBC credit card offers 34 months 0% on balance transfers and comes with a 3.3% balance transfer fee. It also offers interest-free purchases for three months.
In order to qualify for the £25 cashback, you need to either make a purchase or transfer a balance within 60 days of signing up. While purchases can be of any value, balance transfers must be at least £100.
HSBC will then pay £25 into your Advance account within 45 days.
In addition the offer rules state you can’t be an existing HSBC credit card customer or have had an HSBC credit card in the past six months.
It’s also important to note that HSBC won’t accept transfers from other HSBC companies, so credit card customers of First Direct, Marks & Spencer and John Lewis won’t be able to move over a balance.
[Related story: Virgin unveils record-breaking interest-free purchases card]
Should you switch to the HSBC credit card?
If you’re a HSBC Advance customer and don’t have an existing balance to transfer, it's easy money. Open a credit card account, make a small purchase, and net £25. Make sure you repay the bill in full by the end of the month
If you’re not an Advance customer, or have an existing credit card balance to transfer, it’s a bit more complicated.
Firstly, let’s look at Advance customers with an existing credit card balance elsewhere.
The HSBC balance transfer fee is quite high at 3.3%. This means if you owe more than £757.58 on your credit card your entire £25 cashback will be wiped out by the fee.
If you can pay the debt off relatively quickly, then you'll be better off switching it to a 0% balance transfer card with no transfer fee. Tesco, Halifax and Post Office all offer cards with 18-month 0% periods and zero transfer fees.
If you can’t pay off your balance relatively quickly you should look at the longest balance transfer deals on offer – and HSBC is among them.
At 34 months, it’s just two months short of the longest deals which currently stand at 36 months from Barclaycard, Halifax, Virgin Money, MBNA, Bank of Scotland and Lloyds.
Of the 36-month cards the one with the lowest fee is Barclaycard, which has a balance transfer fee of 2.39% (1.99% if you apply direct).
Whether this is best for you depends on the size of your balance. For example if you have a £1,500 balance to transfer, HSBC works out pretty well.
You’d pay a fee of £49.50 but the £25 cashback would reduce this to £24.50. Transferring £1,500 to Barclaycard's Platinum card would cost more at £35.85.
But if you had a £5,000 balance it would cost you £140 to switch to HSBC, even taking the £25 into account. Switching the balance to Barclaycard would cost just £119.50.
Should you switch to HSBC?
If you’re not with HSBC but want to take advantage of the credit card cash incentive, you might consider switching your current account to HSBC Advance.
HSBC is currently paying new account-holders a welcome bonus of £120. However, to qualify you need to pay in £1,750 a month for two months.
You can also earn an extra £120 by opening a HSBC Loyalty Cash Isa and taking advantage of Save Together.
Add on the £25 for switching your credit card and in total you could earn £265 by switching to HSBC.
The Advance current account is fee-free and offers preferential rates on various products. The most eye-catching is a Regular Saver paying 6% but the maximum you can pay in is £250 per month for up to 12 months.
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