HSBC - High Interest Deposit bonds...too good to be true?

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berti_quinlan
berti_quinlan Posts: 30 Forumite
in Savings & investments
HI,


Having already opened up two ISAs, (one in my name, one in my dads) this year i am looking for another option for the next few monthes before i take a jump into the housing market.

I am a HSBC customer and noticed their Deposit Bonds, which seems in principle to be ok, 6 months in, and a 2% rate for such a short time.
Seems like a suitable option instead of sitting in my savings account going mouldy and earning about 3 pence interest....

Does anyone have any experience or can offer any advice as to whether it actually is that rosey?

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  • Reaper
    Reaper Posts: 7,285 Forumite
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    How about the Egg instant access account - it pays 3.25%
  • Reaper
    Reaper Posts: 7,285 Forumite
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    berti_quinlan wrote: »
    6 months in, and a 2% rate for such a short time.
    Just in case you misunderstood the rate - that's the annual net rate they are quoting. You will get about half that for a 6 month term.
  • berti_quinlan
    berti_quinlan Posts: 30 Forumite
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    Reaper wrote: »
    How about the Egg instant access account - it pays 3.25%


    Isnt the EGG account relying on the money being in the account for a year though, like the majority of them do.
  • atypical
    atypical Posts: 1,342 Forumite
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    No, you don't have to keep the money in the account for a year hence it's called an instant access account.
  • td_007
    td_007 Posts: 1,212 Forumite
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    berti_quinlan wrote: »
    Isnt the EGG account relying on the money being in the account for a year though, like the majority of them do.

    You will get interest for whatever period the money is in. The advantage is the the money is not locked up and you can put in or take out as and when needed.
  • Aegis
    Aegis Posts: 5,688 Forumite
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    berti_quinlan wrote: »
    Isnt the EGG account relying on the money being in the account for a year though, like the majority of them do.
    Account interest rates are always quoted on an annual basis, not for the term you actually put money into them. AER stands for annual equivalent rate, and it is the rate you would get if you could put your money into the account for one year and allow the interest to compound. As such, in a 2% AER account for 6 months you'll end up with a little less than 1% if it's monthly interest.
    I am a Chartered Financial Planner
    Anything I say on the forum is for discussion purposes only and should not be construed as personal financial advice. It is vitally important to do your own research before acting on information gathered from any users on this forum.
  • RayWolfe
    RayWolfe Posts: 3,045 Forumite
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    Oh Aegis!!
    You know that's not correct; you will end up with 2% AER.
    Half a years saving brings you half a years product, not 1%.
    Me? Picky? ;)
  • Aegis
    Aegis Posts: 5,688 Forumite
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    RayWolfe wrote: »
    Oh Aegis!!
    You know that's not correct; you will end up with 2% AER.
    Half a years saving brings you half a years product, not 1%.
    Me? Picky? ;)
    Not sure I understand: half of 2% AER would be a return of just under 1% in 6 months?
    I am a Chartered Financial Planner
    Anything I say on the forum is for discussion purposes only and should not be construed as personal financial advice. It is vitally important to do your own research before acting on information gathered from any users on this forum.
  • RayWolfe
    RayWolfe Posts: 3,045 Forumite
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    Hi Aegis
    I was not trying to pick you up here, I know what good advice you dispense.
    All I was trying to do is point out that it would be better if we concentrated on the percent per annum and/or AER. To say that because the account lasts half a year and therefor only pays 1% is true but misleading. Think of the countless threads on Monthly Savers where people think they have received less than the APR.
    So, a very picky point as I said before but I do have a bee in my bonnet about this subject. ;)
  • Aegis
    Aegis Posts: 5,688 Forumite
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    RayWolfe wrote: »
    Hi Aegis
    I was not trying to pick you up here, I know what good advice you dispense.
    All I was trying to do is point out that it would be better if we concentrated on the percent per annum and/or AER. To say that because the account lasts half a year and therefor only pays 1% is true but misleading. Think of the countless threads on Monthly Savers where people think they have received less than the APR.
    So, a very picky point as I said before but I do have a bee in my bonnet about this subject. ;)
    Ahh, gotcha. I was slightly confused there I think!
    I am a Chartered Financial Planner
    Anything I say on the forum is for discussion purposes only and should not be construed as personal financial advice. It is vitally important to do your own research before acting on information gathered from any users on this forum.
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