HSBC e-ISA

mac12 wrote: »

Has anyone had any problems with HSBC ISAs? I quite interesting in this e-ISA as I already have a current account with them which I am happy about. Their rates on other savings haven't always been the best but I was wondering if I should get this ISA or top off my NS&I ISA for 08/09.

I think the rate of interest on the HSBC e-ISA (6.00% AER) is currently better than the NS&I rates (4.85% AER for Cash ISA or 5.55% AER for Direct ISA). I've not had a problem with my money at HSBC.

And, despite the worries we've had on this thread about the e-ISA, it sounds like you aren't in the same boat (i.e. you don't already have an ISA with HSBC), so you should be absolutely fine to apply without concern.

mac12, I'm not very good at this malarkey, but I think that 5.84% is the 'gross' interest. If you ask for the monthly interest to be paid into another account, you will only make 5.84% interest over the year.

However, if you allow the monthly interest to accrue in your e-ISA account, you will earn interest on the interest (called 'compound interest'). Over a year, that would amount to 6% interest (tax-free) in total.

What happens to ISA's opened in previoius tax years? I understand that no further money can be added to it if I was to open the HSBC ISA but would I still be able to withdraw money from last year's one ( which is with Nationwide) or does need to be left completely untouched?

Thanks

mac12 wrote: »

Thanks Grifty for that.

I was wondering - how comes in the website is says it is 5.84% Tax Free but 6.00% interest? Isn't is all tax free?

Hi this is the reply I got from them when I asked them the above question.

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The AER refers to the Annual Equivalent Rate which is the overall interest rate should the Gross interest be compounded each month. The current Gross rate which is 5.84% which is tax free and this is the return you would see in your account.
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Which confirms what Grifty has already explained.

Cheers

looks like its only me who has applied for this then.