Way around HSBC on-line saver withdrawal penalty ?

money-magnet_3

As has been discussed on other threads, us poor expats have great difficulty in opening new accounts due to the "must be resident for tax purposes" criteria (this is different to having a UK mailing address - which I do have). One poster basically stated that if you move abroad, keep all your accounts open because you won't be able to open anymore later.

I have been trying to get myself an on-line saver account and since I already have a relationship with the HSBC (going right back to the Midland days), I thought that I would open one with them (since Sainsbury's won't accept me).

Minimum balance is 500 and interest is paid monthly. However they have a condition that if you make a withdrawal, you forfeit ALL interest on the ENTIRE balance for the whole month !!!

Thought I might open myself 2 of them, put the minimum balance in each and all the remaining funds in one. If I time any withdrawals to be on the day after the interest is paid, I should be able to take out all the funds (less the minimum 500), take what I need and put the balance into the other account.

This should only cost me 1 month's interest on 500 for the month of the withdrawal.

Can anyone spot any gaps in my logic ?

Thanks

Milarky

money-magnet wrote:

Thought I might open myself 2 of them, put the minimum balance in each and all the remaining funds in one. If I time any withdrawals to be on the day after the interest is paid, I should be able to take out all the funds (less the minimum 500), take what I need and put the balance into the other account.

This should only cost me 1 month's interest on 500 for the month of the withdrawal.

Except - I think you can only have one HSBC online saver account. Fortunately you can also have a First Direct (same bank) e savings account - with nearly the same features - except you do earn interest on balances less than £500. Move ALL the money (less £1) from one account and deposit the DIFFERENCE into the other account on the same date - always the 1st of the month - keeping what you want to use . Transfers should occur without delay as they are internal to HSBC. The only caveat is to always move at least £500 back into the Online Saver due to the additional requirement on minimum balances to earn interest there. This should allow no lost interest at all - simply that you would only earn interest in one of the two accounts - but on the full amount of your split deposit always.

EDIT: I Just confirmed that payment from a FD current account to the OLS is instant by moving a small amount into the OLS. I know that movements between FD c/a and FD s/a are instant. Logically they will work the same in reverse too - although I haven't made any withdrawals from either account and this can piggy-back onto the current account. (You need to be able to take out the difference, remember, so there is nothing achieved simply by moving the whole balance from one account straight to the other)

ManAtHome

You can set the HSBC online saver to pay interest into your current account so you may not need to make withdrawals if you're only planning to spend the monthly interest.

Connected_2

I'm not sure if I'm right to post this in the thread, but I have one question with regards to the HSBC Online saver.

If you withdraw the money, is it Instant Access? I've looked at the terms and conditions, but I can't find anywhere which states this. I currently have an Instant Access savings account with them, which pays ridiculous interest (about 0.1%)

The Online saver seems a great idea if it's Instant Access. I'm not too fussed with sacrificing interest if a withdrawal is made.

ManAtHome

Yes, you move the cash from the saver into your current account (think there were some limits in the T&C, something like 10k a day - maybe that's for transferring outside HSBC).

To add a bit to my earlier post - monthly interest is 4.65%, ends up at 4.75% if interest is credited to the online saver account. If you were to make 3 withdrawals a year, this brings the interest rate down to around 3.5% (4.65 x 9 / 12) - still better than 0.1% (is this just a current account by the way?).

They do have other instant savings accounts - I have one which pays around 3%, theory is that if I need to withdraw from the online saver, most of it will go into this one (on the 1st of the month!), then back in on the 1st of the next month (doing it this way would shift the overall IR above 4%).

Connected_2

ManAtHome wrote:

Yes, you move the cash from the saver into your current account (think there were some limits in the T&C, something like 10k a day - maybe that's for transferring outside HSBC).

To add a bit to my earlier post - monthly interest is 4.65%, ends up at 4.75% if interest is credited to the online saver account. If you were to make 3 withdrawals a year, this brings the interest rate down to around 3.5% (4.65 x 9 / 12) - still better than 0.1% (is this just a current account by the way?).

They do have other instant savings accounts - I have one which pays around 3%, theory is that if I need to withdraw from the online saver, most of it will go into this one (on the 1st of the month!), then back in on the 1st of the next month (doing it this way would shift the overall IR above 4%).

I've got the interest rate wrong - it's not another current account, it's an Instant Access Savings account with HSBC - 1.25% AER, which is still cack.

I do most of my banking via the internet, and HSBC have an excellent online service - and I like the flexibility of having the Instant access option. I'm not saving up for any particular reason, but it's there in case of an emergency, or if I want to go on holiday etc)

money-magnet_3

Thanks guys, its nice to know that there are people out there more devious than me !

I have applied for an HSBC account over the web-site and it appears to have worked (though there is still some manual process involved (?) since they say that it will take a few days to appear in my account list).

I have drawn a blank with FD though, their on-line application form won't allow a non-UK address.

The fall back position then becomes the lower rate account for the second account as recommended by ManAtHome.....(who is now opening a FD account ?....)

missile

I operate a similar system with Nationwide using accounts in my name and my wife's name. 4.55% e saver with instant no penalty access to the cash via my flex account(s). By crediting money to Flex account, I get their top rate on my flex (i.e. current) account too. An added bonus is that I can withdraw cash overseas @ a good exchange rate, without incurring bank charges.

Be aware if you are non UK resident you are breaking the law. Perhaps you ought to consider investing in your chosen country. There are some reasonable rates available for Sterling savings accounts in Spain - see http://www.CAM.es

gt94sss2

Connected wrote:

If you withdraw the money, is it Instant Access? I've looked at the terms and conditions, but I can't find anywhere which states this. I currently have an Instant Access savings account with them, which pays ridiculous interest (about 0.1%)

The Online saver seems a great idea if it's Instant Access. I'm not too fussed with sacrificing interest if a withdrawal is made.

As long as you have internet access, you may want to consider asking HSBC to change your Instant Access account to a Flexible Saver account instead.

Regards
Sunil

money-magnet_3

missile wrote:

Be aware if you are non UK resident you are breaking the law. Perhaps you ought to consider investing in your chosen country.

That's a bit harsh, Missile, I'm not sure whether there is any illegality involved here and I for one am certainly not out to commit any form of deception. The UK financial institutions I have accounts with are all fully aware of my [foreign] residential address and I have made no attempts to hide the fact that I am an expat. None of them have contacted me to advise me that I am no longer permitted to hold the accounts (in fact some even provide international reply-paid envelopes when they send me junk mail about taking even more accounts with them!).

As far as I can see there are 2 issues relating to residency; the first is that in order to open an account, the institution has to verify your identity. This would be very difficult to do internationally. The second is the question of withholding tax (some non-residents prefer to be paid interest gross). In my case, I am already known to the HSBC and if I want the withholding tax back on the interest, that is for me to take up with the inland revenue.

As you would know expats may choose to hold funds back home for a number of reasons, not least of which would be because they plan to come back one day. It is a real nuisance that we do not have the same opportunities to make our money work for us as regular residents.

MM

AP

I am going to close it as soon as they credit the £20 incentive for opening. This is to be done immediately following the next interest payment afterwards.