HSBC current account customer? You can now get 3% ‘easy-access’ on your savings

westv

Presumably, funds have to be in the account for a full month before they earn the bonus?
For example, say, £5k was put in on the 31st October and £5k on the 2nd November. Only the first £5k would earn the full rate for November?

Section62

Descrabled said:

January

January is a long way away in respect of top easy access savings interest rates....

Section62

westv said:

Presumably, funds have to be in the account for a full month before they earn the bonus?
For example, say, £5k was put in on the 31st October and £5k on the 2nd November. Only the first £5k would earn the full rate for November?

No, you get interest paid on each pound which is in the account per day.  The second £5k will earn interest at 3% pa from 2nd November. (assuming no withdrawals are made that month)

phillw

Sensory said:
The difference is 0.15%, whether gross p.a. or AER. It’s only worse than that for HSBC if the balance ever goes above 10K.

If you deposit £10k in HSBC then the balance will go over £10k after one month. Which is why HSBC quote the AER as up to 3%. You will only get 3% if you deposit around £9700. I think its around 2.97% AER if you deposit £10K

phillw

Descrabled said:

January

If I need cash from my bonus account during January the earliest I can transfer money to an alternative savings account is Tuesday 2nd.

On £10k this will mean a loss of £1.69 me thinks. I'll deduct that from the grandchildren's allowances to balance the books.

Edit. It's Tuesday 3rd of January of course. 2 days at 0.5%

I'm expecting that by December 1st there will be a better paying account with no access restrictions. I'm currently weighing up whether to empty the account on 1st November or 1st December.

Daliah

phillw said:

Sensory said:
The difference is 0.15%, whether gross p.a. or AER. It’s only worse than that for HSBC if the balance ever goes above 10K.

If you deposit £10k in HSBC then the balance will go over £10k after one month. Which is why HSBC quote the AER as up to 3%. You will only get 3% if you deposit around £9700. I think its around 2.97% AER if you deposit £10K

Provided you make no withdrawals, you get 3% on £9,999.99 and 0.75% on anything above that. If you make any withdrawals, the interest on the entire balance is 0.75% for the entire month of the withdrawal.

phillw

Daliah said:
Provided you make no withdrawals, you get 3% on £9,999.99 and 0.75% on anything above that. If you make any withdrawals, the interest on the entire balance is 0.75% for the entire month of the withdrawal.

It clearly says 2.96% on up to and including £10000, not £9,999.99.

If you deposit £10000 then after a month you are earning interest at 2.96% which will only compound at 0.75%. Therefore the table is misleading as you cannot get 3% AER on a deposit of £10,000.

In terms of comparing the bonus saver to an account without these limitations (and AER exists to allow you to easily compare accounts with different terms and conditions), depositing £10000 for a year gives around 2.97% AER overall.

I think HSBC are violating the AER code as the bonus shouldn't even be included, which would make the advertising of this account misleading:

7 A key element of the AER Code is the requirement to display an AER on advertisements. AER is a notional rate which illustrates the gross interest rate (excluding any conditional bonus payable) as if paid and compounded on an annual basis. The purpose of the AER is to provide an easy method for customers to compare interest rates on products so that they can shop around for the best deal. AER is the accepted market standard methodology for comparing the expected returns for cash savings products

Not even bothering to include the example of a £10000 deposit is an indication they didn't want to clarify the situation.

cricidmuslibale

Daliah said:

phillw said:

Sensory said:
The difference is 0.15%, whether gross p.a. or AER. It’s only worse than that for HSBC if the balance ever goes above 10K.

If you deposit £10k in HSBC then the balance will go over £10k after one month. Which is why HSBC quote the AER as up to 3%. You will only get 3% if you deposit around £9700. I think its around 2.97% AER if you deposit £10K

Provided you make no withdrawals, you get 3% on £9,999.99 and 0.75% on anything above that. If you make any withdrawals, the interest on the entire balance is 0.75% for the entire month of the withdrawal.

Important amendment to the above: If you make any withdrawals, the interest on the entire balance will be 0.50% rather than 0.75% for the entire month of the withdrawal.

Sensory

phillw said:

Daliah said:
Provided you make no withdrawals, you get 3% on £9,999.99 and 0.75% on anything above that. If you make any withdrawals, the interest on the entire balance is 0.75% for the entire month of the withdrawal.

It clearly says 2.96% on up to and including £10000, not £9,999.99.

If you deposit £10000 then after a month you are earning interest at 2.96% which will only compound at 0.75%. Therefore the table is misleading as you cannot get 3% AER on a deposit of £10,000.

In terms of comparing the bonus saver to an account without these limitations (and AER exists to allow you to easily compare accounts with different terms and conditions), depositing £10000 for a year gives around 2.97% AER overall.

I think HSBC are violating the AER code as the bonus shouldn't even be included, which would make the advertising of this account misleading:

7 A key element of the AER Code is the requirement to display an AER on advertisements. AER is a notional rate which illustrates the gross interest rate (excluding any conditional bonus payable) as if paid and compounded on an annual basis. The purpose of the AER is to provide an easy method for customers to compare interest rates on products so that they can shop around for the best deal. AER is the accepted market standard methodology for comparing the expected returns for cash savings products

Not even bothering to include the example of a £10000 deposit is an indication they didn't want to clarify the situation.

Mathematically, the problem isn't even the conditional bonus interest. Assuming 3% and 0.75% were the standard AER rates, the problem is crediting interest monthly coupled with tiered interest rates based on balances. AER relies on monthly interest compounding at the same gross rate to provide an accurate equivalent to annual interest.

Gross figures can be applied consistently as they are the actual figures used in calculations per credit, so 2.96% and 0.75% are correct for their respective balance tiers (up to 10K and over 10K). Balances up to 10K compound at 2.96%, and everything above compounds at 0.75%; this results in variable AER figures, starting from 3% and gradually decreasing as balances increase.

3% AER for balances up to £9,708.73.
3% to 2.97% AER for balances from £9,708.74 and £10,000.

For balances above £10K, the AER figure is 2.97% for the first 10K, then 0.75% above, which results in example figures for single balances like:

2.8466% for £10,590 (Al Rayan's AER is 2.8465%).
2.23% for £15,000.
1.86% for £20,000.

Their estimated balance for a £20,000 deposit after 12 months is incorrect. Ignoring monthly rounding (so give or take up to 12 pence), the result is £20,372.28 -- not the cleaner £20,375.00 (if interest were paid annually).

(As a side note, banks like Atom specifically ignore monthly rounding by keeping track of fractional pennies between months, and once those fractional pennies add up to whole ones, they're credited as interest.)

phillw

Sensory said:
Mathematically, the problem isn't even the conditional bonus interest. 

The bonus is the largest violation of the AER code "gross interest rate (excluding any conditional bonus payable)". Within the rules, I think it should be 0.5% AER.

I agree the £20,000 deposit doesn't give me confidence that either they, or I, have no idea how to calculate the interest on this account.