HSBC bonus saver

Sappy123

Hi all, a quick question. I have opened the HSBC bonus saver with 3% on balances up to £10k. I have £10k in it now but am intrigued by how compounding interest will work. Any value above £10k earns 0.65% so by keeping the full £10k in the account am I limiting my ability for the internet to compound as, any interest will be above the £10k limit?

Am I best splitting the cash, say leaving £5k where is is and putting £5k elsewhere or am I overthinking.

Thank you in advance.

ColdIron

You're probably over thinking it. It's probably easiest to skim off the interest into another decent account

£10,000 at 3% would give you £300 pa. If it were possible to compound at 3% in the bonus saver that £300 would earn £9 but as you would be drip feeding it over a year it's probably closer to £4.50

If you skim off the interest to, say, Marcus at 2.25% that would be about £3.38 so £1.12 difference over the year

herebeme

You can’t skim interest. You lose the bonus if you do withdrawals. There is interest paid on amounts over 10k, just less. 

ColdIron

Apologies, I didn't check the conditions of the account, disregard my post

wmb194

It might depend on how long you plan to keep it there but if for a year you could deposit say, c.£9,700 and let it compound. After a year the balance will be about £10,000.

Bridlington1

YBS will be raising the rate of their Rainy Day saver to 3% (up to £5k) on 9/12/22 so if you're going to split the money, this account may be worth a look at.

Sensory

Above £10K, the rate is 1.4%; the rate is only 0.65% if you make a withdrawal.

It's not too bad just leaving the whole £10K and allowing it to compound. After the first year, the AER is ~2.99%. Leaving it for a second year would result in an AER of ~2.94%.

Band7

The interest on the £10k principal is roughly £24.75 a month (differs based on number of days in a month), adding up to £297 after 12 months.

On that £297, you only get 1.4% interest, rather than 3%. The difference is negligible, just a couple of pounds.

Sappy123

Thank you all so much, you're the best. Long answer short, I'm overthinking it for a couple of quid!

Thank you.