Focus on: Current account paying 6% in-credit interest

Published:
22 December 2011
Topic:
News,Money,Current Accounts,Product review

Most of us are used to our banks paying paltry rates of interest on any money held in our current accounts, but HSBC has bucked this trend by offering a massive 6% to people switching their accounts.

The bank will pay a market-leading 6% in-credit interest rate on balances up to £2,500 for customers who move their current account to HSBC, making it a great option for those who usually stay in the black. We look at the offer in more detail to see if it could be right for you...

What's the deal?

You will earn the 6% in-credit interest rate provided you switch to a Bank account, Advance account or a Premier account with HSBC before January 31, 2012. Once this has been done, you must submit a "Switching your account to HSBC" form by February 29, 2012.

Interest on the account is payable monthly rather than annually, which is appealing for anyone looking to supplement their income.

Any catches?

When you move your bank account over to HSBC you must agree to switch a minimum of two direct debits or standing orders and deposit £500 a month into the account. That means it won't be suitable for anyone without a regular income.

You can also only qualify for the offer on the condition that you have never previously used the HSBC switching service, or if you already have two or more direct debits set up on any of their accounts. You also won't be eligible if you've deposited more than £500 every month into an HSBC account in the last three months.

Remember too that the 6% rate is only payable for 12 months from the date of account opening, so if you want to continue to earn a high rate of interest on your money after this you will need to move it elsewhere.

Verdict

With the Bank of England base rate still languishing at 0.5%, being able earn interest 12 times higher than this on your current account savings is undeniably attractive.

Remember, however, that you should look carefully at everything else the accounts offer, as there is no point switching if it won't suit your needs.

Top tip

While most current accounts pay dismal rates of interest when you are in the black, HSBC isn't the only bank to pay competitive returns when you are in credit.

Santander's Preferred Current Account, for example, pays 5% on balances up to £2,500 for a year, and you also get £100 cashback when you switch your main account to Santander. You must pay at least £1,000 into your account each month to qualify for this offer.

The Santander account is also a great option if you tend to use your overdraft, as it offers a 0% overdraft for the first 12 months.

Another option worth a look is the Halifax Reward Current account. This pays you £5 a month whether in you are in credit or overdrawn, provided you pay in £1,000 a month. There is also a fee-free overdraft for three months for switchers, but after that you will be charged £1 a day when you are overdrawn, rising to £2 a day for overdrafts over £2,500.

Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct

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About This Author

Melanie Wright

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Financial journalist

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