HSBC Bank Account pays 6% on your cash

HSBC has launched a new promotion on its Bank Account, which allows account holders to earn a market-leading rate on their money

When I was at school I worked at Next in my spare time so, for me, the phrase ‘January sale’ conjures up images of people desperately rifling through racks of clothes, barging each other out of the way in order to nab that £10 top.

But it’s not just the high street retailers that are at it – even banks now launch January sales, with enticing offers on select deals. And HSBC’s sale has included the launch of a current account paying an amazing fixed rate of 6% on balances!

Banking with HSBC

As part of its January Sale, HSBC has revamped its current accounts, and now has a number of extremely attractive deals.

My favourite is the simple Bank Account. Whether you are a new or eligible existing customer, you can secure a whopping rate of 6% interest fixed on balances up to £2,500. However, in order to secure the deal, you will need to get your switching forms over to HSBC by 5pm on the 31st January.

You can also get this rate if you go with the HSBC Advance account or the HSBC Premier account.

With the Advance account not only will you get 6% on your money, but also life insurance cover up to £3,000, worldwide travel insurance, roadside breakdown assistance and exclusive deals on a rate of products and services. It will set you back £9.95 for the first 12 months, and £12.95 thereafter though. However, I’m not a big fan of packaged accounts like this, and the FSA has its own concerns too, as we highlighted in The new bank mis-selling scandal.

With the Premier Account you’ll get wealth management advice from an HSBC IFA, family banking accounts and all sorts of other personal services. However, to qualify, you’ll need to meet any of the following criteria:

Joint savings or investments of at least £50,000 with HSBC in the UK.
An annual income of at least £100,000 paid into your HSBC Premier Account, as well as either: 1) a mortgage of at least £300,000 with HSBC or 2) a product taken out from the bank’s independent financial advisory service, excluding mortgage-related insurance.

In other words, it's not an account for everyone.

Not a long-term answer

The HSBC Bank Account is a pretty incredible deal for the vast majority of us. However, it does have one rather significant fault to be aware of.

That enticing 6% rate does not last forever. Indeed, it’s gone after 12 months. And what’s more, the rate doesn't just fall to something smaller, but still acceptable, like 2% say.

No, at the end of the year, that rate of interest falls to a bit fat zero. So if you want to continue earning any interest at all, let alone a market-leading rate, on your cash, you’ll need to switch accounts again.

The best of the rest

The next highest rate on offer comes from an old favourite of lovemoney.com readers, Santander, with its Preferred current account. You get a rate of 5% on your cash (again only for 12 months), but you can also nab a free overdraft for the first year too, of up to £5,000 (depending on your circumstances).

What’s more, Santander has extended the welcome bonus of £100 for another couple of months – that’s cash you get simply for signing up to the Preferred account and switching over your direct debits. Indeed, you could get a bigger welcoming bonus if you’re already a Santander customer - £200 if you have a Santander mortgage, or £300 if you have a mortgage and at least £10,000 in savings with the bank.

Of course, banking with Santander is unlikely to be a stress-free experience, with the bank notorious for its dreadful customer service. That said, I banked with Santander for a little over a year and had no complaints, so things are at least improving.

After that, the rates on offer fall off sharply. You can get 3% from the Lloyds Classic Account with Vantage, so long as you maintain a balance of between £3,000 and £5,000. Otherwise your rate will be 1.5% for balances under £1,000, or 2% for balances between £1,000 and £3,000.

Get £60 a year from an empty current account!

But even if you don’t tend to have much cash in your current account by the month’s end, you can still secure a decent return from your current account, thanks to the very clever Halifax Reward Account.

So long as you pay in £1,000 each month, then you shall receive a lovely monthly reward of £5. That’s irrespective of your account’s balance. So you could finish the account £1,000 in credit, or even in your overdraft, and you’ll still get that £5.

What’s more, you can currently secure a £100 welcome bonus as soon as you apply for the account! For more on this, check out Halifax Reward Account paying £100 cashback.