Loyalty to HSBC now pays 4p per week as it cuts returns for its cash Isa savers to just 0.02%
- The move comes after the Financial Conduct Authority (FCA) dropped plans to better protect loyal savers from scam rates
- The regulator found that only one in ten easily accessible account holders switched to a better deal – meaning most earn lower rates
Building societies reward existing members with more attractive rates and prices – while loyalty at major High Street banks pays just 4p a week on £20,000 in savings.
The four major building societies have put together £367 billion and have either launched new accounts, raised interest rates or set up a monthly draw.
Still, international bank HSBC has announced it will cut returns for its cash Isa savers from 0.1 percent to just 0.02 percent later this month. This would pay loyal Isa savers who invest in the bank every year as little as £2 a year in extra interest – or 4p a week – on the full £20,000 Isa benefit.
HSBC has announced it will cut returns for its cash Isa savers from 0.1 percent to just 0.02 percent later this month.
They will earn only 0.01 pc more than those who have money in their Loyalty Cash Isa but add nothing to their account. It comes after the Financial Conduct Authority (FCA) dropped plans to better protect loyal savers from scam rates. The regulator found that only one in ten easily accessible account holders switched to a better deal, meaning most earn lower rates.
The FCA suggested introducing a Single Easy Access Rate. Under the plan, banks would define their own institutions, and crucially, it would be the same for all their customers. But the reforms bit the dust last year when the regulator focused on the coronavirus.
The average rate paid by banks on easily accessible accounts is 0.12 pc. against a higher 0.19 pc for building societies, according to research by the website Savings Champion. Anna Bowes, director of Savings Champion, says: “This gap would be even wider if we only looked at the big players who control most of our money. It is always worth checking with your local construction company to see what they offer a local or loyal customer. It’s probably more than a High Street bank.’
This is because the large banks, together with National Savings & Investments (NS&I), pay an average of 0.01 pc. But as a loyal customer, you can buy up to 0.5 pc from building associations. to earn. Yorkshire BS, the third largest carrier, last month raised interest rates on its easily accessible accounts opened before January 30 this year to 0.5 pc.
It’s about the same as the top accounts — like Goldman Sachs’ popular Marcus account — offer new depositors. Last month, Coventry BS, the second largest, launched its Loyalty 21 Day Notice Saver at 0.65 pc. It is only offered to members who joined on or before January 1, 2020 and who are willing to notify the association 21 days in advance of withdrawals.
Skipton BS launched its Existing Member Regular Saver for those who have been members since before August 16 this year. Save up to £250 a month and earn a guaranteed 3.5 percent for the year. So $250 saved each month becomes $3,056 in a year.
Nationwide, the largest association, has launched a member prize draw that gives £1 million worth of 8,008 prizes each month for a year, ranging from £100 to £100,000. The first draw will take place on September 14. Eleanor Williams, financial expert at data company Moneyfacts, says: “Savers may find that loyalty doesn’t always pay off. Top rates often come from lesser-known brands.’