HSBC’s recent announcement was nothing less than a surprise for its loyal clients who have a regular savings account. Together with its internet-based bank, First Direct, HSBC has announced that interest rates on regular savings accounts will now be reduced to 2.75% from the previous 5%.
Following HSBC’s rate cut, Mark and Spencer Financial Services remains the only bank still offering interest rates of up to 5%. The M&S Bank has also been operated by HSBC since 2004, when the largest banking and financial services organization (HSBC) bought it.
The Nationwide Building Society was also in the league of those who offered 5% interest rates at the beginning of the year. However, in the first quarter of 2019, it also announced that interest rates would be cut.
2.75% is the lowest interest rate offered for regular savings accounts
The 2.75% interest rates announced by HSBC are the lowest rates currently available in the market. The next best are offered by Virgin Money (digital), Kent Reliance on a branch by branch basis and the Saffron Building Society for postal accounts. The interest rates of these companies are unchanged at 3%.
The 3% interest rates offered by these organisations and HSBC’s newly announced 2.75% interest rates are significantly lower than First Direct’s 6% interest rates for regular savings accounts which were in place until three years ago (2016).
HSBC offers regular savings accounts for clients who can afford to contribute to their savings on a regular basis while maintaining a current account with the bank. According to financial experts, such accounts are perfect for people who are new to saving and are trying to build them from scratch. Customers are required to make a regular monthly contribution to the savings account, which entitles them to interest towards the end of the year.
While regular savings accounts have gained in popularity in recent years, the recent interest rate cut means that such accounts are expected to gradually lose their charm, analysts say.
HSBC share performance on Friday
The movement in HSBC shares on Friday 18 October 2019 was reportedly minimal. The share opened at 38.67 this morning. After a high for the day of 38.84, it fell back to the 38.76 level at which it is currently trading. The opening level marked the low point of the HSBC share on Friday.