Loyalty to HSBC now pays 4p per week as it cuts the returns for its cash Isa savers to just 0.02% – This is Money

by MoneySaverExpert

Building societies are rewarding longstanding members with more attractive rates and prizes – while loyalty at big High Street banks pays as little as 4p a week on £20,000 in savings. 

The big four building societies hold £367billion between them and have either launched new accounts, raised interest rates or set up a monthly draw. 

Yet international bank HSBC has announced it will cut the returns for its cash Isa savers from 0.1pc to just 0.02pc later this month. This would pay loyal Isa savers who invest with the bank each year just £2 a year extra interest – or 4p a week – on the full £20,000 Isa allowance. 

HSBC has announced it will cut the returns for its cash Isa savers from 0.1pc to just 0.02pc later this month

HSBC has announced it will cut the returns for its cash Isa savers from 0.1pc to just 0.02pc later this month

They will earn just 0.01 pc more than those who have money in its Loyalty Cash Isa but don’t add to their account. It comes after the Financial Conduct Authority (FCA) dropped plans to better protect loyal savers from rip-off rates. The regulator found just one in ten easy-access account holders switched to a better deal — meaning most are earning lower rates. 

The FCA proposed introducing a Single Easy Access Rate. Under the plan, banks would set their own, and crucially, it would be the same for all their customers. But the reforms bit the dust last year as the regulator focused on the coronavirus. 

The average rate paid by banks on easy-access accounts is 0.12pc against a higher 0.19pc at building societies, research from website Savings Champion shows. Anna Bowes, Savings Champion director, says: ‘This gap would be even wider if we just looked at large players which hold most of our cash. It’s always worth checking with your local building society to see what they offer a local or loyal customer. It is likely to be more than a High Street bank.’ 

This is because the big banks along with National Savings & Investments (NS&I) pay an average of 0.01pc. But at building societies you can earn up to 0.5pc as a loyal customer. Yorkshire BS, the third-largest society, last month, raised the rate on its easy-access accounts, opened before January 30 this year, to 0.5pc. 

It is about the same as the top accounts — such as the popular Marcus account from Goldman Sachs — offer new savers. Last month Coventry BS, the second l­argest, launched its Loyalty 21 Day Notice Saver at 0.65 pc. It is only on offer to members who joined on or before January 1, 2020, who are willing to give the society 21 days’ notice on 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 you earn a guaranteed 3.5pc for the year. So £250 saved every month becomes £3,056 in a year. 

Nationwide, the largest society, has introduced a Member Prize Draw giving £1million in 8,008 prizes each month for a year ranging from £100 to £100,000. The first draw will be held on September 14. Eleanor Williams, finance expert at data firm Moneyfacts, says: ‘Savers may find loyalty does not always pay. Top rates often come from less familiar brands.’ 

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