Major bank offering market-leading savings account with 7% interest – but there’s a catch
A MAJOR bank has launched a market-leading savings account with 7% interest – but there’s one big catch.
First Direct, part of HSBC, is to increase the interest rate on its Regular Saver account from 3.5%.
The upped rate is available from tomorrow, December 1, but customers can sign up for the account now and the rate will be automatically increased from that date.
However, there’s a major catch – customers who want to sign up have to also have a First Direct Current Account.
That means you might have to switch bank or building society.
If you are switching to a First Direct current account, the bank currently has a £175 bonus for new customers.
Read more in Money
You’ll have to deposit £1,000 within three months of opening the account though.
Those who do sign up to the Regular Saver will get the 7% figure fixed for 12 months.
They can deposit between £25 and £300 a month into the account, up to £3,600 a year.
That means if you had the full £3,600 in your account at the end of the year, you’d make around £135 in interest, based on a MoneySavingExpert calculator.
Most read in Money
Customers can change their monthly standing order amount at any time.
However, if they close the account before the end of the 12-month period, they’ll get a lower interest rate on the total sum.
Customers also can’t make partial withdrawals in the 12-month period.
That means taking just a portion of the money you’ve saved up.
Andrew Hagger, personal finance expert at Moneycomms.co.uk. said: “It’s good to see the big banks offering attractive regular saver rates to encourage people to adopt the savings habit.
“The new deals are excellent but many people won’t be able to take full advantage of these offers as their spare money is needed to cover higher food, fuel and energy costs.”
How can I sign up for the account?
If you’re an existing First Direct Current Account holder, you can sign up to the Regular Saver Account by logging into your online banking.
If you don’t have access to the internet, you can call 03456 100 100.
If you’re new to the bank, you’ll have to sign up for a Current Account first.
You can make the switch through the Current Account Switching Service.
Once your application is accepted, your new bank will tell your old one that you’re moving.
It will switch over any direct debits so you don’t miss important payments or outgoings.
It’s usually done within seven days.
How does the account compare to others?
The new 7% rate on First Direct’s Regular Saver account makes it the most attractive on the market in terms of interest rates.
Lloyds Bank offers its Club Lloyds Monthly Saver at 5.25% while the HSBC Regular Saver will be at a 5% interest rate from December 1.
NatWest offers customers a Digital Regular Saver for 5.12% too.
The Lloyds Monthly Saver is only available to Club Lloyds current account holders who opened the account more than 12 months ago.
You can add between £25 and £400 into the account each month, so £100 more than the First Direct Regular Saver.
Meanwhile, customers opting for the HSBC Regular Saver can deposit between £25 to £250 into the account each month.
However, you can’t make any partial withdrawals from the account in the first 12 months.
Customers picking the NatWest Digital Regular Saver account can deposit between £1 and £150 each month up to 12 months.
The 5.12% interest rate only applies to the first £1,000 in the account.
After that, you get 1% interest between £1,001 to £5,000 and 0.5% over £5,000.