HSBC and First Direct to boost savings rates as pressure mounts on banks to pass on betters rates to savers

If you’ve been looking for the best savings accounts, then you may have felt let down by the high street banks who have recently come under pressure for not passing on interest rate rises to savers as fast as they do to borrowers.

As pressure mounts, banking giants HSBC and First Direct have said that they will today (30 June) increase the rates on saving accounts to give savers more on their cash holdings. 

Chancellor Jeremy Hunt recently said that while banks had been quick to pass on higher rates to mortgage holders they had left savers behind and urged banks to do better.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

The lowest rates are on easy access savings accounts, though some fixed accounts have seen better increases.

The Financial Conduct Authority has also stepped in and is due to report by the end of July on how the savings market was supporting savers to benefit from higher interest rates.

While some savers may have savings inertia, now is the time to shop around for a better rate and move your cash.

Kalpana Fitzpatrick, MoneyWeek’s digital editor, and author of Invest Now, says: “Some savers are holding onto cash in accounts paying as little as 0.25% - the base rate is 5%. So, if your cash is languishing in accounts paying little or nothing, move it. It takes minutes to open a savings account; the best ones aren’t necessarily with the high street giants, so take a look as it is just as important to make your cash savings work hard as your investments do.”

If you bank with HSBC or First Direct, we look at what they are offering and how it stacks up against other savings rates.

How much is HSBC increasing its rates by?

Customers with HSBC accounts will see some savings interest rates increase from today - June 30. 

If you have an online bonus saver, you’ll be able to earn 4% in interest on up to £50,000 - previously, this rate was limited to holding of up to £10,000, and anything between £10,000 and £50,000 would only earn 2.3%. This means you can potentially earn up to around £680 more annually in interest.

HSBS is also increasing the rate on its instant access premier savings account by 0.4%, taking it to 2%, and its flexible saver account, pushing the rate to 1.75%. 

The bank currently offers a switching bonus of £200, but is due to remove them on 3 July. 

How much is First Direct increasing its rates by?

First Direct, part of the HSBC group, is also bumping up its rates with its fixed-rate saver account going up from 4.6% to 5%.

It said it plans to pass on further rate increases later this year.

What are the best savings rates on offer right now?

While the rate increases from HSBC is a move in the right direction, there are better rates if you shop around.

MoneyWeek has been tracking interest rates on different types of savings accounts for some months now and some of the rates are the best we have seen in 15 years. Here’s what is on offer right now.

• The top easy access account, from Chip, from 4.21%. Existing customers can get 7% from First Direct, fixed for 12 months. 
• The best one-year fixed account from SmartSave offers 5.86%, while the best two-year fixed account, also from SmartSave offers 5.86%. 

Savers must act fast to get the best deal on savings accounts should act fast, as these can get pulled from the market when the bank reaches it capacity.