A simples guide

HSBC Cash ISA

HSBC likes to think of itself as the ‘world’s local bank’ and with 37 million customers across 70 countries, it’s not an idle boast. Being a big bank means having lots of products and services, which can be confusing. But HSBC’s ISA offering is nice and straightforward – it offers two cash ISAs  – a help-to-buy ISA and a loyalty cash ISA – as well as a stocks and shares ISA.

How does an ISA work?

All cash ISAs work in a similar way to a savings account, and those from HSBC are no different. 

An ISA is an ‘individual savings account’. You can open one if you’re over 16 (18 for some products, including stocks and shares ISAs) and live in the UK. Any interest you earn on money you put in an ISA is tax-free, so it’s a worthwhile investment to make.

If you’re eligible to open an ISA, there’s a limit to how much money you can put in. This limit changes every financial year; for 2017/2018 the limit is £20,000. You can have more than one ISA, but you can’t go over your allowance in any one financial year 

Standard savings accounts, on the other hand, are liable to tax. If you’re a lower-rate taxpayer, you can earn up to £1,000 interest tax free; any interest you earn after that is subject to tax. For higher-rate taxpayers, the allowance is £500. If you earn £17,000 or less each year, you won’t pay any tax on your savings interest at all.

Tell me more about HSBC ISAs

HSBC offers a help-to-buy ISA, which is a government-backed scheme aimed at helping first-time home buyers. In the first month, you can deposit up to £1,000 to kick-start your savings; after that, you can save up to £200 per month. When you’re ready to buy your house, the conveyancer claims your bonus, which is paid by the government. For every £200 you save, the government adds £50. The maximum bonus that can be paid is £3,000, and that’s on a savings balance of £12,000. You can continue putting money into the ISA after you’ve reached £12,000, until you’re ready to buy your first home. You can use a help-to-buy ISA to buy a house costing up to £250,000 outside London and up to £450,000 in some areas of London.

HSBC also offers a loyalty cash ISA. To qualify, you need to be an HSBC customer, and the interest rate you’ll get will depend on the type of account you hold with them. You’ll get a bonus ‘loyalty’ rate for 12 months after making a deposit and that loyalty rate will start again every time you put money in. So, as long as you deposit money every 12 months, you’ll get the preferential rate continuously.

Is a HSBC ISA right for me?

You should always consider as many options as you can before committing to a savings product. The whole point of an ISA is to get as much interest as possible and there’s no point putting your cash somewhere where it won’t grow. So, start comparing cash ISAs and look after your money so it can look after you.

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All information correct as of 31 March 2017.