I opened a mini cash ISA with HSBC in 2002 and haven't touched it since. I've always been very happy with the service on my current account and the easy-to-use internet banking, so it never occurred to me to check on my ISA much. Occasionally I would look on their website to check that the advertised rate was still competitive, but that was it. A month ago however I decided to check my statement for the last tax year and noticed that the interest payment looked a bit low. When I worked it out, I had received only 3.85% interest for the year 2006-07. The Bank of England base rate for that year was between 4.10% and 5.25% so alarm bells started ringing. Eventually I managed to get them to send me a complete breakdown of the interest calculation and it emerged that they routinely use interest rates up to 1% below the base rate - and this is perfectly in accordance with the fine print of their terms and conditions. So, don't be fooled by the headline advertised rate - this is normally the maximum rate and only payable on large balances. For balances less than £9,000 you can expect to receive a considerably lower interest rate than the one advertised - but funnily enough their website makes it surprisingly tricky to find this information! There are dozens of ISAs out there with much better rates and clearer terms, so while I would happily recommend HSBC current accounts, their ISA is not worth the hassle.
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Sep 21st, 2007
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