Compare HSBC ISAs

Who are HSBC Bank?

HSBC Bank are an international investment bank and financial services company. They operate in over 60 countries across the world and are headquartered in London, UK.

The company’s history traces back to the 1860s, originally founded as The Hongkong and Shanghai Banking Corporation.

With a major banking presence in the UK, they provide various financial services to business and retail customers including insurance products, loans, mortgages and savings accounts.

Among the savings and investments accounts they offer are Cash ISAs and Stocks and Shares ISAs, which allow investors to protect up to £20,000 of savings from tax per year.

What is an ISA account?

An ISA account is a tax-efficient, personal savings and investment account.

The ISA Basics:

• HMRC allows you to contribute up to £20,000 to ISAs in the current tax year.
• Your ISA allowance refreshes each year.
• There are two main types of ISAs: Cash ISAs and Stocks and Shares ISAs.
• The interest earned in a Cash ISA is free from income tax.
• The dividends from Stocks and Shares ISA are free from income tax.
• You don’t have to pay capital gains tax on the growth of your Stocks and Shares ISA.

What is the difference between a Cash ISA and a Stocks and Shares ISA?

The main difference between Cash ISAs and Stocks and Shares ISAs is what your money invests in within your ISA.

Cash ISAs are savings accounts that generate interest on your cash savings, whereas Stocks and Shares ISAs are investment accounts that allow you to invest in the stock market.

Cash ISA Basics:

• Your savings cannot go down in value.
• Earn either a fixed or variable rate of interest on your cash.
• Fixed ISA interest rates are higher, but you must commit to a term of 1 to 5 years without withdrawing.
• Variable ISA interest rates are lower and can fluctuate, but you can usually withdraw freely.
• If you withdraw early from a fixed Cash ISA you lose a portion of your earned interest or you are charged a fee.
• Interest rates in the UK have been low for many years, so the return potential on your savings is very limited.

Stocks and Shares ISA Basics:

• Invest in the stock market via shares, funds, ETFs and other investment types.
• You can pick your investments yourself, or invest in a ready-made ISA portfolio managed by investment professionals (usually more expensive than DIY investing).
• You pay annual charges to your Stocks and Shares ISA provider as well as any fund managers you may invest with.
• The potential for returns on your investment is much higher compared to a Cash ISA, but the value can go down as well as up, so you could get back less than what you originally invested.
• You can usually withdraw free of charge from a Stocks and Shares ISA after selling down your investments, and the process normally takes roughly one week.

What type of Cash ISA does HSBC offer?

HSBC currently only offer a variable-rate Cash ISA that gives you flexible access - they don’t provide any fixed-rate ISAs at present.

HSBC’s variable-rate Cash ISA is called their Loyalty Cash ISA, and it offers a better interest rate if you have topped up within the last 12 months.

To keep getting the best interest rates you need to keep topping up your account each year. Otherwise, after 12 months your interest rate will revert to HSBC’s lower standard interest rate.

Withdrawals:

You a free to withdraw at any time from your HSBC Cash ISA with no charge, and you'll keep all of your earned interest.

Transfers:

You can transfer your existing Cash ISAs and Stocks and Shares ISAs to an HSBC Cash ISA.

ISA transfers don’t count towards your ISA allowance, so you can transfer as many ISAs as you like in one tax year without worrying about the £20,000 annual allowance.

Make sure to check with your existing ISA provider whether you’ll be charged for transferring.

What type of Stocks and Shares ISA does HSBC provide?

HSBC’s Stocks and Shares ISA has two main investment types: self-select and ready-made portfolios.

HSBC ready-made ISA portfolios:

• Choose a ready-made portfolio, managed by HSBC’s investment professionals
• Pick a risk level that suits you, from cautious and defensive portfolios to adventurous and higher risk options
• Have the choice of a sustainable portfolio that has an ethical and environmentally conscious investment strategy
• Benefit from an instantly diversified ISA portfolio, managed daily by professionals
• You’ll pay higher charges compared to if you pick funds and shares yourself

HSBC self-select or share dealing ISA:

• More suitable for experienced investors
• Pick shares or funds yourself from a wide range of options
• Buying and selling shares incurs dealing charges
• Trading managed funds (OEICs and Unit Trusts) is free
• You usually pay lower charges than a ready-made ISA, depending on the makeup of your own specific portfolio

How do I open an HSBC ISA?

Once you’ve decided what type of ISA you want to invest in, the easiest way to open your account is online.

You must be:

1. A UK resident
2. At least 16 years old
3. You may need to open an HSBC online banking account for some ISA accounts

Once you have created your account, you can choose to save with a lump sum payment via debit card, or with a regular contribution via direct debit.