Savers might resist HSBC's 8% temptation

Just when you thought the battle of the high street banks could be no bloodier, HSBC has struck with a new regular saver account paying 8 per cent. When equities have struggled to match such returns in recent years, it's a wonder that a bank can afford to offer this kind of return to customers without them bearing any of the risk.

Just when you thought the battle of the high street banks could be no bloodier, HSBC has struck with a new regular saver account paying 8 per cent. When equities have struggled to match such returns in recent years, it's a wonder that a bank can afford to offer this kind of return to customers without them bearing any of the risk.

But to make it worth its while, HSBC has attached strings. Launching tomorrow, the account will pay what is today the highest savings rate available, but only for 12 months. The 8 per cent rate then drops typically to around 2.85 per cent.

You can't pay in more than £250 a month, are allowed to save no more than £3,000 over the year and forbidden from withdrawals for the first year.

And, here's the sneaky bit, you can apply for this savings deal only if you're already an existing current account holder, or if you switch your current account to HSBC, where any credit earns a miserly 0.1 per cent.

Rachel Thrussell, from financial analyst Moneyfacts, says you need to weigh the benefits of an 8 per cent savings account coupled to a "current account paying 0.1 per cent on balances in credit and charging 14.8 per cent on balances in the red. Think about whether you will be better off after 12 months - or whether you'll have to go through the hassle of transferring your current account again."

In the scrum for new current-account customers who might be open to cross-selling of other products, HSBC's hybrid offer may well spark similar deals elsewhere. The market for regular savings accounts was formerly led by Halifax, with its 7 per cent deal, but HSBC's offering has overshadowed this.

"HSBC's account does pose some healthy competition," says Ben Willis from independent financial adviser Chartwell. "Halifax is one of the main competitors, but unlike HSBC, it does not offer penalty-free contribution holidays."

In this respect, the HSBC account has flexibility in its favour. You can vary the monthly payment (which must be between £25 and £250) and can manage your money by phone or internet, or at a bank branch. If you need cash urgently, payments can be suspended for a month without charge.

Alternatively, you could consider the Derbyshire building society's regular savings account, paying 5.85 per cent a year, into which you can invest between £10 and £1,000 a month.