HSBC offers only a few term options for its certificates of deposit (CDs). This differs from other banks, some of which have 10 or more term options. Whether your goals are short-term or long-term savings, you can find banks with that offer more choices.
The interest rates from HSBC are higher than some banks, particularly for its six-month option. However, there are plenty of banks that are more competitive on longer CDs and offer some of the best CD rates out there. The minimum balance for a CD, $1,000, is not out of line but could be a bit high for the average customer.
Here’s a guide to whether you should consider a CD with HSBC instead of choosing an account with another bank.
|CD Length||Minimum Deposit||APY|
|6 Month||$1,000||0.75%||Compare CD Rates|
|12 Month||$1,000||0.95%||Compare CD Rates|
|24 Month||$1,000||1.30%||Compare CD Rates|
Overview of HSBC CDs
HSBC (known officially as The Hongkong and Shanghai Banking Corporation Limited) has entered the online banking world with a few CD options. There are three options to choose from, with term lengths of six months, 12 months and 24 months. While these options will be enough for many customers, other banks do offer more extensive choices. There is also a minimum deposit of $1,000 for all HSBC CDs. This minimum is relatively high.
Withdrawing funds early from a CD will result in a penalty. HSBC will collect the penalty from the interest your CD has earned. If you have not earned enough interest to cover the penalty, it will come out of your principal. The exact penalty amount will depend on the length of your CD term. If your term is between seven days and one year, you will pay a penalty of 30 days’ interest. If your CD term is more than one year but less than two years, the penalty is 90 days’ interest. The early withdrawal penalty for any CD of two years or longer is 180 days’ interest.
When your HSBC CD reaches maturity, you have a few options for your next move. First off, HSBC will send you a notice before your CD reaches its maturity date. This notice will help you plan what you want to do with your money.
Once your CD reaches maturity, the default action is for HSBC to put your funds in another CD of the same term length. The interest rate for the new CD will depend on the current rates available and not the rate of your previous CD. You will also have a 10-day grace period after the CD’s maturity date when you can withdraw funds, add funds and change your CD term. You will not pay penalties for any withdrawals you make during this grace period.
How Much You Earn With HSBC CDs Over Time
In the most basic terms, you will earn more interest with HSBC’s longer CD terms. So even though the six-month option has the most competitive rates, you should use the longer-term CDs if you want to invest for more than six months.
You will also earn more by contributing more. For example, you will only earn a few dollars if you contribute the $1,000 minimum to the six-month CD. Your return grows significantly the more cash you put in.
The table below shows what your total balance could look like depending on your initial deposit and your term length.
|Initial Deposit||6 Month CD||12 Month CD||24 Month CD|
How HSBC CD Rates Compare to Other Banks’
HSBC could be a good choice if you are looking for a short-term CD. The bank’s six-month CD option offers a competitive interest rate. CDs of longer than six months are less competitive. For example, Capital One and Ally Bank offer one-year and two- year CDs with interest rates that are about double the rates of HSBC. It is worth noting though that HSBC’s rates are competitive with other large banks, such as TD Bank.
|CD Account||HSBC||TD Bank||Capital One||Ally Bank|
|6 Month||0.75%||0.15% - 0.25%||2.05%||1.75%|
|12 Month||0.95%||0.30% - 0.50%||2.30%||1.85%|
|24 Month||1.30%||0.35% - 0.55%||2.65%||2.25%|
Should You Get an HSBC CD Account?
You should consider a CD with HSBC if you are already a customer or if you are looking for a short-term CD. In particular, the six-month option has a competitive rate. Anyone looking to invest for at least one year should consider other banks. As mentioned earlier, you can find rates almost twice as high. For help finding those rates, be sure to read our list of the top CD rates.
Another consideration with HSBC is the minimum deposit of $1,000. This is a high minimum and you can certainly find banks that require less or don’t have a minimum at all. HSBC also does not have any way to change your CD once you open it. Some banks have special plans that allow you to change your interest rate or contribute more funds during your CD term. If you are looking for high interest rates but want more flexibility with your money, make sure to consider a high-interest savings account instead.