This means that for accounts of £3,000 after 12 months, the previous £16.25 in interest would become £81.25 in interest.

The rate can be applied on savings from £25 up to £250 per month, HSBC said, with customers getting a lump sum at the end of 12 months.

ISA interest on the rise

HSBC also said that its one-year fixed rate saver account will increase from 2.25% to 3.50% and that the interest rate on ISA products will be 0.90% higher.

The move by HSBC follows recent announcements by lenders including the Leeds Building Society and the Nationwide Building Society on similar savings rate increases starting on Thursday.

The upward trend comes shortly after the Bank of England raised its lending rates by 0.75 percentage points to 3% in an effort to slow inflation as the UK slid into recession.  The move spurred lenders to charge more to borrowers but also to raise what they would pay to savers.

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‘Increasing ALL Regular Savers to 5%’

Tom Wolfenden, HSBC UK’s head of retail, said: “While the cost of living may be increasing, emergencies will still happen, so having a small safety net that will help cover you in the event of something expected happening can be extremely important.

“To help encourage a savings habit and to help customers make their money grow, we are increasing the interest rate on our Regular Saver, to 5%. The rate is fixed for the year from the time of opening, however at this time to help with the increased cost of living and to support those who currently have a Regular Saver open, we are increasing ALL current Regular Saver accounts to the new rate of 5% with effect from 1st December.”

Customers do not need to take any action, he added, saying accounts would be “updated automatically”.