first direct 1st Account: the £175 Switch, the 7% Saver and the HSBC Rule Behind Both

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first direct pays £175 for switching to its 1st Account, charges no monthly fee, and lends the first £250 of an arranged overdraft at 0% EAR. Figures checked on 12 September 2026 against first direct's own product, rates and charges pages. The account holders who get most out of it are the ones who also open the linked Regular Saver, which pays 7.00% AER fixed for twelve months — the highest advertised savings rate anywhere in the group.

It has been running since one minute past midnight on 1 October 1989, when it took more than a thousand calls in its first twenty-four hours as Britain's first telephone-only bank. Midland Bank built it; HSBC inherited it when it bought Midland in June 1992; and since the ringfencing reorganisation of July 2018 it has been a division of HSBC UK Bank plc, authorised by the Prudential Regulation Authority and regulated by both regulators under Financial Services Register reference 765112. It says it now has over 1.7 million UK customers and it still has no branches at all. In the independent service quality survey every large provider has to publish, dated August 2026, it came joint third of seventeen on 75% and third for online and mobile banking on 78%.

One rule decides whether the £175 is available to you, and it is worth knowing before you click. first direct will not pay it to anyone who has held a first direct product before, and its own wording adds: "Sorry, we also can't offer this to people who have opened an HSBC current account on or after 1 January 2018." A great many people opened one in that period. The account itself is open to any UK resident over 18 who has not been bankrupt or in an IVA in the last six years; it is only the cash that is restricted.

Four things in forty-five days, and the money lands the month after

The £175 is not paid for opening an account. It is paid for completing a checklist, and first direct prints the whole checklist rather than burying it. Within 45 days of the account opening you have to switch to it using the Current Account Switch Service, bringing at least two Direct Debits or standing orders with you; pay in £1,000; make five or more debit card payments; and log on to digital banking at least once.

Two of those are trivial and two are not. The £1,000 is a single deposit rather than a monthly commitment, which makes this a materially easier offer to complete than the ones that demand a pay-in every month for a year. The two Direct Debits are the real work, because they mean moving live commitments rather than opening an account alongside the one you already use. A switch that carries no Direct Debits does not qualify however much money passes through it.

Payment timing is stated plainly: "You'll get the money by the 20th of the following month in which all criteria has been met." Complete everything in late September and the cash arrives by 20 October. The offer is limited to one payment per customer or per joint account, and first direct reserves the right to withdraw it at any time without notice, so a plan built around it a month from now is a plan built on something the bank can remove tomorrow.

Seven per cent, and what seven per cent comes to

The Regular Saver is the reason most people move here, and first direct deserves credit for publishing every number needed to work out what it is worth. The rate is 7.00% AER and gross, fixed for twelve months. You can pay in between £25 and £300 a month by standing order, one payment a month, to a maximum of £3,600 over the year. Interest is calculated daily and credited on the first anniversary. You must already hold the 1st Account to open one.

Now the sum the headline does not do. Pay in the full £300 every month and you finish the year with £3,736.50 — £136.50 of interest on £3,600 of your own money. That is a return of about 3.79% on the total deposited, because only the final month's balance ever earns 7% for any length of time; January's £300 is invested for twelve months, December's for a matter of days. The 7.00% is arithmetically correct and the £136.50 is what reaches your account.

The account is closed to withdrawals for the full term. There are no partial withdrawals: the only way to reach the money early is to close the account, and first direct's terms say that if you do, "we'll only pay you interest at our standard savings account variable rate" — 1.05% AER at the time of checking, so an early exit costs roughly five-sixths of the interest. At maturity the balance sweeps automatically into a sole Savings Account if you hold one, and if you do not, first direct opens a fresh Regular Saver and moves it there. That takes up to five working days.

What first direct does not publish anywhere obvious is what happens in a month you miss the standing order — whether the account continues, whether the missed month can be made up later, or whether the rate survives. The FAQ states only that one payment of between £25 and £300 may be made each month. That needs confirming with first direct directly rather than assumed.

The rest of the savings ladder is a long way below the headline

A current account is a gateway to whatever else the bank sells, and here the drop is steep. The Savings Account pays 1.05% AER on every balance from £1, a rate effective from 12 March 2026. The Cash ISA pays 2.75% AER tax-free on all balances, set on 10 November 2025 and variable since. The Bonus Savings Account pays 3.35% AER on balances up to £50,000 in any month you make no withdrawal and do not close the account, and 1.05% in any month you do.

So the ladder runs 7.00%, 3.35%, 2.75%, 1.05%, and only the first rung is capped at £300 a month. A saver with £20,000 who moves here for the Regular Saver will earn the headline rate on at most £3,600 of it across a year, and 1.05% or 3.35% on the rest unless they keep it elsewhere. The 1st Account itself pays no credit interest on any balance, so money left sitting in the current account earns nothing at all.

The Bonus Savings Account is the one worth reading twice. The bonus is applied month by month rather than annually, so a single withdrawal costs you the bonus for that month only rather than for the year — better than the versions of this product that strip a year's bonus for one touch, and worth knowing before you treat it as untouchable.

Five brands, one compensation limit

Deposit protection rose from £85,000 to £120,000 on 1 December 2025, and to £240,000 on a joint account. Most comparison pages have not caught up. The part that matters more here is who the limit is shared with, because first direct is not a bank in its own right — it is a division of HSBC UK Bank plc, trading under one banking licence with several stablemates.

first direct's own wording is that the limit "is applied to the total of any deposits you have with the following: HSBC UK, HSBC Private Bank, first direct, M&S Bank and M&S Savings and Investments". Five brands, one £120,000. A saver holding £80,000 at HSBC and £80,000 at first direct has £160,000 on deposit and £120,000 of protection, and first direct says anything above the limit across those brands is "unlikely to be covered". Nobody buying a savings account chooses a brand expecting it to share a ceiling with four others, and the structure is not mentioned on the product pages where the decision is made.

The flip side is real and worth saying. Being part of HSBC UK Bank plc means a ringfenced retail bank's balance sheet behind a brand with no branches, and the regulatory apparatus that comes with it: a route to the Financial Ombudsman Service at no cost, and a firm reference number a customer can check. The FCA has published a warning about a cloned site trading as thefirstdirect.com, with an overseas phone number and its own support email address, dated 12 November 2024. The genuine firm's reference is 765112 and its registered address is 1 Centenary Square, Birmingham B1 1HQ. Anyone dealing with the clone has neither ombudsman nor compensation scheme.

What borrowing costs, and what the regulator said about HSBC and arrears

The first £250 of an arranged overdraft is free. Above it the rate is 39.9% EAR variable, which produces a representative rate of 30.5% APR variable on an assumed arranged overdraft of £1,200. first direct publishes worked costs rather than leaving the reader to compute them: borrowing £500 costs £1.63 over seven days, £7.00 over thirty days and £13.99 over sixty. Interest is calculated daily and taken monthly, with at least fourteen days' notice, and pay the money back before 11.45pm and that day carries no charge.

Two details sit outside the headline. From 19 May 2026 first direct stopped charging interest on unarranged overdrafts altogether, though it may still decline payments that would create one — a meaningful change, and one that is not advertised anywhere near as loudly as the £250. And the interest-free £250 does not apply at all to customers with an Offset Mortgage linked to their 1st Account, which is a carve-out affecting exactly the customers most likely to assume they are getting the group's best terms.

The conduct record behind the lending is a matter of public record. On 23 May 2024 the FCA fined HSBC UK Bank plc, HSBC Bank plc and Marks and Spencer Financial Services plc £6,280,100 for failures in the treatment of customers in arrears or financial difficulty between June 2017 and October 2018. The regulator found the banks did not properly consider people's circumstances when payments were missed, did not always assess affordability before agreeing payment plans, and sometimes took disproportionate action. More than 1.5 million customers were put at risk of harm and £185 million of redress was paid. The penalty was reduced by 30% for settlement, from £8,971,600. HSBC identified the problem itself and spent £94 million putting it right, which the FCA took into account — but the period covered is recent enough, and the customer count large enough, that anyone planning to run an overdraft here should know it happened.

Two service records inside one legal entity

Because first direct is a division rather than a separate company, it reports its complaints inside HSBC UK Bank plc's return — but under its own name, which makes a direct comparison possible that is usually impossible. For the half year from 1 January to 30 June 2026, first direct opened 6,076 banking and credit card complaints at a rate of 1.47 per 1,000 accounts, closed 71.1% of them within three working days, and upheld 48.4%. The same entity's combined figure was 73,367 complaints at 2.26 per 1,000, 60.1% closed in three days and 58.8% upheld.

Fewer complaints per account, settled faster, and fewer of them found justified: on its own regulatory return, the branchless division is running a better operation than the branch network it sits inside. The general admin and customer service category was the largest driver on both sides.

The independent survey every large provider must publish, carried out by Ipsos for the Competition and Markets Authority between July 2025 and June 2026 across 17,055 customers, put first direct joint third of seventeen on overall service quality at 75%, alongside Nationwide and behind Monzo on 79% and Starling on 76%. It ranked third for online and mobile banking on 78%. Its weakest showing was overdraft services, fifth on 70%.

Not every product does as well. first direct's investments complaints over the same half year ran at 3.83 per 1,000 client accounts and were upheld 82.5% of the time — four in five decided against the bank, on a book small enough that the absolute number is only 83. Home finance complaints ran at 3.54 per 1,000 balances and were upheld 60.4%. The current account is the strong part of this business, not the whole of it.

Charges that survive the no-fee headline

"No monthly fee" is accurate and unusually complete here, because there is also no ongoing monthly pay-in to keep the account free — the £1,000 is a one-off condition of the switch cash, not a standing obligation. Travellers get more than that: first direct charges nothing of its own for debit card payments in a foreign currency, or for cash machine withdrawals outside the UK, though the machine's operator may still levy its own charge.

The tariff is not empty, and the remaining charges are the kind that arrive unannounced. An inward payment in a foreign currency worth more than £100 costs £8.00, which on a £120 payment from abroad is 6.7% of it. A status enquiry — the reference a bank gives a landlord or a lender about your account — costs £10.72 including VAT. An indemnity for a lost share certificate costs 0.5% of the value with a £50 minimum. Cancelling a cheque, copying a cheque, inward sterling payments and duplicate statements are all free.

The structural cost is the one no tariff shows. There are no branches, and there never have been: everything is the app, the website or the telephone on 03 456 100 100. Paying in cash means using another bank's counter arrangements, and a customer who wants to sit opposite somebody to sort out a problem has bought the wrong account. That has been the deal since 1989 and the service scores suggest most customers are content with it, but it is a deal, not an oversight.

Figures were taken from each provider's own published terms on 12 September 2026. Variable rates can change at any time — confirm the current rate with the provider before applying.