The New Egg 'Bank Account' Looks Like a Good Deal
September 2005
Egg, the internet bank backed by the Prudential has come up with an interesting hybrid banking account called Egg Money. Actually it's a sort of cross between a bank account and a credit card. Egg refers to it as a 'spending account'.
Customers will be able to choose whether to use Egg money like a current account or like a credit card.
The credit card facility (which includes a cash-back bonus) charges 6.9% (well, they say this is the 'typical' rate but we'd suggest that unless you've got a squeaky clean credit file expect to pay higher, APR goes as high as 15.9%).
Any cash balance that's paid into the account will receive interest at 4% which is not a bad rate at all.
How The Egg Money Account Works
- Interest rate of 6.9% (see above argument) rising to 15.9%
- Minimum cash-back of 1% on ALL purchases, up to 5-10% from selected retailers such as Currys and WH Smith
- 4% pa interest on cash balances (Note: No chequebook)
- Text messages can be setup to give you statements but more important to alert you when your cash balance is running low
- If you pay the outstanding balance on each statement in full by the payment date, you can get up to 50 days' interest-free credit
- The 50 days interest-free facility gets around the nasty tactic that most banks use and start slapping down 'unauthorised fees' even if you slip over you agreed balance for a day or two
Egg Suggests You Use The Account Like This
- Keep your current bank account whoever that's with and get your salary and any other payments paid in as usual
- BUT, work out what your likely spending is over a given month and then transfer that amount over your Egg Money account
- Note, only transfer the spending amount as the account doesn't offer direct debits etc
- This way, you money is going further because a) it's earning interest and b) you're earning some cash-back
Are Any Other Bank Accounts Better?
It's hard to say yes or no because the Egg account is a hybrid so like cannot easily be compared to like.
It certainly looks like an excellent deal but then also check out the Alliance & Leicester Premier Plus account (Click Here for details) because it pays 5% interest alongside an interest free overdraft for the first 12 months, but then it doesn't offer such useful and money-making facilities as cashback - It also offers a free £25 cash signup bonus, see below)
Summary
We're giving the Egg Money account a top rating because it offers some great money saving/making advantages.
HOWEVER, Egg have a horrid reputation of announcing blockbuster deals on their financial products to attract loads of business, only to savagely purge said advantages at a point in the future, normally 9-12 months after launch.
So our final advice is simple, watch the rates and get ready to sump this deal if/when Egg start playing unfair games with their clients.
See Also
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