Egg Savings account and interest rate increases advice please

happyhero

I am saving some money to use for something in the future and I wanted fairly easy access, and have already used my ISA allowance, so in April I chose an Egg saving account as I already had accounts with them and thought this would make it simpler too, plus they were offering one of the best rates for that type of account. So each month I put money in there.

Now I notice they are offering a savings account with an even better rate of 2.8%, so I asked if I could open one of those and they said yes but it is only for new money. I thought fair enough thats what I will do then as you always want the best rate don't you, even if the change is small, you may as well have it as the small change will mean more and more as time passes and you get interest on the interest and put more money in etc. The only minor gripe is if this goes on it will get messy as I will end up with loads of savings accounts with them. Ok I can cope with that but given the choice I would prefer to have just one.

So I then thought I would like to get this better rate on the current savings I have with them but they say only new money in the account so I assume that means I am not supposed to transfer money from other Egg accounts into a new savings account, so therfore, I have to ask the obvious what is to stop me emptying my current savings account with them into an outside account and then putting it back in to the newly opened higher interest one? Does that not make a mockery of them saying only new money and whats the point wont most people do that? Also can I not then close the current savings account to end up with what I want, basically one savings account earning the higher rate?

Can anyone comment please if I am doing this right or missed something else etc?

Any advice help/comments appreciated.

Milarky

happyhero wrote: »

Does that not make a mockery of them saying only new money and what's the point won't most people do that?

My guess is that some won't but a lot will.I suspect that Egg haven't really thought it through either....

YorkshireBoy

If you're going to the trouble of transferring your money out of Egg, why not put it somewhere that pays more than 2.80% AER?

If you do want to put it back in Egg, read the T&C's to see if you can hold more than one savings account paying an introductory offer interest rate. If you can't, then you'll have to wait for the old one to be formally closed before applying for the new one. How much interest will you lose by waiting?

Lokolo

Which ISA is it?

if its Egg Cash ISA 2 this pays more than the savings account after tax.

ChiefGrasscutter

Egg are not stupid and like most Banks/Building Societies know exactly what they are doing.

They are relying on most of the older account holders not bothering to take all their money out of the old account and then merely put it back into the new account. I did read some figures many years ago that the savings institutions reckon that when they do downgrade their accounts in some manner (reduce the rate or introduce a new higher rate account) 60% of savers will leave their money in and 40% take it out. The Societies do not like the 40% who move - they call us such names as "rate tarts".

Of course there are variations on the theme to prevent customers doing this out/in swap. Some will mandate that only "new customers" can have the higher rate and then we can discuss how long since you last closed your last account with the organisation could count as being a "new customer". I'm told this can vary it seems from a few days to 6 months.

Ultimately it is game, institutions want to get as much money in and pay as little interest as possible, while keeping the capital from moving out again, so they are constantly trying to out-wit each other in trying to get as much of savers' cash as possible. Savers are in the middle and need to stay nimble. Of course we could go back into the 1970's when all the various rates for personal customers were the exactly same across the board, there was none of this constant account shifting - and errr.... the interest rates paid on accounts were rubbish......

YorkshireBoy

Lokolo wrote: »

Which ISA is it?

It isn't an ISA, it's an Egg Savings account.

It's still a bit early for you students isn't it!

Lokolo

YorkshireBoy wrote: »

It isn't an ISA, it's an Egg Savings account.

It's still a bit early for you students isn't it!

Ha I read ISA and Egg on the same line and thought they had taken out an Egg ISA then wanted to open savings account.

Yes too early, but I should also not be working a 9-5 job in the summer. ITS TOO NICE OUTSIDE

grumpycrab

YorkshireBoy wrote: »

...If you do want to put it back in Egg, read the T&C's to see if you can hold more than one savings account paying an introductory offer interest rate...

I'm in the same boat as the OP. You can only open one account in your name but you can have joint accounts too.

I'm going to move X pounds out of Egg and then open one of these accounts with the original X pounds matched buy another X new pounds. We'll see what happens.

The OP was worried about having multiple accounts with Egg. The Egg user interface is quite good at handling multiple accounts. You can also see accounts from other banks/building society's if you use Egg Money Manager.

natman

Hi.

A lot of banks / building societies offer similar things, and for us money savers this creates opportunities and issues.

When opening up a 'VARIABLE' savings acount as you have highighted the issue is, the interest rate will probably drop. Many banks even offer a sort of bonus deal for say 12 months so you know roughly what interest rate will be.

I have opened up around 6 instant access acounts in 12 months becasue the interest rate has dropped.
Regarding new money, your right you can close your egg account take funds out, to then open a new one with the same money.

As stated previousy the banks arent stupid really because many will keep money there without researching, others see it as hassle, and becasue its it is sometimes hard to find curent interest rates on accounts, people dot bother.

The only good/bad account I have had is BRADFORD and bingley when a new saving account opened you transferred the monies accross, but they do change the account a lot.

Ok, if your guna take money out there are better interst paying accounts at present
Alliance and leicster online 5- 3.15%
Birmingham midshires telephone - 3.15

so plenty of options

happyhero

Hi thanks for all the replies, much appreciated. I take the point, thank you Yorkshireboy, about the interest with them being not that different, and I may lose any gain by moving out and back in, although I may do this anyway just to tidy up and stop myself gaining too many savings accounts (not sure yet) as for the waiting, it does not appear there is any as from their reply, I can simply open another account without closing anything, despite the fact they are both promotional rate accounts, here was my correspondence with them.

My Question
"I see you are currently offering a savings rate of 2.80%
which includes a bonus rate of 1.55%, and so basically
higher than what I am currently on, if I understand
correctly, so what is to stop me opening a new saving
account to get this rate and putting all future money
in there to achieve this rate instead of using the lower
rate account?"
Their Answer
"I can confirm that you're able to apply for an Egg
Savings Account which has interest rate of 2.80% gross
pa/AER variable for the first 12 months. The rate will
then move to the current standard variable rate which
is currently 1.25% gross pa/AER variable. To open a new
Egg Savings Account, you'll need to apply for it on the
Egg website."

Perhaps I should mention because of my odd circumstances, I do not pay tax so ISA's are no big draw for me although I do not think it effects what I am asking, I will just get the full 2.8% instead of 2.8% taxed.

I will look at other accounts again due to bits mentioned above, (although I keep an eye already on altering rates etc), before I do anything but I have no income either as such so I cannot really open accounts that ask for a regular monthly payment in of £500 or £1000 for example, as I quite often could not manage this, even if I took the money from other accounts.

KTF

If you dont want to have lots of egg accounts then send them a message asking for the accounts to be closed and the bank account and sort code that you would like any interest paying in to.

They normally close them within 2-3 working days then you can open up a new savings account if you wish (although as others have pointed out there are better accounts available than Egg at the moment).