Alliance & Leicester Current Account/Savings Account Idea

wibbly1

I've been looking into the current A&L Premier Direct Current Account offer with the £50 referal and noticed something else I'd like to run past you all to see if it holds water.

New customers are being offered:

* 5.00% AER (fixed until 30.09.07) on balances up to £2,500, 0.10% AER (variable) on balances over £2,500
* 0% overdraft for 12 months from account opening, 5.9% EAR typical (variable) thereafter
* Earn 10.00% gross p.a./AER fixed for a year with Premier Regular Saver

Forget the 5% for a moment. The maximum overdraft limit on the account is £2500 the maximum savings limit of the Premier Regular Saver is £3000. What if I were to pay £208.33 (2500/12) a month into the regular saver slowly eating into my overdraft and let it earn 10%.

I don't spend more than I earn so there is no chance of me going over the limit.

According to the terms and concitions at the end of the year the money in the savings account automatically goes back into the Premier Direct Current Account. Effectivly wiping out the overdraft debt and netting me aprox £139 in gross intrest (if my sums are correct). Plus if I do the referal thing that's another £50 on top.

Have I missed something? Is this a stupid idea?

Wyndham

You also have to fund the account with at least £500 per month. And it has to be money from outside of A+L. You can put it in and immediately take it out again, but you still need to do it (and lose interest on it when it is in transit).

If you don't put in £500 per month, they charge you an underfunding fee of £5, so £60 for the year, eating into your interest.

jimclark1967

wibbly1 wrote:

Have I missed something? Is this a stupid idea?

Nothing wrong in theory. The only problems you might have are:

a) Getting the full £2,500 overdraft limit

b) The Premier Regular Saver will not mature until after the 0% overdraft ends as there's a delay getting it going once the current account is up and running. I opened my account in January but the first £250 wasn't taken till March.

JC

YorkshireBoy

jimclark1967 wrote:

The only problems you might have are:

a) Getting the full £2,500 overdraft limit

...and you'll probably have to agree to credit far more than £500/month to secure an overdraft of this size - especially one given at 0%.