Not strictly stoozing, but still free cash

LearnedTheHardWay

Hi all, my first post here... I've been quietly following things for some time, and was seriously considering the move from Eon to Ovo, so got digging...

zerog wrote: »

Is the 3% taxable?

I do not believe the 3% 'interest' you would earn from Ovo is taxable as it's not deposited to your bank account, but to your Ovo account. And there are also some strict guidelines in their T&Cs about this.

Of course, you could claim that if you requested a refund to your bank account, then it's a gain, but there are some strict guidelines around that too.

I have pasted section 11 from the Ovo T&C's below - they are taken from a document on MSE but I am unable to give a link (no matter how hard I try!) as this is my first post and the anti-spam system won't let me! However, I bolded some important parts...

11. Ovo Interest Reward scheme
11.1 When we produce a statement (every month for our online and email customers or every three months for customers who receive statements in the post), and your account is in credit (that is, you have paid for more energy than you have used), we will pay you 3% Ovo Interest Reward to your account.
11.2 We will pay the Ovo Interest Reward direct to your Ovo account. We cannot pay it direct to you.
11.3 The rate of reward is based on 3% per annum for each date you are in credit by.
a. We may decide to change this rate from time to time.
b. The rate of reward is not linked to the Bank of England bank rate.
11.4 We will work out the Ovo Interest Reward and add the amount you have earned to your account as and when a statement is produced. The amount will be based on the balance shown in the statement, brought forward from your previous statement. We cannot adjust the amount if we issue a revised statement based on a meter reading you give us.
11.5 If we discover that a statement contained inaccurate information, we can work out how much we should have paid into your account and, where necessary, reclaim any amount you were not entitled to. If we do this, we’ll send you a revised statement.
11.6 The Interest Reward scheme is about creating a fairer deal for customers. It’s designed to pass on the interest we earn when customers’ accounts with us are in credit and to reward people for repayment. In order to protect the spirit of this scheme, we need to apply the following extra restrictions.
a. In any year we will not pay interest rewards of more than 12 times the monthly Direct Debit amount we have agreed with you.
b. If you make a significant overpayment into your customer account, then ask for that amount back within six months, we will reclaim any interest reward you have earned from that amount.
c. We can review your monthly Direct Debit at any time.
d. If you choose to leave us during the term of a fixed contract, we will work out how much interest reward you have received during that contract and add it to the final balance you will need to pay us.
e. We can withdraw your entitlements under the Ovo Interest Reward scheme if we feel you are not using it appropriately.
11.7 We will only pay the Ovo Interest Reward into your account during periods when we are supplying you with gas
or electricity (or both).
11.8 Any overpayment you make is not considered to be a deposit.
11.9 We can withdraw the Ovo Interest Reward scheme at any time. If we do that, we’ll let you know about it.

Not sure if that helps, or creates more questions?!

Switching to Ovo does still make $15 (after 3 months), and they do have good rates. But I reckon some people will come unstuck with the 3% 'interest' thing, based on the agreement clauses above.

It's definitely a nice feature of Ovo where their direct debit estimate turns out to be too high, but it's likely not something I'd leverage as an investment strategy by deliberately overpaying on my direct deposits...

As I said, I'm new here, and am not suggesting anyone else should or shouldn't try this - I'm just sharing what I found, and I decided it wasn't for me. Maybe I'm missing something? Maybe I should be jumping on this?! I'm waiting for someone with far more knowledge and experience to weigh in...

All that said, I did pick up a Santander 123 account today, and will be using that to pay my DD's and earn some pretty solid cashback! I'm actually tickled that I get 1% for paying my Council Tax - ok, so it's only 1%, but gosh-dang it just feels good to get something - anything - back for paying that one! :beer:

planteria

excellent first post.

LearnedTheHardWay

planteria wrote: »

excellent first post.

Thanks planteria...

One thing I did miss was that, by paying the DD via a Santander 123 account, one would earn 2% cashback from the payment. So, as long as one doesn't totally overdo it I think it might be a good call after all...

And a 3% 'interest' credit on an Ovo credit balance sure as heck beats the 0% I earn on my E.On balance!

Going to take another look at this after having slept on it, but would still love to hear if anyone else has got anything to add!

OVO_Energy

Zerog -

zerog wrote: »

Is the 3% taxable?

Hi there everyone!

Our interest reward scheme is a discount so it isn't taxable.

Thanks for sharing the information 'LearnedTheHardWay' - much appreciated

Hope this helps. If you have any other questions about the Ovo Interest Rewards then please feel free to ask.

Thanks,

Ovo

LearnedTheHardWay

Ovo_Energy_company_representative wrote: »

Our interest reward scheme is a discount so it isn't taxable.

Thanks for confirming, Ovo!

I'm actually making the move - the £15 incentive was the real deal-maker for me!

So, to summarize:

1. I'll get £15 just for switching (after 3 months)
2. I'll get 2% cashback from Santander for paying via Direct Debit
3. I'll get a 3% 'interest' (as a non-taxable discount) on any legitimate credit balance!

:j

Big thanks also to MR BLAND for starting this thread and bringing this to my (our) attention!

vacheron

Thanks for sharing this Mr Bland, great idea.:money:

Also to warwicktiger for the heads up on the Ovo "interest" which prompted me to check my energy provider (Scottish Power) only to find that they do it as well, but only with credit balances of between £133 and £496 at the time of their annual DD review.

(Their max return works out at about 2.5%)
http://www.scottishpower.co.uk/support-centre/billing/fairer-deal-from-scottishpower


Edit: Monthly payment now bumped up from £140 to £225 That should do the trick.

mike3010

I guess the other thing to think about is that the credit balance isn't protected by the FSCS guarantee. If the company goes bust you might not get your money back, and it would almost certainly take some considerable time to get it back.

Of course, there doesn't seem to be much risk of any energy company going bust in the near future

Man_on_fire

I do a similier thing with my 123 acc, I have my supplier as utility warehouse and I think I get 3% cashback and not 2%, as they do telecoms too. Not that I use their telecoms services, just that Santander can't tell the difference.

But I also have solar Pannels and, I now have them pay me the FIT into a serperate account and get them to take out the full direct debit from the 123 acc. Instead of having my monthly bills reduced by one canceling out the other.

jaik

nPower allow you to make one-off overpayments via credit card. I have a good chunk of credit on a 0% purchase card, but also sizeable loan with no early repayment charge which I'm paying off as quickly as I can.

I'm thinking I could make a large overpayment with the card, then claim it back which would come through as a direct debit, then use that balance to pay off the loan early and avoid some interest.

Is there any reason this wouldn't work? What sort of value would you expect them to raise their eyebrows at?