Family Saver Club from Eversmart Energy - 1% interest per month

the_mandarin

Eversmart Energy have offered me the chance to join the "Family Saver Club"

What this means is that:

1. You pay for 1 year of energy upfront.
2. Eversmart Energy pays you 1% interest on your outstanding balance every month.
3. Fixed prices for 12 months

Has anyone else received this offer? If so, what do you think of it?

The interest on balance that they are offering is quite attractive, however I am concerned about what would happen if they were go go bust like Iresa or GB Energy did. Incidentally, both Iresa or GB Energy were offering the cheapest energy rates at that time and they eventually went bust.

Your thoughts, please?

System

the_mandarin wrote: »

Eversmart Energy have offered me the chance to join the "Family Saver Club"

What this means is that:

1. You pay for 1 year of energy upfront.
2. Eversmart Energy pays you 1% interest on your outstanding balance every month.
3. Fixed prices for 12 months

Has anyone else received this offer? If so, what do you think of it?

The interest on balance that they are offering is quite attractive, however I am concerned about what would happen if they were go go bust like Iresa or GB Energy did. Incidentally, both Iresa or GB Energy were offering the cheapest energy rates at that time and they eventually went bust.

Your thoughts, please?

Simple: your credit is now 100% protected by Ofgem's consumer levy. However, do not be taken in by claims that an interest rate of 1% equals an annual rate of 12%. If you joined today and paid, say, £1000 up front then come May you would be lucky to have £400 left in your account.

No doubt ESE customers will be declaring interest payments to the taxman?

the_mandarin

Hengus wrote: »

Simple: your credit is now 100% protected by Ofgem's consumer levy. However, do not be taken in by claims that an interest rate of 1% equals an annual rate of 12%. If you joined today and paid, say, £1000 up front then come May you would be lucky to have £400 left in your account.

No doubt ESE customers will be declaring interest payments to the taxman?

Thanks, I wasn't aware of the protection provided by Ofgem on this matter. Does that mean if they were to go bust, then Ofgem pays you on behalf of the energy provided?

And yes, I am aware that a monthly interest of 1% on a depleting balance does not equate to an annual 12% interest.

Also, the "interest" is not actually paid to you, it is just added as a bonus "credit" to your account. So I am not sure about the tax implications of it. Perhaps someone here who has more knowledge of the tax laws can advise on this?

System

the_mandarin wrote: »

Thanks, I wasn't aware of the protection provided by Ofgem on this matter. Does that mean if they were to go bust, then Ofgem pays you on behalf of the energy provided?

And yes, I am aware that a monthly interest of 1% on a depleting balance does not equate to an annual 12% interest.

Also, the "interest" is not actually paid to you, it is just added as a bonus "credit" to your account. So I am not sure about the tax implications of it. Perhaps someone here who has more knowledge of the tax laws can advise on this?

No. In the event of a supplier failure, Ofgem appoints a Supplier of Last Resort. The SoLR takes over your account. All credit balances will be honoured by the SoLR. The SoLR pays something in goodwill for gaining 'X'000 customers and claims all other additional costs back from Ofgem. The Ofgem Consumer Levy, as it is known, is paid for by all energy customers in the form of higher bills. If I recall, the failure of GBEnergy a couple of years ago added £10 to the average energy bill. It is not a great scheme as it is unfair on consumers that resist the temptation to switch to new entrants: a better scheme would be a requirement for an insurance bond.

If these types of schemes grow, my guess is that HMRC will be taking an interest (no pun intended) if it isn't already, as indeed should the FCA.

wavelets

Hengus wrote: »

...
No doubt ESE customers will be declaring interest payments to the taxman?

Hengus wrote: »

....
If these types of schemes grow, my guess is that HMRC will be taking an interest (no pun intended) if it isn't already, as indeed should the FCA.

I don't believe this type of "interest" payment is considered in the same way as interest paid on savings; rather it is considered a discount on the consumer's bill.

Ovo have been paying interest on credit balances since at least 2010, and that is not taxable as it is considered a discount

https://forums.moneysavingexpert.com/showpost.php?p=65140919&postcount=15

Therefore no interest statement is issued for tax purposes

The essential difference to a savings account is possibly easier explained by asking the question:
Will I ever be able to withdraw more money from this account than I originally paid in?
If not, it's not usually considered interest for tax purposes, but rather a discount on whatever you are spending the money on.

wavelets

the_mandarin wrote: »

Eversmart Energy have offered me the chance to join the "Family Saver Club"

What this means is that:

1. You pay for 1 year of energy upfront.
2. Eversmart Energy pays you 1% interest on your outstanding balance every month.
3. Fixed prices for 12 months

Has anyone else received this offer? If so, what do you think of it?

The interest on balance that they are offering is quite attractive, however I am concerned about what would happen if they were go go bust like Iresa or GB Energy did. Incidentally, both Iresa or GB Energy were offering the cheapest energy rates at that time and they eventually went bust.

Your thoughts, please?

Yes, this has been the subject of a previous MSE News article

MSE News article here:
https://www.moneysavingexpert.com/news/2018/10/you-can-now-pay-upfront-for-your-energy-for-the-next-year---but-/

Associated MSE discussion thread here:
https://forums.moneysavingexpert.com/discussion/5916469/mse-news-you-can-now-pay-upfront-for-your-energy-for-the-next-year-but-is-it-a-good-deal

Edit: There is also some discussion of this in the Eversmart Feedback thread, in which I see you had yourself earlier posted
https://forums.moneysavingexpert.com/discussion/5686344/add-your-feedback-on-energy-supplier-eversmart-energy&page=19

System

wavelets wrote: »

I don't believe this type of "interest" payment is considered in the same way as interest paid on savings; rather it is considered a discount on the consumer's bill.

Ovo have been paying interest on credit balances since at least 2010, and that is not taxable as it is considered a discount

https://forums.moneysavingexpert.com/showpost.php?p=65140919&postcount=15

Therefore no interest statement is issued for tax purposes

The essential difference to a savings account is possibly easier explained by asking the question:
Will I ever be able to withdraw more money from this account than I originally paid in?
If not, it's not usually considered interest for tax purposes, but rather a discount on whatever you are spending the money on.

You could be right; however, the supplier is using the term Family Saver Club and it is showing comparisons with other types of FCA regulated savings accounts on its website. It is either a discount or an interest bearing savings account. I would also question the claim that the Family Saver Club equates to 12% interest compared to 1.3%Cash ISA; 1.75% High St Savings Account and 2.2% 5 Year Fixed Cash. These types of interest payments are not on HMRC's tax exempt list. You would be surprised to read what is listed.

the_mandarin

wavelets wrote: »

Yes, this has been the subject of a previous MSE News article

MSE News article here:
https://www.moneysavingexpert.com/news/2018/10/you-can-now-pay-upfront-for-your-energy-for-the-next-year---but-/

Cheers, just what I was looking for but could not find before I started this thread.

the_mandarin

Hengus wrote: »

I would also question the claim that the Family Saver Club equates to 12% interest compared to 1.3%Cash ISA; 1.75% High St Savings Account and 2.2% 5 Year Fixed Cash. These types of interest payments are not on HMRC's tax exempt list. You would be surprised to read what is listed.

The 12% interest claim is clearly incorrect, as it is along the lines of a how a Regular Saver interest is calculated. Just as Regular Saver amount slowly builds up, the balance in the Energy account slowly depletes. So anyone who pays upfront needs to factor in that the 1% credit that they get each month is going to reduce every month.

But calculations aside, has anyone signed up for this? I wanted to check what they believe my annual usage would be, but the Eversmart Energy website does not actually provide any link from where to sign up to this. Also, when I click on the "Family Saver Club" link, it asks me to get a new quote which is at a considerably higher rate than what I am currently paying. In fact, it is so high that if I were to pay at that rate, my bills would be higher by more than the 12% that they claim they are offering :shocked:

System

the_mandarin wrote: »

The 12% interest claim is clearly incorrect, as it is along the lines of a how a Regular Saver interest is calculated. Just as Regular Saver amount slowly builds up, the balance in the Energy account slowly depletes. So anyone who pays upfront needs to factor in that the 1% credit that they get each month is going to reduce every month.

But calculations aside, has anyone signed up for this? I wanted to check what they believe my annual usage would be, but the Eversmart Energy website does not actually provide any link from where to sign up to this. Also, when I click on the "Family Saver Club" link, it asks me to get a new quote which is at a considerably higher rate than what I am currently paying. In fact, it is so high that if I were to pay at that rate, my bills would be higher by more than the 12% that they claim they are offering :shocked:

Forget the price for the moment, are you following this thread:

https://forums.moneysavingexpert.com/discussion/5914762/eversmart-saying-my-deal-isnt-fixed

This is a supplier that I personally would avoid for the time being.

the_mandarin

Thanks for pointing this out, wasn't aware of this