Overpay DD for Cashback?

queenkelly

I have a Santander edge current account and get 1% cashback on my gas and electricity bill.

I've been overpaying my direct debit by £100 a month because I was over £500 in debit because of BG not taking the DD when I switched to them.

I've now caught up so should I reduce the DD to what I will be using in the winter months or continue overpaying even more than what I will use to get an extra £1.00 cashback a month?

Or should I switch to a variable direct debit if BG allow it and just pay for what I am using?

Bigphil1474

Where else could you get 1% interest a month on your money? Equates to around 12% a year. I would keep paying the same amount, and get your excess balance refunded when you can. If there's no limit set by Santander, pay more if you can afford it even. Bear in mind you will probably use half your gas usage between November to February, so you probably want a bit of credit anyway.

Woodstok2000

£100 to BG each month gets you £12 over a year.

£100 into the Santander regular saver each month (8%) gets you £51 over the same period.

No Brainer. Even a 2% savings account is better than the cashback.

Woodstok2000

https://forums.moneysavingexpert.com/discussion/comment/82154703#Comment_82154703

You're not getting 1% per month on your money, you are getting 1% of £100 for each month. If you did it for a year your interest rate would be about 1.9% overall.

Bigphil1474

https://forums.moneysavingexpert.com/discussion/comment/82155114#Comment_82155114

I think you are missing one factor. You can take the £100 back from British gas and then put it into your savings account. They would be receiving the 1% for making the transaction, whereas the Santander savings account is only paying that interest if you leave the money in the account all year.

Woodstok2000

https://forums.moneysavingexpert.com/discussion/comment/82156070#Comment_82156070

I did think about that, but it's a bit of a hassle considering you'd have to wait 10-15 days for every credit to come back from BG. I also wasn't sure if it would be viable long term - if it's possible to do it with £100, what would stop me doing it with £1000 every month to maximise the cashback?

QrizB

if it's possible to do it with £100, what would stop me doing it with £1000 every month to maximise the cashback?

There's usually a cap on cashback.

I've got a similar current account (the previous Santander 1-2-3 account; Santander replaced it with Edge for new joiners). Cashback on energy bills is capped at £5 a month. I pay enough into my Octopus account each month to earn £5, then reclaim any excess every quarter.

If I left the money I'm using for this in a top-paying instant access account, it would earn maybe £30 a year. This way it's earning £60.

Bigphil1474

Yes, it would depend on the practicalities of getting the money back from BG, and whether they'd get fed up after the first 2 times. If the cap is £5, then in theory you could pay £500 a month, take off what you need to pay the actual bill, get a refund 2 weeks later, put that into your savings, and you would only be 2 weeks behind on your savings. Whilst technically it could maximise your returns, would seem to be a faff that far outweighs the gains . On reflection, @Woodstok2000 I think you were right first time.

Scot_39

https://forums.moneysavingexpert.com/discussion/comment/82156070#Comment_82156070

Except can you get it back that quickly - on a regular DD plan - just like many other suppliers - they may well have quite high minimum credit balance requirement - at this time of year maybe 2 - maybe in extremes even 3 months of annualized DD.

The standard time even if allowed at EOn for sufficient credit (not 0 credit) was 3 weeks - or iirc more accurately 15 working days.

And if only now back in credit could take months to get back to those sort of minimum credits as prices increase 9% was it yesterday - and cap 16 CI - Suppliers c20% - in Jan.