Closing savings accounts

Megalomaniac

I'm just wondering what people's opinions are on closing savings accounts? I'm asking as my Egg Instant Access savings account has recently dropped interest rates to below the B of E base rate, I am contemplating closing it.

However, I figure, if you are a long time customer of a bank, even with just a small amount in a savings account, it may be useful in the future in view of other financial products (which may be offered then). A savings account doesn't appear on a credit report so you can't have 'too many'.

However on the other side of things, too many accounts can be hard to manage (eg, notifying them of change of address) and you'll be getting a very small amount of interest, is it really worthwhile keeping them.

On a side note, I have an Egg Savings a/c and also an Egg Card. With the recent spaye of closing of accounts, I wonder if I looked better to them than another customer because I had other financial products with them, therefore didn't close my account. I don't know, but wonder if it had any influence.

Any how, what are your thoughts.

Lokolo

Egg are only out to get your money.

I originally had your view and to be customer loyal to my banks but from learning on this site, the bank don't care, they just want your money!

I keep the Egg Savings account only because I don't tend to use it a lot, its quite quick to get money out so usualluy if I have a lump sum come in, and I know I need to use it in a month, I stick it in my Egg Savings for 20 days and get 20 days interest.

However, I can't imagine Egg coming upto me saying 'because you regularly use your svaings account we'll offer you a decent mortgage' or anything, no matter how I wish

Toastie

Megalomaniac wrote: »

However on the other side of things, too many accounts can be hard to manage (eg, notifying them of change of address) and you'll be getting a very small amount of interest, is it really worthwhile keeping them.

There is a post on compounding interest and it isn't really that major if you split it, i think it is a post by layvender. Unless of course you have a rather large amount of money, then it may make a difference if not compounding.

for £10k at 5% no tax would be £500 compounded and only £488.88 - only £12.12 less per year.

Milarky

I would keep the account 'open' but with a nil balance. If you aren't already on monthly payment of interest then ask them for this and it will start. That way you can empty out the interest as well.

Their debit card method of collection is unique - allowing you to credit the account (and earn interest) 'instantly'. But the nice thing is that the cash leaves your bank according to a separate clearing period. For Lloyds and Barclays this is 2 working days - Mon to Fri - (plus the weekend) later, for First Direct it is 'next working day' (plus the weekend) for Nationwide, Halifax, A&L and Norwich and Peterborough (all building societies or former societies) it seems to be 'next working day' with Saturday included as a working day (i.e. Mon - Sat)

Debit card deposits can be paid onward by BACS instantly (IME) too. At the moment of course this loses two days interest. But after May, if things speed up here, Egg will have the ability to redeposit funds into your current account again the same day -1, 2, 3 or 4 days before they leave them. Please remember that with DC payments you must stay within any overdraft limit for some banks (safe to assume all banks) So if you have a £500 overdraft, say and you keep nothing in there but DC £500 to Egg, you will have a 'nil' available balance straightaway - regardless of when the payment leaves your bank.

[Some further thoughts]

If you have an Egg Money card it can be used to make cash withdrawals of up to £500 per day against positive balances.

Transfers from Egg internet savings and Egg Money are 'same day' it is stated (and also IME)

If you make a payment before 2pm on a working day, the transferred funds will be available to view on the next working day. Payments made later than 2pm, will take just two working days to show on your account statement. In either case, when the payment does appear, the transaction date shown will be the date you made the request, so you won't be charged interest on this payment amount during those two days.

whereas

Payment of an Egg Money card by debit card takes 3 working (i.e. 'plus 2') days.

A debit card payment will be taken today from [current account] to your Egg Money account, although the transaction may take up to four working days to show on your external account statement. If you made this request before 1pm on a working day, it will be applied to your Egg Money account within three working days. Otherwise it will be applied within four working days

This means that a manual payment to Egg Money is 2 days quicker if directed through Egg savings - via an initial debit card deposit - than via a direct debit card payment.

It also mean, incidentally, that Egg Money can be used to withdraw from Egg savings without loss of interest associated with BACS payments provided the EM account is always kept in credit (50p minimum interest charge for being 1p overdrawn!) The safest way to do this is to make a transfer early Mon to Thu, wait until it shows credited the next day and then draw down appropriately. The only drawback is not being able to use EM as a purchases credit card meantime and remembering to allow for any payment authority or other transactions likely to show up