Is Alliance & Leicester an EVIL bank?

suze200

Hi Grade A Reject

Are you really doing so well putting £2032 O/D money into an ISA paying 6.05%?

Doesn’t A&L pay 6.8% net (8.5% gross) credit interest? Factor in the £60 per year in charges and the loss of credit interest and it might not be worth it. All depends on your average credit balance.

MX5huggy

suze200 wrote: »

Hi Grade A Reject

Are you really doing so well putting £2032 O/D money into an ISA paying 6.05%?

Doesn’t A&L pay 6.8% net (8.5% gross) credit interest? Factor in the £60 per year in charges and the loss of credit interest and it might not be worth it. All depends on your average credit balance.

You are presuming he is paying 20% tax.

nobblyned

suze200 wrote: »

Hi Grade A Reject

Are you really doing so well putting £2032 O/D money into an ISA paying 6.05%?

Doesn’t A&L pay 6.8% net (8.5% gross) credit interest? Factor in the £60 per year in charges and the loss of credit interest and it might not be worth it. All depends on your average credit balance.

There wouldn't be any credit interest as he wouldn't be in credit. Putting the mony back would leave him with a balance of zero. I think it will work out about £120 in his favour over the year.

suze200

He could be in credit some or all of the time!

With this account you have to pay in a least £500 a month so it can’t be consatanly O/D by £2932 for the whole month.

But if his income was say £5000/month then the credit balance on payday would be £5000 - £2932 = £2068 credit.

If his outgoings are less than £2068 then there will always be a credit balance. How large a credit balance depends on amount withdrawn and how quickly

If his outgoings are more than £2068 then he’ll get stung with the £3 / day charges as he will go over his O/D limit of £3000, which could quickly wipe out any interest earned on the ISA!

PurpleReindeer

Eak, I've just changed to A&L Premier due to recent MSE e-mail. I thought they were running a good ship.
Thanks for the heads up, I will review paperwork very closely!

suze200

It can be good if you have a big O/D and use it properly.

Just be careful and watch EVERY PENNY so you don't caught in the £3/day charging situation.

Another trick they use is letting the 50p/ day or £3/day charges build up rather than deducting them on a daily basis. Then they take them out of your account after several weeks thus putting you (or keeping you) over your O/D limit. Always deduct charges you know are due off your balance when you check it, like you would if you know a DD is due.

nobblyned

suze200 wrote: »

He could be in credit some or all of the time!

With this account you have to pay in a least £500 a month so it can’t be consatanly O/D by £2932 for the whole month.

But if his income was say £5000/month then the credit balance on payday would be £5000 - £2932 = £2068 credit.

If his outgoings are less than £2068 then there will always be a credit balance. How large a credit balance depends on amount withdrawn and how quickly

If his outgoings are more than £2068 then he’ll get stung with the £3 / day charges as he will go over his O/D limit of £3000, which could quickly wipe out any interest earned on the ISA!

You are making a lot of assumptions there. Not the least of which is you assuming that his income is arond quadruple the national average.

Probably easier just to believe what he says, and that he has already done the maths for his situation without your 'help'.

suze200

OK point taken.

Grade_A_Reject

Hi Suze200, You're pretty spot on with your posts (apart from the £5000 a month salary!, I wish). My account isn't always near it's potential limit as my salary goes in it the end of the month. However all my DDs are set to come out on the 1st so it literaly is just for a couple of days. I also have an SO setup to transfer my "spending money" to a Halifax account so no further payments are made from the A&L account til next month. Any residual money is transfered into my A&L savings account where it makes a small amount of interest but is easy to transfer back into the current account at short notice.

I track all my accounts on MS Money to the penny and reconcile daily when I can (no I don't have any friends).

I could theoretically take the account to it's absolute max on the O/D but I'm not brave enough since, as you say, a minor miscalculation could incur charges that would outweigh any potential gain so I keep £50ish in the current account as a small buffer.

A&L's credit interest rates are better than Egg's but I would need to use my own money to get credit interest. By using the O/D I get credit interest from Egg of around £15 a month and pay A&L £5 for the privilege.

TighterThanTwoCoatsOfPain

suze200 wrote: »

If you went overdrawn by 1 penny for 1 day every month it will cost you £6 or 5000% (yes I know, technically there’s no such thing as more than 100% but I’m making a point.)

I know you're using an extreme example to demonstrate a point, but of course its possible to charge over 100% APR interest! I think you'll find that for 1p you would get the automatic charge straight back unless you made a habit of it.

Plenty of short term loan (and thats what a small overdraft facility like this is) companies do as a matter of course.

e.g Typical APR 1355% here.
http://www.paydayuk.co.uk/getting-started/our-charges.html