Igloo Energy Interest rate

cdgillie
cdgillie Posts: 2 Newbie
in Energy
I signed up to Igloo energy because the energy club does not seem to factor in the 3% interest on credit balances on up to £1000. It was about £20 a year more expensive than the cheapest energy deal, but if I deposit £1000 it should be about £10 cheaper. Perhaps MSE should put this in their description for Igloo, or am I being silly?

Comments

  • System
    System Posts: 178,092 Community Admin
    Photogenic Name Dropper First Post
    cdgillie wrote: »
    I signed up to Igloo energy because the energy club does not seem to factor in the 3% interest on credit balances on up to £1000. It was about £20 a year more expensive than the cheapest energy deal, but if I deposit £1000 it should be about £10 cheaper. Perhaps MSE should put this in their description for Igloo, or am I being silly?

    Welcome to the forum. How exactly would any Ofgem-accredited PCW factor in the small amount interest paid on credit balances? Most suppliers will not allow consumers to put a £1000 on the account just to gain interest. If they did, then I suspect that the FCA and HMRC would be watching them very carefully.
  • cdgillie
    cdgillie Posts: 2 Newbie
    I don't know what a PCW is. On Igloo's terms and conditions they say they pay 3% on credit balances of up to £1000, so I assume this is true. This is better than I can get for most savings accounts, which is why it was interesting to me. I was surprised to see it oferred as I have not seen others offer it.

    I appreciate that re-engineering the MSE calculator to be able to take account of this factor is probably unduly onerous, but it seems worth a mention in the blurb, as for me, it bumped them up from being 3rd or 4th cheapest (I think) to the cheapest. There are a handful of linked savings accounts that do better, but not many, and I have maxed them all out, so it seemed to be a decent way of getting an extra £30/year.

    I guess it helps them with cashflow as a cheap way of raising money, and the £1000 limit might be what the regulators allow before extra rules apply perhaps?
  • System
    System Posts: 178,092 Community Admin
    Photogenic Name Dropper First Post
    edited 20 June 2018 at 1:49PM
    PCW - price comparison websites which, for energy, have to comply with the Ofgem Confidence Code:

    https://www.ofgem.gov.uk/system/files/docs/2018/02/publication_of_the_revised_ofgem_confidence_code_december_2017.pdf

    Trust me: you will not get £30 interest per year. That would require you to have a stable deposit of £1000 for a year. If suppliers start offering what could be seen as savings schemes then I suspect that HMRC will want to treat the interest as savings on which tax should be paid.

    https://www.telegraph.co.uk/bills-and-utilities/gas-electric/energy-suppliers-vs-banks-earn-5pc-overpay-energy-bills/

    Edit: Ovo also has a £1000 credit balance limit but also this caveat:

    You must not make payments into your account just to receive the OVO Interest Reward. If we think you're doing this, we'll refund the extra amounts to you and we may withhold payment of the OVO Interest Reward on those amounts.
  • molerat
    molerat Posts: 31,810 Forumite
    Name Dropper Photogenic First Post First Anniversary
    edited 20 June 2018 at 6:00PM
    They seem to have missed that caveat
    6.1. Where You pay by Standard Direct Debit, We will pay interest on the first £1,000 of any credit balance, this is the Igloo Interest Reward
    6.2. The Igloo Interest Reward is calculated based on 3% per annum and the remaining credit balance in Your account each month after all charges for that month have been paid, pro-rated for the number of days in that month.
    6.3. We can change any part of the Igloo Interest Reward at any time, including but not limited to, its rate, how it is calculated and paid, or We may withdraw it entirely.
    6.4. We will calculate the Igloo Interest Reward each time We produce a bill and We'll automatically credit it to Your account. We may not recalculate any change to the Igloo Interest Reward where we issue a revised bill.
    Iresa is another interest payer but
    4.14 Our interest credits are linked to your energy usage and so you promise that you will not make payments into your account just to receive interest credits. If we think you are making payments into your account just to receive interest credits, we will refund the extra amounts to you and may withhold the interest credits on those amounts.
  • antrobus
    antrobus Posts: 17,386 Forumite
    molerat wrote: »
    They seem to have missed that caveat
    ....

    And;
    5.2.1. You must keep Your account with Us in credit by paying for supply in advance;

    5.2.4. You agree that We can carry forward any debit or credit balance to the next month’s bill;

    So the 'interest reward' I'd say is just a sweetener to compensate for the fact that you're always in credit, and they don't refund credit balances.
  • leafy211
    leafy211 Posts: 281 Forumite
    Name Dropper First Anniversary First Post Combo Breaker
    Very late in the posting .. but they almost actively encourage the £1000 deposit (which I shall take advantage of! :-))

    Can I make one-off payments?

    Yes, you can. If you would like to make a one-off payment to clear a debit balance, or to benefit from our 3% interest reward,  then you can easily do this yourself from the “Manage my payments” section of your account. Simply log in to your account and go to the Billing section where you will find options to make your payment. 

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