Sam Dunn: The online bank that faded is punching its weight again

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The Independent Online

However, a sure bet is something that the Egg internet bank has not been over the years.

While it has cooked up a number of juicy deals for consumers, these have tended to lose their taste.

The online lender first began to simmer gently back in the late 1990s when it said it would do away with tiered rates of interest and pay just one rate of 8 per cent on any balance over £1.

It forced rivals on to the back foot and sparked a trend that continues today.

Egg then came to the boil with the introduction of 0 per cent deals on new credit card purchases and balance transfers.

This sparked a sea change in lending, prompting a slew of similar deals that offered cheap credit to millions of hungry consumers.

And although it wasn't the first, Egg also managed to poach new credit card customers in the late 1990s by offering generous cashback on purchases as high as 2 per cent when goods were bought at selected retailers.

Fast forward, and its table-topping 8 per cent deal for savers has long gone - it offers 4.5 per cent today, the same as the Bank of England base rate.

The 0 per cent deals tempting card users to shift their balances to Egg unleashed a tide of credit that has taken the best part of half a decade to be stemmed - as well as creating the phenomenon of "rate tarts", who simply transfer debts between lenders to take advantage of the 0 per cent interest.

In January this year, Egg joined others keen to put an end to this by slapping a 2 per cent fee on anybody wanting to switch their debt over.

As for other incentives, the rates on offer have dwindled over time: in April 2004, the cashback given to customers crashed to its lowest-ever level of 0.1 per cent.

These measures have not been good for the reputation of Egg, which has itself been facing uncertainty over a possible sale by its majority owner, the insurance group Prudential.

Indeed, for the past couple of years, it has retreated into its shell. Where once consumers could look to Egg for innovation, they have recently found inaction.

This could all change, though. The internet bank hopes that its new Money account (see page 26), will lure us in with its promise of a clearer view of how we manage our cash.

It wants customers to use the account as a window on to their spending by diverting all their free, disposable cash there from their current account (once all bills have been paid).

Once ensconced with Egg, you can see what kind of items you spend (or waste) your money on, budget and keep an up-to-date record of your cash.

By better marshalling your money, you'll avoid hefty bank charges, it says.

To make things more tempting, it will also offer interest on balances in credit, cashback, a cash card and even let you borrow up to twice your monthly salary - the latter at a cost, of course.

The gloopy marketing describes it as "a whole new animal", but for once, those creatives might be right.

Think of it as a "matrix" account, one that lets you see all the numbers whizzing around your personal finances.

It should encourage better money management - the only cost is that in effect, you have to bolt it on to your existing current account.

There have been many mixed messages from Egg in the past; perhaps this will make a long-term healthy difference.

s.dunn@independent.co.uk

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