Well-disposed customers are targeted by Egg

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The Independent Online

Spend, earn interest on balances in credit, and borrow - would you do it all with just one lender?

Internet bank Egg thinks so. Last week it launched Money, a "'spending" account that pays interest if you're in the black, gives cashback on purchases, includes a debit card, and also offers a borrowing facility.

You might think this sounds uncannily like a current account. But it isn't: this Egg deal won't let you set up direct debits or standing orders.

Instead, it only wants our disposable income - that pile of cash left after we've paid off all our bills from our current account every month.

This sum - which is calculated for you online before you join - should then be switched into the Money account, says Egg, where consumers can get a clearer idea of just where they stand with their finances.

You'll earn 4 per cent gross on a balance in credit, while any spending is rewarded with a 1 per cent cashback - rising to 2 per cent in the run-up to Christmas.

Spend more than you put into the account, and you'll pay interest at an annual percentage rate (APR) of 6.9 if you have a good credit history.

However, a worse record could see you pay an APR as high as 15.9, since the product is priced according to how it sees you as a risk. The most you can borrow, though, is twice your monthly salary.

To help you manage your cash, the account includes an online calculator and finance "analyser" to help you see where you spend it, whether on clothing, food and drink or leisure.

Customers will also receive a weekly text message showing their account balance and latest transactions.

The account has had a cautious welcome. Melanie Green of consumer body Which? says it could be "useful" for managing money, while Richard Mason of price-comparison service moneysupermarket.com has backed its flexibility.

But while such a "bundled" financial product is convenient, he warns, consumers could get better value for money by opting for a standalone current account and a competitive credit card instead.

Alliance & Leicester, for example, pays 4.89 per cent gross on any balances in credit on its Premier Plus current account.

The Capital One credit card has the same APR of 6.9 as Egg, but it also has the longest 0 per cent balance transfer rate, until January 2007.

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