Egg yesterday unveiled a new banking deal in the latest attempt to break the stranglehold that Britain's biggest banks have on the current account market. The internet-based bank launched Egg Money, an account paying 4 per cent interest on positive balances and 1 per cent cashback on spending, and charging an overdraft rate of 6.9 per cent.
Egg said it was pitching the deal as a spending account. The idea is that customers will use existing bank accounts to pay regular bills, direct debits and standing orders, while diverting all disposable cash to Egg Money each month.
"Current accounts do not give us an accurate picture of where we stand financially at any one time," said Mark Nancarrow, Egg's chief financial officer. "Liberating our spending money from more mundane things would enable us to budget more efficiently." But Egg said it planned to sell the account both as a convenient way of budgeting and as a market leader on interest rates. The 4 per cent interest on offer is better than the deal offered by Barclays, HSBC, Lloyds TSB and NatWest, the largest current account operators. The 6.9 per cent borrowing rate is also competitive.
Richard Mason, of independent price comparison service MoneySupermarket, said Egg Money was a genuinely new type of product, though it did not offer the best interest rates. Alliance & Leicester, for example, pays up to 5 per cent interest on credit balances in its current account.Reuse content