Fool's Gold: an idiot's guide to... The mysteries of internet banking are unveiled
Saturday 07 February 2004
Q: what is an internet savings account? A: a savings account you can only access online. You do not deal with bank branches or use the post
What is an internet savings account?
A savings account you can only access online. You do not deal with bank branches or use the post.
How do you open an Internet savings account?
You apply online. An application takes about 10 minutes. You make an initial deposit using a debit card and electronic transfer. Minimums vary, but are usually £1. Money-laundering regulations mean that before your account is active you have to sign a piece of paper sent to you in the post.
How do you pay in?
With a debit card online or by setting up a standing order. Most also take cheques.
How do I actually save?
You get interest on the money in the account and you can arrange a direct debit so regular amounts are paid in automatically. Or add to the account when you can afford it.
What are the leading brands?
Egg is the biggest. The others are Cahoot, an offshoot of Abbey, Smile, linked to the Co-op, and Intelligent Finance, which is part of Halifax.
Is your money safe?
Yes, provided you choose an established brand, and realise that if something looks too good to be true, it probably is. The market leader, Egg, offers an anti-fraud guarantee. So if they screw up, your money is safe. Anti-fraud guarantees are safer than cheques in the post.
Do internet savings accounts offer better rates than conventional ones?
They ought to. What online banks save by not having branches to maintain and paying staff for phone banking or handling post, should be passed to customers. But headline rates and the bonuses are deceiving.
Egg is offering 3.75 per cent plus a bonus of 0.75 per cent for six months. After that, its rates of interest are guaranteed to track the Bank of England's base rate until 2007. Others, including Northern Rock, ING and Abbey, have higher headline rates.If time bonuses are offered, watch what happens after the end. The rate of return can drop below the underlying rate. You should get a higher return by tying your money up for longer, perhaps three years.
Headline rates change constantly so check one of the best-buy tables offered online by Money Supermarket ( www.moneysupermarket.com/Savings) or one of its competitors.
What other advantages are there?
There are no delays waiting for cheques to be cleared. And you are in control of your own money in that you have easy access to it. You decide what happens instead of leaving things to a financial service provider.
Are there any snags?
Dealing online can be irritatingly slow and some websites are cluttered with jargon. Opt for reliable operators with user-friendly systems that keep you in control of your savings and watch its long-term value. The best are designed for busy professionals, the cash happy and time poor. Online services work 24-7 and in the early hours nothing is worse than waiting 25 minutes for your account to open when you want to go to bed. Your chosen banker needs to have the resources to handle high volumes of transactions.
Who regulates this sector of the banking industry?
Online savings accounts have to comply with the law so they have the Financial Services Authority and the Office of Fair Trading to worry about. They also have to comply with the banking industry's code of practice, but not the mortgage code which is voluntary.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
Simon Read: There may be trouble ahead for cohabiting couples who don’t make a will
Mark Dampier: Strong returns can be found if you go the opposite way to the crowds
Money Insider: Would £150 make you switch banks?
Bargain Hunter: Find the deals that have real value beneath the Black Friday hype
Gold-plated pensions – the key to retirement freedom?
- 1 To help fuel their propaganda machine against the poor, our government has now decided to redefine the word 'welfare'
- 2 Tower Bridge glass walkway 'smashed' by night-time visitor dropping bottle of beer
- 3 Anti-gay hate preacher accidentally tweets 4,000 followers cartoon clip of him 'confessing' to be a 'homosexual sodomite'
- 4 Woman opens professional cuddling shop – gets 10,000 customers in first week
- 5 Grayson Perry: London needs affordable housing because 'rich people don't create culture'
Rochester by-election: Ukip gains second MP as Tory defector Mark Reckless holds seat
'Beast of Bolsover' Dennis Skinner takes Ukip MP Mark Reckless to task moments after he is sworn in
Rochester by-election: Labour MP Emily Thornberry resigns after posting white van and England flags tweet
France 'blocks' Russian sailors from boarding a warship
Rochester aftermath: Sacking of Emily Thornberry will make work of Labour MPs '10 times harder'
Revealed: How the world gets rich – from privatising British public services
iJobs Money & Business
Voluntary Only - Expenses Reimbursed: Reach Volunteering: Age Concern Slough a...
Voluntary Only - Expenses Reimbursed: Reach Volunteering: Crossroads Care is s...
£20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...
£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...
Day In a Page
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens