There's a pitfall in the windfall

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SAVERS with the Cheltenham & Gloucester who moved money between accounts during the past three and a half weeks could miss some of the bonus payments when it is taken over by Lloyds Bank. This is because the percentage payments are based on the lower of the balances on two specified dates on individual accounts - not on the aggregate amount held in C&G accounts.

Muriel Price relies on monthly interest to supplement her pension, and when C&G launched the 'Best 90' postal account last year she switched pounds 15,000 of her savings in a C&G Gold account into it. However, as interest rates fell during 1993 she decided to invest pounds 10,000 in the National Savings' Pensioners Guaranteed Income Bond and reorganise her C&G accounts. The annual statement from C&G on 31 March showed her balances - pounds 30,000 in the Gold account and pounds 15,000 in the Best 90. Last week she drew a cheque for pounds 10,000 payable to National Savings and transferred pounds 15,000 to Best 90.

Then she realised that because she had reduced her balance by pounds 10,000 she had lost pounds 1,000 of her bonus, even though she assumed she would still qualify for 10 per cent of the total of pounds 35,000 she had in her two accounts.

But the documents said that the 10 per cent bonus would be paid on the lower of the balances in each account on 31 March or completion day.

The balance on her Gold account was down to pounds 5,000 and now it seemed that the money she had transferred to her Best 90 account would not count. A possible bonus of pounds 4,500 had suddenly shrunk to pounds 2,000.

She can recover her original position in time to meet the takeover deadline. The C&G confirmed that as long as the balance in the Gold (or any other) account is restored to its original level ( pounds 30,000) before completion, the full bonus will be paid. There will be reasonable notice of the completion date next year.

That still leaves her with the headache of where to find the 'missing' pounds 25,000. Would Lloyds lend her the money? But for how long and at what rate of interest? C&G is now warning savers about loss of bonus unless balances are restored.