When it comes to financial matters I like to think of myself as a rather savvy consumer. I tend to shop around for good bank accounts and I make my money work for me.
Credit cards are no different. If you are disciplined your credit card can actually make you money (well, technically what I am about to describe will save you money) and you don't need to enter the tricky waters of stoozing* to do it. Assuming that you are not actually borrowing money on your credit card and can afford to pay off the full balance each and every month there are some cracking deals out there which will actually save you money on your everyday spend. Although, pound for pound, loyalty points often give a better rate of return, I am a real fan of cash-backcredit cards. These cards reward your spend by paying you back a percentage of your spend (usually between 0.5 and 1%) at various points throughout the year. The cash is yours to do what you will with it.
The only trouble with cash-back credit cards is the fact that the rates of cash-back are forever falling or are capped and you find that you have to swap cards every year to get the best deals. It's an annoyance but hey!
I have a card that pays me 3% cash-back on petrol and groceries but only 0.5% on other purchases. I knew that I could better that. That's how I came to deal with Egg Money.
Egg Money is a rather strange type of credit card cum bank account. It pays you interest at a reasonably attractive rate of 4% on any positive balances and you earn 1% cash-back on spends. Dip into the red and you are looking at an interest charge of around 7.9%APR though so it's not a card for borrowers.
The basic idea is that Egg want you to "
charge up" your credit card with money which will earn interest until it is spent and then use the credit card earning cash-back. Of course, I'm sure that they are hoping that you overspend, thus incurring the interest charge. I guess that if you run a really strict budget then this might work (and Egg will send you text messages to let you know how much money you have left) but it does seem rather complicated to me and you can get far better instant access returns on your cash than the 4% that Egg are offering.
Personally, I use the card as a simple cash-back credit card. I don't pre-load it with cash.
Card acceptance is not an issue, it's a standard Mastercard fitted with the usual chip and pin technology. Talking of chip and pin, Egg is somewhat unusual in that it lets you view your PIN online. I'm not certain that I like that. In today's ever more security conscious world, the less information that is capable of being viewed online the better! It would certainly make me wary of accessing my account anywhere other than at home.
Like many credit cards and bank accounts you can view your details and transactions online. Unlike many credit cards, this is the only way you can operate your account. Egg do not send out paper statements, rather, they email you to let you know that your latest statement is available for viewing. Previous month's statements remain online for you to refer back to as you will. I don't really like Egg's way of displaying your statement. There's something about it that I find hard to read at a glance but I can't really put my finger on what it is. Purchases are categorised for you, so, for example, a purchase from IKEA is categorised as "Household - DIY and Furnishings" and a purchase from Boots as "High street and Web - your Health". The categories of spending are sub-totalled at the top of the statement. This does make it possible to see, at a glance, what your spend in the various areas is. Inevitably there are some retailers that Egg can't work out and which are listed as "Miscellaneous". Your statement will also give you a running total of your cash-back earned to date.
The online account management is easy to use and, in fact, you can link to other provider's bank accounts to see all of your worldly goods in one place. This works but again I'm not sure I like it from a security perspective. If your Egg account is compromised you may loose a little more than you bargained for! We've since de-linked our accounts. I've had no problems with the availability of the site and most of the things you would seek to do with or to the account can be done easily online. If you can't do what you want but don't want to phone Egg then you can even send them a secure message. Egg will also communicate with you through this medium so you do need to register an email address when signing up that you will check to see whether you need to log into Egg to pick up secure messages.
Cash-back is paid into your account each March based on your spend between March of the previous year and February. Cash-back is capped at £200 (£5 minimum) equating to a £20,000 maximum spend before your purchases no longer earn cash-back. In addition to this standard cash-back, Egg has a relationship with certain on-line retailers who will pay extra cash-back for purchases made with them. Examples at the moment include Dixons (5%) and Virgin Wines (20%). These enhanced cash-back amounts do not count towards your £200 limit and you still earn the standard 1% in addition. If you leave Egg you will not be paid any cash-back that has accrued but that has not yet been paid so, if you want to close the account it would be best to wait until March each year!
One of Egg's other quirks is that you must settle your bills by direct debit. You can easily set your account to allow Egg to collect the full amount outstanding, just the minimum balance, or, in fact, any other amount (capped or set) you chose. This makes it easy if you do pay your bills in full each month to pay off the account and not worry about it…. At least that's what we thought….
Having set our account up to always pay off the full balance we had an issue when the bank from which the funds were being transferred made a mistake and refused the directdebit (another story entirely!). As soon as we were aware of the problem we decided to use a debit card to make a payment to Egg Money so that the balance would be cleared. A telephone call to Egg resulted in the late payment fee being waived and we were impressed. Not so fast….
The following month I was keeping a close eye on our accounts to check that further problems were not experienced. To my horror Egg only requested the minimum payment from our account meaning that, in theory, we were incurring interest on the remaining balance on the card (no small sum either). I checked online and the account details were still showing that we had authorised the full card balance to be collected. A telephone call to Egg left us more confused than ever. We were told that because we had made an "additional" payment on the card in the previous month, Egg automatically only sought to collect the minimum payment and not the full balance despite our instructions that they were to take the whole balance. A search of the terms and conditions on the account threw no light on why this was the case (there is a term which states that a payment within 5 banking days prior to the date on which the direct debit is due to collect may mean that they do not request payment via direct debit but this was not the case). We have been assured by Egg that they will refund any interest that the system charges on the account but it's certainly not the way we would wish to operate.
Telephoning Egg is, in some respects, simple. We have never waited long for the phone to be answered and you do get to speak to a real person. One downside, however, is that you cannot set up a password on the account for additional cardholders to liaise with Egg. I usually look after all of our family;s financial affairs and, where I am not the account holder, my husband has set up passwords that allow me to operate the accounts by phone. I'm an additional cardholder on my husband's account but Egg just won't speak to me. We even had a highly amusing three way conversation trying to sort out the direct debit issue where my husband and I were on speaker phone with the customer services representative. I had to tell my husband the questions which I had and he then had to repeat them to the rep who would answer! My husband is more than capable of asking his own questions, but, in this instance, I had a better understanding of the reasons behind the problems and had, in fact, used my own account to fund the additional payment. It was a farce.
All in all I think that this card has its place IF all goes well and you don't want to do anything interesting with it. The 50 day credit period is amongst one of the best in the market at the moment and with no annual fee the cash-back upside is there for the taking.
As with many cards, signing up can be done on-line and acceptance for many will be immediate. You'll then be sent some paper forms to sign and send back. Expect to go from start to card in about 2 weeks.
I wouldn't use the card to borrow on and I probably don't think that the credit interest rate is attractive enough to use it as it is intended. As a cash-back card I think it does the job.
* stoozing is the practice of borrowing money on a 0% interest credit card and investing it elsewhere to get a good return on money that isn't yours. It's legal but not something to be tempted by unless you are very disciplined and have a good credit record which you don't mind risking. If you NEED credit, it's not for you.
How helpful would this review be to a person making a buying decision? Rating guidelines
Advantages: Cashback, simple to use, interest on credit balances Disadvantages: Slow money transfer from external accouts, can work out expensive for some
Advantages: Cashback, simple to use, interest on credit balances Disadvantages: Slow money transfer from external accouts, can work out expensive for some
Advantages: 1% cashback, contacted me to discuss the application, online statements (good for privacy) Disadvantages: customer service non-existant, online email service does not work most of the time
Nov 27th, 2006
exceptional by (13%):
very helpful by (85%):
somewhat helpful by (2%):
