Not for us

Pay interest.

  • 27 September 2018
  • 10 replies
  • 88 views

Userlevel 7
Badge +9
Idea Status: Not For Us



Pay interest on credit balances.
Yes this is the one.
As far as im aware no other utility company does it but i may be wrong.
As monthly billing gives a more up to date state of ones credit/debit how about the concept of saying thankyou for keeping your acct a little in credit you could effectively pay interest on the credit balance. Not a huge amount maybe 1/4% below BOE base rates or something. Would it really cost that much. No need to actually pay the money out it just goes as a credit on customers acct.

10 replies

Userlevel 7
Badge +9
Sorry Jon, but that’ll NEVER happen 🙀🙀🙀
Thanks for posting this idea @Jon1 but it's not for us.
The reason is that we don't want our Members to build up credit.
Our goal is not store money. It's not our business model.
That's why we ask for regular monthly meter readings.
Userlevel 4
Hi @Jon1

It's a good idea - as Marc says, it's not for us, but I thought I'd let you know that some utility companies do. OVO as an example.

https://www.ovoenergy.com/help/interest-reward
Userlevel 6
Yes, as @Georgie says above, I had a time with OVO when they paid interest. I only got pennies back though so it didn't really give much incentive at the end of the day, even if you purposely gave OVO a large one off payment. I don't know what the interest rates are today but I would imagine quite low.
Userlevel 7
Badge +1
Unlikely to apply to me, but how about PP paying a modest amount of interest on a credit balance? Apparently OVO pay 3%.
Badge +2
Although interest on credit balances may be nice for customers, encouraging energy companies to behave as banks doesn't seem a particularly good idea.

When energy companies go bust, they are taken over by another company which honours any customer credit balance. This is what Ofgen has to say:

"Where necessary, Ofgem would allow the replacement supplier to recoup the cost of reimbursing the credit balances through an industry levy."

So energy companies going bust whilst holding large credit balances results in all consumers having to pay (eventually) for the bailout.

Here is the link to the statement on the Ofgen safety net:

https://www.ofgem.gov.uk/publications-and-updates/ofgem-safety-net-protects-consumers-cash
Userlevel 7
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Thanks for posting the Link Lenny.

Yep that's sounds about right..Directors of failing companies keep the business afloat for as long as possible lengthening / squirrelling the rewards.

After the recent failures It appears the industry regulators are not only way off the curve but not even in the game.

But I guess the levy is the lesser evil.

So good to be with Pure Planet
Userlevel 5
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That OVO thing is nuts. 3% for balance credit in year 1, 4% in year 2 and 5% in year 3+. No wonder they capped it at £1k credit balance else people would have been putting as much in there as possible!

You'd have to lock your money away (And a lot of it) for over 5 years to get anywhere near that interest rate.

I guess they are looking at it from the perspective that paying 3-5% interest costs them less than dealing with people phoning up for a refund.

Realistically, smart meters should make accounts being in credit pretty few and far between.....in theory.
Userlevel 7
Badge +11
Let's assume OVO aren't stupid (or at least I suspect not), either they will want to pay as little as possible which mean they will keep a very tight review on account balances and that is good for the consumer. So a point for OVO there if that's true...or
There is another possibility - it costs OVO more than that to borrow money so they are encouraging their customers to lend them (OVO) money at a rate lower than their bank would charge - if that's the case then I would consider it at the very least to be unethical.

As mentioned consumers (the ones who believe OVO aren't ever going to go bust) are going to try to ensure that they have as high a credit balance as they can, or at the least they won't care if their balance is high (i.e. positive) because you can get more interest with OVO than you can with a bank, and clearly that is a nonsense but..

...who pays? Well for a start those who can least afford to have a credit balance (the poorer and more vulnerable) AND ultimately it has to come off OVO's profit, which means all the OVO consumers are paying for it.
I have to be honest, in my opinion if OVO offered between 0.5 and 0.75% I wouldn't have the same concerns so perhaps there is a matter of degree here.
If it's too good to be true, then it's unsustainable, and it is too good to be true.

That said..
I'd like to see PP offering the option of an initial payment date up to 15 days after the switch date, with the possibility of changing it after the first payment has been taken. I understand why it's on day 1 but I think that is a chink in PP's ethical armour, I'm firmly of the opinion that people switching in to attempt to defraud PP would be absolutely negligible, it would stem a lot of complaints about the money being taken in advance and would have the benefit of evening out the credit balances to be closer to the zero line.

Jenam93;24951:
That OVO thing is nuts. 3% for balance credit in year 1, 4% in year 2 and 5% in year 3+. No wonder they capped it at £1k credit balance else people would have been putting as much in there as possible!

You'd have to lock your money away (And a lot of it) for over 5 years to get anywhere near that interest rate.

I guess they are looking at it from the perspective that paying 3-5% interest costs them less than dealing with people phoning up for a refund.

Realistically, smart meters should make accounts being in credit pretty few and far between.....in theory.
Hi @Oakbank
This idea of paying interest on credit was already suggested by @Jon1
It's not for us because we've no interest in storing credit. It's not what we're about.

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