Ovo Energy Company. Pays 5% Interest. Worthwhile??

[Jennykenny]

I have an excess of about £450.00 with Ovo, which I am leaving there as they pay 5% on it - better than I get anywhere else, and with winter coming up, my bills are going to be much higher.
Anyone see any disadvantages in this??

[Gizmonster]

One disadvantage I can see is if you're paying more than you should for the energy usage itself - this may far outweigh any interest you'll make on the excess cash.
In a nutshell - it all depends on what you're paying for the gas/electric you use.

[Buenchico]

As Gizmonster says, you need to think about whether you could get a cheaper energy deal elsewhere, not only now but in the future. If, say, Ovo were to start charging 10% more than the cheapest deal available elsewhere in a few years time, the money you'd already got in your account with them would effectively be of less value than if you were paying it to another energy supplier.

There might also be concerns about whether your money was safe if Ovo was to go bust. (There's some discussion about such matters here: https://forums.moneysavingexpert.com/showthread.php?t=5712120 ).

Lastly, I'd be a little worried about whether HMRC will continue to go along with Ovo's claim that no tax is payable on the interest. If more and more people take up the scheme I wouldn't be at all surprised to see HMRC issuing back-dated tax demands to Ovo's customers.

[ladybirder]

I used to be with OVO but can't remember if they have a limit over which they do not pay 5%?

[Buenchico]

^^^ There's no limit in Ovo's T&Cs, Ladybirder, but some energy companies automatically refund some or all of excessively large credit balances, meaning that (if they chose to do so) Ovo could simply send a customer a cheque if their credit balance got ridiculously large, thus effectively limiting the amount that they could earn interest on.

https://www.ovoenergy.com/help/interest-reward

[Jennykenny]

Thanks all, and as always, Chris has nailed it.
Will be asking for a refund of about £350.00 just to keep some in place for ‘overuse’.