It may sound silly, but it's interesting

Juding by the likes of Cahoot, Egg, Intelligent Finance (IF) and Smile, if you want to be a successful internet bank, you have to have a silly - sorry, quirky - name. But when Egg hatched more than five years ago, it wasn't just the unusual name that made it stand out from its more staidly named rivals.

What really made potential customers sit up and take notice were its market-leading interest rates which, at launch, were genuinely well above what the rest of the market was offering - and not just for a few months either.

According to data published in Which?, the magazine of the Consumers' Association, Egg managed to pass on the cost savings from operating over the internet in the form of excellent savings rates for well over a year after it opened for business.

The same thing happened with Smile, which led the field with its cash Isa for about a year post-launch. With IF and Cahoot, on the other hand, it took a few months for their savings products to start appearing in the best-buy tables - although it was a different story for borrowers, who were offered extremely attractive rates at launch.

But that was then, what about now? Does banking on the internet still have the edge? Yes, and the good news for anyone who finds the whole quirky name thing just a tad too cringe-worthy is that it's no longer obligatory - at least not if you want a current account which pays a decent rate of credit interest and does not charge the earth for an overdraft. As long as you pay at least £1,000 a month into its new Premier Plus Current Account, Alliance and Leicester (0845 300 2887 or www. alliance-leicester.co.uk) will pay 5.37 per cent on credit balances of up to £2,500, which is guaranteed until the end of 2005 for customers opening an account this year. The best you'll get from an internet-only bank is the 4.02 per cent paid by Cahoot (www.cahoot.com) - but for that you have to do without a cheque book.

What you pay for an overdraft with Cahoot depends on your credit rating, but the least you'll have to pay is 9.8 per cent, the same as IF (www.if.com or 0845 609 4343) charges all its customers. According to Moneyfacts, those are good deals - as is the 9.9 per cent that overdrawn customers at Smile (www.smile.co.uk) have to pay.

However, you get a better rate of 6.75 per cent with the FlexAccount - as well as internet banking if you want - from the Nationwide building society (0800 302010).

But why pay anything for being overdrawn when, for the next 12 months, neither the Alliance and Leicester, nor Lloyds TSB with its Classic Plus Account (0800 015 5000 or www.lloydstsb.com), will charge you a penny?

You can also borrow for free with the credit card from Egg (www.egg.com), which is charging 0 per cent until the beginning of February 2005, both on purchases and debts transferred from other cards. The internet-only bank also offers a reasonable rate of 7.9 per cent on a personal loan of £5,000 plus, but for a mar ket-leading rate of 6.7 per cent, you should look to Cahoot.

However, if your credit rating isn't good enough to secure this low rate, this best-buy rate is also on offer from Nationwide and Mint (0800 121 122). While Cahoot has always offered competitive rates to borrowers, it got off to a slow start as far as savers were concerned. But all that now seems to be in the past as it currently leads the field with the 5.5 per cent paid on its no-notice Introductory Rate Savings account.

This also offers a certain novelty value in that the rate goes down to 5 per cent if your balance exceeds £50,000 and is reduced to 4.5 per cent if savings exceed £250,000.