What's the catch?

Intelligent Finance's advertising campaign for integrated banking may tempt you to throw all your finances into one pot, but first make sure it's the right move for you.

The adverts promote the potential tax benefits of integrated banking, which involves offsetting your savings against your borrowings.

In one example, a higher-rate taxpayer who offsets £12,000 in savings against their IF mortgage saves £292.80 in tax.

It works like this: a customer with an IF savings account would be paid interest of 6.1 per cent gross on £12,000, equivalent to £732 a year. A higher-rate taxpayer would pay £292.80 in tax on this. But if the £12,000 was offset against an IF mortgage, in return for receiving no interest on the savings, the customer would pay no interest on £12,000 of their mortgage - saving £780, based on the standard variable rate of 6.5 per cent without being subject to any further tax liability. This is akin to higher-rate taxpayers receiving 10.8 per cent gross on a stand-alone savings account.

IF says: 'The account allows you to keep your nest egg safe and to borrow at the same time.' Savings can also be offset against the IF credit card or a personal loan.

However, the less savings you have, the less benefit you see. IF admits as much. This is also true if you pay the basic rate of income tax. Using the same mix of products as above, a normal-rate taxpayer with £3,000 in savings would receive the equivalent to 8.125 per cent on a savings account rather than 10.8 per cent.

And if you are not going to make use of the offsetting facility, you can get better savings rates elsewhere. The rates on the personal loan and credit card - at 10 per cent and 9.9 per cent respectively - are not market leaders.

All your savings and investments must be with IF, the Halifax's internet arm, and you must bank online or over the phone.

• Seen an advert or offer that sounds too good to be true? Write to What's the Catch? The Observer, 119 Farringdon Road, London EC1R 3ER.