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| Alliance & Leicester - Branch ISA | 2.70% |
| Abbey - Easy ISA | 3.10% |
| Bank of Scotland - Halifax ISA Saver | 3.11% |
| Nottingham BS - Cash ISA | 3.40% |
| Smile - Cash ISA | 3.50% |
| Ulster Bank - Cash ISA | 3.65% |
| HSBC - Cash ISA | 3.75% |
| Stroud & Swindon - Direct Cash ISA | 3.85% |
| Stroud & Swindon - Branch Cash ISA | 3.85% |
| Saffron BS - Cash ISA easy access | 3.85% |
| Triodos Bank - Triodos Online Cash ISA | 3.89% |
| Triodos Bank - Triodos Cash ISA | 3.89% |
| Ipswich BS - Premier ISA | 3.90% |
| Scarborough BS - Cash ISA | 3.97% |
You'll see that some providers are so keen to offer such awful rates that they have more than one ISA with an interest rate of under 4%.
One, the Triodos Bank, even has a 33 day notice period for withdrawals. At these rates, that isn't really that much of a forfeit, Triodos.
You'll notice too, that while most providers have rather dull names for their dull accounts, Ipswich BS has the cheek to call their bottom of the league account "Premier" ISA.
One even comes from a bank called "smile".
Hardly.
(21:00 Tuesday 28th October 2008)
Avoid this loan at all costs.
Provident Credit offers appallingly high interest on its personal loan. Check this out: If you want to borrow £500 and pay it back over 31 weeks, it will cost £25 per week, making a total charge of £775. That's an incredible 365.1%. If you want that over a bit longer, its web site has a second option of 56 weekly payments, allowing a slightly lower payment of £15 or a wince inducing 183.2%, making the total paid back £840. They even offer an "Easy Card", allowing the cardholder to use it at Argos stores only, up to the value of the loan. Collections are made at the doorstep each week, not from a bank account, meaning that those without a bank account are more able to borrow from Provident. It will offer loans from just £50 to £500.
Provident Credit were criticised tonight on Radio 4 for offering such ENORMOUS interest rates on their loans and for being marketed in the run up before Christmas to members of our society who are more vulnerable to poor financial products and less able to understand what they are getting into. This Christmas, they are increasing their incentives to intermediaries who pass on business. See the following link for details. Provident is marketing itself at those with a poor credit history, so you would expect them to have a slightly higher lending rate, and you might even forgive them for door-to-door collecting in deprived areas, but at rates of 365.1% they are making so many bad personal situations much worse. They are simply profiting from the most vulnerable and the most desperate at a very sensitive time of the year for those with debts. If they want to target these people, offer loans at twenty or thirty percent if you must. NOT 365 PERCENT!
We think Provident Personal Credit are despicable. We sincerely hope they go out of business. Soon. The MoneySurgery nurse says "They're preying on the poor". Always believe a nurse. Avoid if you can.
(21:00 Tuesday 21st October 2008)
The British banking system was closer to collapse than at any time since the 1st World War, according to Bank of England governor Mervyn King. But the UK has turned the corner thanks to the government's bail-out package. He said a resumption of normal levels of lending should now resume, due to the £50bn recapitalisation plan. However, Mr King did agree that Britain was likely to be in recession.
Money Surgery has warned, for most of its 8 years, that lending by most banks is being done recklessly, and with little care for the consequences of an inevitable downturn in the property market or the economy, which both have cantered on for an unprecedented number of years. Mortgage lending in the mid-90s always included an MIG or mortgage indemnity guarantee, which covered the lender against making any loss if the mortgagee defaulted on their loan payments. This was implemented after the losses made from the property market collapse of the early nineties. the MIG on a typical 25K loan was about £400.
How short the memory of bankers.
After 12 years of property boom, from 1995 to 2007, none of these financial professionals gave a second thought that the property market might one day slow down or worse still stop completely, even though they all made swingeing losses in the early nineties which necessitated the MIG clause in mortgage contracts in the mid nineties. We all know that share markets, property markets, commodity markets, are all cyclical. One grows as another recedes. What goes up comes down. These bankers (no rhyming slang intended, however appropriate) carried on lending to people with no proof of earnings, loans in excess of the property value, with no MIG to fall back on if, shock horror, property prices actually fell.
The top four banks made in excess of £30bn a year for years leading up to their pitiful begging to the government, and where has it all gone? They cited US sub-prime lending as the source for this "global" banking crisis but British banks have acted like stupid, reckless amateurs. They are supposed to understand business and the markets but turned out to be painfully dim-witted. They are supposed to be the absolute pinnacle of wisdom in the world of money but have acted with wild incompetence.
Thankfully, most of Britain's building societies are generally very healthy. These businesses, again generally, acted with prudence, remember that word, Gordon? And have never had shareholders to drive them towards making profits above all else. How very different building societies are to banks these days. And how very fortunate we are to have an alternative to banks.
(21:30 Tuesday 7th October 2008)
Alliance and Leicester has been fined a record £7 million by the Financial Services Authority for mis-selling sales of payment protection insurance over a period of three years. The FSA said that the bank had deliberately trained its staff to put pressure on customers who queried the inclusion of OPTIONAL PPI in a quote. A&L apologised for its "shortcomings" and said that it would reimburse customers who took out the insurance which is intended to provide cover if loan payments can't be made due to redundancy or illness.
Money Surgery doesn't quote loan best buys WITH PPI any more. PPI is where the banks make their biggest profits and have an awful reputation for having small print which gets them out of covering the loans they were meant to protect and for being sold to people at little risk of being redundant or ill during the loan repayment term.
Banks. Good aren't they?
(21:00 Monday 29th September 2008)
Shares in the US leading share index, the Dow Jones Industrial, suffered is worst ever one day drop of 777.68 points (6.98%) today to finish at 10,365.5, after the US House of Representatives voted against the 700BN dollar rescue package for American banks. It lost about a Trillion dollars in value, dwarfing the value of the bail-out package. In London, the FTSE-100 index plunged 5.3% to finish at 4818, while in Germany the DAX fell 256.42 to 5807 and in France the CAC dropped by 209.9 to 3953.
The fallout from the credit crunch, which began a year ago has led to banks collapsing and being taken over by governments worldwide, with the value of the Bradford and Bingley rescue by the British government being put by some at £9BN. Another bank has been rescued by the BeNeLux countries at a potential cost of £9BN, while in Germany another has been taken over by the government at an estimated cost of £28BN. Even the pound couldn't escape the turmoil, losing ground on the dollar to finish at $1.8025 and slipping against the Euro to 1.25 Euros. Shares in Royal Bank of Scotland fell 13%, leading a banking share price collapse, on the UK stockmarket.
Many Americans blame Wall Street for making the mess and say let them pay for their mistakes, but the US government won't give up on the rescue package or more banks will fail, threatening the functioning of the finanical system itself. Expect more voting at the end of the week when the House of Representatives reconvenes on Thursday. In Britain, Prime Minister Gordon Brown expressed his disappointment at the failure of the US banking bail-out.
At the Surgery this evening, the most entertaining television was on the BBC News channel which showed the Dow Jones Index ratcheting down continuously to ever darker depths. We couldn't believe the degree to which the Index was falling. Perhaps entertaining is the wrong word. We are all affected by these falls, all across the world. Most of our pension funds trade most of the shares. Recent history teaches us that after turbullence on stock markets comes recession, negative equity and unemployment. Hold on tight - the ride isn't over.
(11:00 Friday 12th September 2008)
Members of the Catholic Building Society will receive windfalls over the festive period this year, if they vote to accept the terms of the proposed merger with Chelsea Building Society.
Borrowing members will receive £100, while saving members will receive between £100 and £500 depending on the size of their investment. Savers who had invested £100 will receive £100 bonus. savers with less than £100 invested, or those whose balance drops below £100 between May and December will not get a bonus.
The Catholic Building Society never had a charitable assignment scheme to deter carpetbaggers, and non-patients often say that the days of carpetbagging are behind us. But those in the know realise that a hundred pounds invested in a building society can possibly yield a windfall a few years later and always provide some interest top-up along the way. Just ask members of the Catholic Building Society.
Don't ask unlucky members of the Derbyshire or Cheshire Building Societies, though. They have just been told that they will get nothing when their loss-making societies are taken over by Nationwide Building Society.
One of our patients recently had a £100 win on the Premium Bonds from a holding of just £100 and is now due another £100 bonus from the merger of the Catholic, based on a similar £100 investment, "And I'm not even a Christian!" he says.
Members of the Catholic who want their Society merged must vote yes on forms issued this week, then they need to check that they keep at least £100 invested, or £100 owed, between 31st May 2008 and the close of business the day before the effective date of the merger, which is expected to be 31st December 2008. All bonuses are subject to taxation at the lower rate (20%). The helpline is 0845 607 6702. Bonuses will be sent to the address of the principal account holder within 4 weeks of the merger.
(10:00 Wednesday 16th July 2008)
The cost of a fixed-rate mortgage has soared to an eight year high as lenders continue to hike their rates due to increased funding costs.
The average interest rates on a two-year fixed-rate loan for someone borrowing 75% of their home's value jumped by 0.37% during June to 6.63%.
The Bank of England added that the cost of three-year and five-year fixed-rate deals also rose sharply.
(20:00 Sunday 9th March 2008)
The 6th of April is looming and as it's the start of the new tax year it marks the first day of new ISA rules set out by the government. These are summarised below:
Please bear in mind that the ISA rules are being changed to allow the transfer of monies saved in a cash ISA to a stocks and shares ISA but not vice versa. Savers are also able to transfer money saved in the current tax year. Such transfers must be the whole amount saved in that tax year in that cash ISA up to the day of the transfer. When you transfer your current year cash ISA to a stocks and shares ISA it is as if that cash ISA had never existed.
Any money saved up to the date of a transfer will be treated as if you had invested that money directly to the stocks and shares ISA.
For example, if you had saved £2,000 in a cash ISA and then transferred it to a stocks and shares ISA you would be able to make further investments totalling £5,200 in the year. You can either invest all of the £5,200 in a stocks and shares ISA or you could save up to £3,600 in a cash ISA or a combination of both.
(15:00 Monday 24th December 2007)
A loan firm has come under fire after charging one client an annual interest rate of more than 2.6 million per cent. An unnamed woman in York took out a one week loan for £320 with the firm Early Pay Day Loans, which attracted £80 in interest over the seven day period. When the cost of the credit was calculated over a 12-month period, the APR worked out at 2,639,385.9%.
The anonymous borrower approached York Credit Union for help with a number of debts, including the Early Pay Day Loans deal. Because of the way they are structured, short-term loans almost always have significantly higher APRs than traditional deals, where the money is paid back over a much longer period. Lenders argue such interest rates reflect the fact that many customers who take out these loans are considered to be high risk but York Credit Union Manager Mike Horncastle said he was astonished to see the figure in the loan paperwork.
"I've never seen an APR that high," he said. "When we put her details into the computer, our software, which is designed to help credit unions analyse borrowers' details, simply could not cope with the figure and wouldn't process it. "The computer assumed it was a mistake," he added. He said the credit union recognised why people's circumstances sometimes forced them to take out expensive short-term loans, however he asks anyone considering borrowing this way to first seek professional advice from Citizens Advice. "Don't enter into this kind of loan agreement without fully understanding the consequences in the short and long term," he warned.
Dawn Hodson, a manager at Early Pay Day Loans, was quoted in the Metro newspaper defending the company's policy. "The charges on our loans are competitive in the market, and we like to think we are responsible lenders," she was quoted as saying.
When BBC News contacted Ms Hodson, she declined to comment further pending legal advice. The case is likely to reignite the controversial debate about whether there should be a cap on the amount of interest lenders can charge. The UK has not had an interest rate ceiling since the introduction of the 1974 Consumer Credit Act. Other European Union countries, such as France, Germany and Ireland, do limit interest rates. Consumer groups and debt charities in the UK are split on whether a cap is a good idea.
In 2004, the Department of Trade and Industry rejected calls to re-introduce a threshold, arguing that it would make it more difficult for low-income consumers to get credit.
(19:00 Thursday 29th November 2007)
The number of mortgage approvals for the month of October was the lowest monthly total for nearly three years, according to the Bank of England. The 88,000 mortgage approvals was down on September's 100,000 and 128,000 a year ago, suggesting that the housing market is cooling off sharply, under the impact of higher interest rates.
Further evidence of this cooling off comes from one of the country's biggest lenders, Nationwide Building Society, which has said that house prices fell in November by the biggest percentage for 12 years, at an average 0.8 percent from the previous month, and the first drop in price since February last year. This year's house price inflation rate now stands at 6.9%, a significant slide down from 9.7% reported in October.
However, worse may come if, as governor of the Bank of England, Mervyn King, forecasts, the outlook is "uncomfortable", due to the global credit crunch. He warned that growth may slow and inflation might rise in a speech to the Treasury Select Committee.
So what is the worst that can happen to house prices? How low can they go? Well back in the early nineties, the worst performance year-on-year was in 1992 when prices fell by 8.2%. For the five year period from 1990 to 1995, house prices fell by 10.7%. So, there may a little way to go, in terms of price and time but if 10 percent is the worst to be expected, then loads of eager first time buyers will be disappointed if they're looking to snap up a bargain.
(20:00 Thursday 22nd November 2007)
With-profits funds are dull, with minimal bonuses, disappointing payouts, and derided by financial advisers. But at the moment, they are slightly more interesting. Three leading firms - Prudential, Norwich Union and Legal & General - are announcing various forms of restructuring of their with-profits funds. L&G has written to its 880,000 with-profits policyholders outlining its plans to restructure its long-term fund. They will be forgiven for wondering what all the fuss is about: underneath all the jargon about sub-funds, shareholder retained capital and regulatory capital, there seems to be little change. Shareholders, however, can look forward to share buybacks and more efficient use of capital.
But policyholders with Norwich Union or the Pru may find themselves enjoying a modest windfall next year.
These manoeuvres reflect both the complicated ownership structure of the with-profits funds in which policyholders money is invested and the longevity of these funds. Under insurance company rules, 90 per cent of profits earned on these funds must be retained within them and shared among policyholders as their investment return, with just 10 per cent allocated to shareholders - reflecting their role in providing capital for growth. But these funds go back decades - even centuries - and, over the years, have run up surpluses that can no longer be identified with individual policies. At the Pru, the fund is worth £80bn and the excess is around £8.7bn, while Norwich Union's is £4bn. These companies have both decided that they would like to, in the jargon, 'reattribute this inherited estate' - commonly translated as distributing orphan assets. They have opened discussions with the regulators about how this can be done.
This year, Norwich Union formally appointed Claire Spottiswoode as an independent arbiter, or policyholder advocate. She has conducted roadshows to explain the proposals to customers and is still in discussions with the company's management. Her summary report is expected next spring and, if a distribution follows, it will happen next summer. The Pru has nominated Peter Bloxham as its advocate, but his appointment will not be confirmed until the Pru has satisfied itself it is worth considering distributing the estate.The key issue is how much of these surpluses will have to be given back to policyholders. While the rules suggest they should get 90 per cent, the companies would not bother going through the process unless they thought they could get away with paying less.
That may seem like a bad deal in principle, but it may not be in practice. While policyholders may own 90 per cent of the surpluses, that is not reflected in their policies and they have no more power to get their hands on it than the company's shareholders do. So the advocates may conclude it is better for them to get a smaller proportion of the surplus, but the decision is not straightforward. Indeed, Spottiswoode has said the advice could be different for different types of policyholders. Her key concern will be ensuring that they are treated fairly and that, shorn of its surplus, the with-profits fund will still be financially strong.L&G's situation is rather different. Following a reorganisation in 1996, the company extracted about £1.6bn from its with-profits fund, though there was no policyholder windfall. That capital was reclassified as shareholder capital, but L&G could not do much with it: the money had to be kept to back the policyholders' funds with only a small amount able to be released every year. Now, it wants these funds - which stood at £316m in June - with its shareholder capital; policyholders will instead get the protection of a £500m fund, which will be reduced over the next 10 years - the period over which current policies will mature. That will give L&G greater flexibility in how its capital is used, but should not affect policyholders.
Norwich Union and Pru customers may be luckier, but don't spend the windfall yet; not only is it still uncertain but, if it happens, it will be added to policies rather than sent out as a cheque.
(18:00 Wednesday 14th November 2007)
Expectant mothers are to be given a new one-off payment worth £190 to keep them healthy in the final weeks of pregnancy, the government has said. The Health in Pregnancy Grant will be paid to women from the twenty-fifth week of pregnancy starting April 2009. It is designed to help women maintain a healthy diet and lifestyle at a time when many of them have stopped working.
To claim the money, which will not be means tested, women must be under the care of a midwife or health worker. Details of the new grant were announced at a conference organised by the Daycare Trust. Jane Kennedy, Financial Secretary to the Treasury, said the government wanted to promote a healthy lifestyle but recognised the financial pressures facing pregnant women. "The Health in Pregnancy Grant is designed to provide pregnant women with financial support, alongside important advice from a health professional to help them invest in their individual needs during pregnancy," she said. Ms Kennedy added that the system would be flexible enough for women "to choose how they budget and where they spend the money". Similar to child benefit in that respect, then.
(19:00 Thursday 8th November 2007)
Irresponsible lenders are pushing people into debt, but regulators are "asleep on the job", a charity warns. Citizens Advice says that its staff dealt with a record 1.7 million debt problems during the last 12 months, which was an increase of 20% on the previous year. The charity says it is working hard to help more people deal with their financial problems. However, it wants the financial services industry to do more to tackle irresponsible lending.
The director of public policy at Citizens Advice, Teresa Perchard, said: "Time and time again, we come across people in desperate straits who need not be there if the firm who lent them money had acted responsibly on day one. "And while some regulators have taken action on scandals like the mis-selling of payment protection insurance, others seem to be asleep on the job," she added. The call for action comes as the charity holds a conference on helping people to make the most of their money. Citizens Advice is developing more new services to help prevent debt, such as providing financial planning advice, and improving people's skills and confidence but it says regulators and businesses must play their part to address one of the biggest issues facing the UK economy.
Teresa Perchard also warns that the collapse of Farepak and the problems at Northern Rock have pushed consumer confidence in the financial services market to an "all-time low". Her comments come as new figures show Britons spent a record £511bn on credit, debit, charge and store cards in 2006. Plastic spending has soared by 47% since 2002, according to market analyst Datamonitor.
(19:00 Friday 2nd November 2007)
Credit card firms have been told by the House of Lords they must refund people who buy goods and services abroad that are undelivered or damaged. Five Law Lords have dismissed an appeal by Lloyds TSB and Tesco Personal Finance, who had challenged the application of the Consumer Credit Act. Section 75 says credit card purchases between £100 and £30,000 are insured by the card issuing companies. The Lords' decision upholds an earlier decision of the Appeal Court. "It confirms that credit card issuers are individually and jointly liable with suppliers if a consumer has a valid claim against the supplier for misrepresentation or breach of contract," said John Fingleton, chief executive of the Office of Fair Trading (OFT).
The banks responded to the Law Lords' decision with disappointment, but not surprise. "At long last we have clarity," said Sandra Quinn of the card services organisation Apacs. "The banks now know where they stand and there is no doubt it is good for consumers." She pointed out, though, that the banks were not concerned so much with small-ticket items that failed to be delivered. She argued that the main problem for banks was any consequential loss - for instance, being liable for all costs in the US that might arise out of a crash in a car hired with a credit card payment. "Legal costs there are not cheap," she said. Martyn Hocking, the editor of Which? Money said the legal decision was excellent news. "Foreign travel and the internet have opened up huge new markets to consumers." "With most credit card companies, consumers already pay a charge each time they use a credit card abroad - the least they can expect is the same level of protection as they enjoy at home," Mr Hocking added.
(13:00 Sunday 7th October 2007)
Credit card companies have requested that the House of Lords clarifies that consumer protection rules will not apply to foreign credit card transactions.
Consumer protection group Which? believes that people who use their cards to make overseas purchases should be protected under the 1974 Consumer Protection Act but Lloyds TSB , Tesco Personal Finance and American Express say that the Act does not apply.
According to Which?, the credit card firms are worried that card users will claim from them as the first option but people are encouraged into using credit cards due to an assumed protection offerred by the Act. Credit cards also make a lot of money from transaction fees.
In the UK, some £146.4bn was spent using credit cards during 2006, while just £12.3bn spent overseas, and currently the credit card firms, including Lloyds TSB, continue to pay out on claims from overseas spending.
At MoneySurgery, we want to see the Act applied formally to overseas spending, after all, the companies that use the logos of the card companies to attract business ought not to offer poor service or poor products. The card issuers are rightly jointly liable for any proven claim for poor service along with the foreign trader. However, if we are fighting debts, the best way to get rid of debts is to stay at home until the debts are shown the door. And as for using credit cards, they are very dangerous things and can easily rack up more debts. There are ways to get a few pennies back as our etients have proven, and as we have described in this site, but generally most people are better off cutting all their credit cards up and paying off all their outstanding balances.
(20:00 Thursday 16th August 2007)
Almost one in four of us Britons have no savings at all, with the parents of young children the least likely to have spare cash, according to a survey by Combined Insurance.
Approximately 23% of us have no nest egg, while 8% have less than £100 set aside. Almost 30% have £100 to £1,000 saved, but only 8% have more than £1,500.
Money Surgery is the greatest debt-busting site on Earth. You know, the blue thing between Venus and Mars. And as such, our focus is on getting rid of our personal debt. Read our pages and you'll get the knowledge to beat debt and control your finances. After that, it is almost as important to build up some savings even for that rainy day emergency, to forge a solid investment strategy or simply save for the finer things in life. You could advance from the Greatest debt buster on Earth to the greatest saver on Earth, right here at Money Surgery. Don't forget to turn left at Saturn.
(23:00 Thursday 12th July 2007)
The US Dow Jones Industrial Average rocketed 283.86 to 13861.73 chiefly because of huge gains from companies such as Alcoa, Intel and American Express. It was the biggest point gain for the blue-chip index since October 2002 and its biggest percentage gain since October 2003. The Dow Jones has gained 11% in the last year. Other indices posted similar gains, the S&P 500 also setting benchmark rises. It seems as though investors, who had recently been nervous about the market, fearing fall-out from "sub-prime" mortgage repossessions amongst other things, relaxed and reacted with vigour to a little good news.
For those of us focussed on beating our personal debts, huge gains in stockmarkets around the world means little. What it can mean, is that there are opportunities to invest your own money once those debts are gone. It should act as an incentive to kick debt out sooner rather than later. To many Ex-Patients of Money Surgery, or Ex-Pats as we call them, a world without debt can seem daunting...
What do we do with our savings?
Should we spend our money and enjoy ourselves now that the burden of living with debts is lifted?
Where do we start with investments?
How can we avoid getting back into debt?
For some pointers and hopefully some answers, see our Future Dreams page.
We won't profit from your debts... or your savings.
(08:00 Tuesday 10th July 2007)
Getting rid of debts requires a great deal of self-discipline and motivation. To beat debt in the shortest time, means doing without things that we would regard as normal everyday things. It means spending the absolute minimum to survive and seeing how little you can spend in a day, a week, a month.
This is the basis of the MoneySurgery philosophy. It is in its most extreme sense, to merely exist for a short time, foregoing unnecessary expenses, so that debts can be paid off as quickly as possible. It could be called pure MoneySurgery or extreme MoneySurgery.
Think about the term MoneySurgery. Its name was not accidental. It implies a crisis, it implies pain and suffering, an immediate whole-hearted response to an emergency situation. Pure MoneySurgery means cutting-out comfort and luxuries, prioritising where our money goes, channelling it into paying-off those debts. Surgery also describes a review and a refocussing and a chance to regain control of our own money and our own life. To see where every penny goes and to make changes. To be brutal and to waste nothing.
The more extreme the response, the quicker the recovery.
Cut out the car, get an instant cashback and save £4,000 a year, £60,000 - 70,000 in ten years.
Cut out smoking 20-a-day and save £40,000 in ten years.
Keep re-mortgaging and save 20% of the mortgage, that's £20,000 over a 25-year 100K mortgage.
Don't have a baby, save £20,000 - 50,000 in the first five years, depending on the child care.
Cut-off your mobile account, go Pay-as-you-go and switch to BT's Light-User Scheme and pay just £15 per quarter. Dial "M" for MoneySurgery.
Snip-off your hair for free, and save £1,200 over 10-years.
Buy just enough food to live on, from a supermarket, using own-brand products and good-for-you fruit n veg, that won't get wasted.
Give NOTHING to charity: YOU are the charity now.
Keep checking and switching fuel supplier, and keep the lights out and the heating down
Don't buy clothes - They'll last.
Cut out holidays and any unnecessary travel.
Forget satellite TV, computers, CDs, DVDs and books.
Don't booze, gamble or do anything illegal because getting caught costs.
Living like this is extreme. It is, in a way, pure. There are many aspects, of abstinence, of poverty, of discipline, of suffering, even of chastity, that we share with religious beliefs and doctrines. The difference is, all you need to believe in is yourself. Oh, and you'll get your reward on Earth, too. In cash.
(08:30 Thursday 5th July 2007)
The Bank of England is likely to raise interest rates again this month, probably by a quarter of one percent to 5.75%, making it the fifth increase in a year. The main reason for raising rates again is the continuing rise of inflation but house prices continue to rise too, stimulated by the buy-to-let market. Expect similar increases in borrowing rates and mortgages, and in savings account interest too. Should you fix your mortgage now? Should you fix your mortgage ever? Should you pay it off? All these questions and answers, and more, lie within Money Surgery. Not profiting from your debt.
(21:00 Monday 2nd July 2007)
When it is one like this:
Please, please, please, consumer protection, stop companies flogging "Zero" percent credit cards with a three percent set-up fee. In the example of the AOL card, the deal is over twelve months, so that equates to three percent per annum NOT ZERO PERCENT.
If the card bill is paid off after six months, the charge equates to about SIX percent per annum! If the cardholder uses the card or they don't pay off the transferred balance in time, they may well rack up more debts at SIXTEEN POINT NINE PERCENT.
Financial companies get the most complaints of any business sector out there. Be careful, Patients, because too many companies exist to make money from you by deception, so read the small print, every time.
This is Money Surgery. Our ethics are rather purer than others. We have nothing to hide and nothing to sell. We will not profit from your debts.
(19:00 Monday 2nd July 2007)
Banks are providing a current account "jungle" and hurting the most vulnerable of their customers, says watchdog The National Consumer Council. It today called on regulators to force banks to give better information on interest charges on statements. Some bank charges could harm low-income account holders more than others by pushing them further into their overdrafts and increase their debts, said the NCC. The banks, in defence, have said that UK customers can avoid all fees by staying in credit.
Money Surgery recognises that banks exist to make a profit and to serve shareholders first, customers second. Every company, every bank, every financial advisor exists to make a profit from its customers. If they didn't they simply wouldn't exist. Only non-profit-making organisations like The National Consumer Council, Citizen's Advice Bureaux and Money Surgery exist to assist those in debt. Every money expert that makes their money from handling your debts, savings and investments is by definition a money making expert. If they didn't make enough commission on your money, they might go out of work. Stop clicking their click-throughs and they cease to exist. Getting help and impartial education for the vulnerable for free will not increase their debt burden but banks, however, will not try very hard to prevent the less well off from slipping into the charging trap. In fact, they'll do everything but push them into it.
(13:00 Saturday 30th June 2007)
After the deluge of recent weeks, many home owners are busy repairing their properties and have sent off claims to their insurers. Many, though, have found that they have been underinsured or failed to cover contents. With more storms expected this weekend, it could be time to check your policy. Here are the key questions you need to consider.
What damage does my policy cover?
Check that your policy covers flood damage. Those that do will pay for repairs to your home, such as replastering and replacing floorboards or carpets. When it comes to claiming for possessions that have been destroyed, such as electronic equipment and furniture, you need to check your contents cover. You may need to update your policy if you have new possessions and have not increased your cover limit. As ever, it is crucial that you read the small print. For example, some insurers insist that you take steps to prevent flood damage, such as moving valuables upstairs. Failure to take such action can invalidate your policy.
Who provides and pays for temporary accommodation?
Most policies cover the cost of alternative accommodation, up to a specified limit. For example, Norwich Union will pay up to £6,000 of rent for accommodation while your home is repaired.
Will my insurer organise any repairs?
Some insurers offer 24-hour emergency helpline services and will use specialist companies to arrange alternative accomodation and repairs. They will negotiate with all tradespeople and organise the job from start to finish. However, other insurers will simply tell you to organise your own repairs and will reimburse you when you make the claim. It is essential, therefore, that you keep all receipts.
My area has flooded several times before. Will my insurer continue to cover me?
Insurers may choose to stop providing cover if your area continues to be prone to severe flooding. Insurers have pledged to continue to cover homes in flood risk areas where the Government plans to boost flood defences. If you are in a high-risk area with no such defences planned, your insurer may stop your cover. Alternatively, it may continue to provide cover against other forms of damage apart from water damage. In some cases, insurers will simply increase your premiums. In all of these cases it may be time to shop around for a new policy.
What do I do next?
Some specialists, such as Adrian Flux and Bureau Insurance Services, provide cover for homeowners in flood-prone areas even when they have made multiple claims in the past. If you do take out a new policy, you must advise the insurance company of any previous flood claims you have made. Failure to do so could invalidate your policy.
(19:00 Thursday 21st June 2007)
The "best thing anyone can do" we say, is give up smoking.
Next month it becomes illegal to smoke in a public building in England, so why not drop your last butt?
"Got a light, mate?"
No.
We've got 7 tips to help you give it up, instead. Stick that in your pipe...
Finally, visit our Smoking page for even more thoughts and tips.
(19:00 Monday 30th April 2007)
The best way to get a grip on your home phone bills is to switch to, or stay with, BT's Light User Scheme. Even making as much as 25 pound's worth of calls a quarter will see you get a rebate of £11.07. Don't make any calls, and let people with less debts call you, or simply have a phone for emergencies, and you'll get a whopping £22.70 rebate. Take that off your line rental and your quarterly bill will be £9.32 including VAT.
After giving up smoking, and staying married, the third best thing any human can do is dial 100 and ask to switch from whatever scheme they're on to the Light User Scheme. Switch back to BT if you have to. The sums are irresistable, and the key to its success is that THE LESS YOU USE IT, THE MORE YOU SAVE. In BT's own language, "If your call charges exceed £11.99, you get a rebate of £11.07. Otherwise, for every 10p your call charges are less than £23.967 you get a rebate of 9.50p." Take this away from, or add what's left of your bill to, the line rental, which is £30.63, add 17.5% VAT and that's your shiny new very low bill.
For debt-busters, it's the king of home telephone schemes, and has been for years.
(19:00 Monday 16th April 2007)
We've all seen the price of oil come down but where are the savings for the consumer? Householders are needlessly paying about £200 per year because energy companies haven't cut their bills in line with wholesale price reductions, according to a report. So much for competition and free markets.
uSwitch.com, the excellent energy price comparison web site, to which we have no money making click-throughs or affiliations, says the big energy companies are keeping prices at an "inflated" level. Price cuts have brought average annual energy bills down from £1,013 to £935, uSwitch.com said, however, suppliers must make further cuts averaging £200 a year to pass all the wholesale cuts on to their customers. Depending on their supplier, customers are still paying between 33% and 53% more than they were before January 2005, said uSwitch.com.
To us at MoneySurgery, many Patients have complained about no perceivable reduction in their gas and electricity bills and most report no notification from their suppliers of any price reductions, which would be loudly advertised if there were any. Add to this the fact that water companies steadily add a standing charge to customer's bills despite the fact that they have changed to a meter, and huge percentage rises in the cubic metre charge for water used and sewerage processed. Let's have competition amongst water companies we say. And we haven't even mentioned the rip-off that is widely known as Council Tax.
Gas companies, electricity suppliers, water firms, councils, take a bow. Our Patients think you're sh*t. And you should be taken out and sh*t ...with a sh*tg*n.
(22:00 Thursday 15th March 2007)
Tuesday saw the introduction of a new twenty pound note from the Bank of England and it carries the image of someone Scottish, not English. The person in question is philosopher and economist Adam Smith, author of The Wealth of Nations, and credited by many as inventing the concept of competition and market forces. So, well-qualified for appearing on currency but one wonders "couldn't they find anyone English?"
Guess who's constituency Mr Smith was born in... Go on, you know you want to... Yes! Chancellor Gordon Brown's constituency. Who said the Bank is independent?
For the record, the note has a number of anti-counterfeiting features, some advertised, some secret, and they are guaranteed to slip through one's hands as easily as before. If you don't like them, maybe you're English and offended by the appearance of someone "foreign" on your cash, please send them to us here at the Surgery. Only joking - we're non-profit-making - our only interest is the interest your money is earning, unlike other money web sites.
(18:00 Thursday 28th December 2006)
Okay, you've overspent a little this Christmas and the sales have sucked some more money from your credit card but there is a way you can deal with that debt, at least for a few months, with a Zero Percent balance transfer credit card. Unfortunately, these things almost always come with a Balance Transfer Fee, of up to 3%, so only transfer to a card that offers 0% to transfer your debt AND has no fee.
We are campaigning for the removal of advertising that says "0% Balance Transfers, 2.99% balance transfer fee." because it's misleading and contradictory. If they said that the balance transfer was to a rate of 2.99% over the first year, they wouldn't shift as many cards but they would but be telling the truth and members of the public, who aren't as card or marketting savvy as card providers, would know where their money was going. Okay, the transfer fee is a one-off payment, the effect of which diminishes if the debt is left on the card for a few years, but equally this fee becomes a stratospherically high percentage if the debt is paid-off after just a few months.
Looking at the first page of the balance tranfer credit card best buy section of moneyfacts.co.uk today, which we consider to be one of the best money sites out there, we can see that all of the cards listed offer 0% on your transferred balance but will charge a fee for it. They include:
Avoid these fees at all costs by going to our Latest Rates page, and selecting a card that suits you. We make a point of not listing cards that charge transfer fees, so go on, genuinely zero that debt.
(11:00 Saturday 16th December 2006)
The Guardian newspaper's Money section Worst-of-the-Worst Award to the company that has the most awful customer service was revealed today. Based on an admittedly unscientific poll of readers' letters, the most complaints were for phone and broadband supplier Talk Talk, part of Carphone Warehouse, with many customers left unconnected to their free broadband package that came with a deal that included its landline phone. Talk Talk also came bottom if JD Power's satisfaction ratings, so it wasn't just the newspaper's readers who had problems.
Orange too has rivalled Talk Talk in terms of complaints to The Guardian's Money section. If the newspaper printed complaints it received about Talk Talk and Orange in proportion to the number of letters received, there would have been a risk of boring readers week in, week out. More like Winge Winge than Talk Talk, or Moan Moan... you get the picture.
NTL also persists in providing dour service to many, though the Guardian hopes for an imminent change since it linked-up with Virgin and Telewest.
Money Surgery is the fairest of the fair, in impartiality if not in beauty, so we must include more of the companies named and shamed by The Guardian. Low cost airlines feature, with easyJet soaring above Ryanair in the altitude of complaints. Do they have a bad altitude to customers, one wonders? The Guardian says that one reader sent 1,000 faxes and letters to easyJet in an attempt to get a refund. Finally, top of the bill, gas bill that is, is British Gas. Permanently high prices and now a shoddy HomeCare central heating maintenance cover service, which The Guardian says, services the shareholders of British Gas's parent company Centrica more than it does customers, ensures that it's product always has a certain odour.
(20:00 Friday 15th December 2006)
The average worker in Britain is planning to cut back their Christmas present spending by 12% compared with last year, a new report reveals. The report from Axa confirms fears that retailers will struggle this year in the UK, with global surveys indicating similar spending sut-backs across major economies.
If you're struggling with mounting debts, trying hard to reduce debts or simply avoiding debts like the plague, you can still join in the festive spirit... by cutting back on present spending.
And face '07 with a smile, not a money hangovers.
On a more serious note, remember that there is a new year after Christmas and, with inflation rising, interest rate rises are almost inevitable early next year. So plan what impact that will have on your finances.
(10:00 Sunday 12th November 2006)
The average cost of bringing up a child to the age of 21 has risen to £180,000, exceeding the rise in property prices. A report by Liverpool Victoria reveals that in the last year alone, the cost of looking after baby for 21 years has risen by 9% to £180,137 which is £23.50 a day, and this doesn't allow for any future inflation: Babies born now are likely to cost a whole lot more. House prices have risen by 8% but the cost of bringing up a child has gone up by 9%.
One of the biggest factors in the steep rise is the inflated cost of childcare, and of putting a child through school, state schools that is, and university, which is put at 26%. Private schooling costs an extra £71,050 for day pupils, and £130,450 for boarders. After the university years, which cost £12,153 per annum, the next most expensive years are between 6 and 11, put at £9,468.
Something else has risen this week. The Bank of England has put up its base rate to 5% (from 4.75%) as previewed in our article below. Any changes in savings and borrowing rates will be highlighted here
(10:00 Sunday 22nd October 2006)
Share prices globally have been surging ahead this week, with some indices achieving all-time highs. The leading US index, the Dow Jones Industrial broke through 12,000 for the first time ever and at one time was at 12,049.51. Compare this with our headline of Monday 9th January when the Dow broke 11,000, just 9 months ago. Elsewhere, the UK FTSE-100 index of the largest 100 companies hit its highest for 6 years when it peaked at 6184.30, with similar highs for the German DAX, French CAC, Hong Kong Hang Seng and Japanese Nikkei indices. Recovery from the lows after the "9/11" attacks appears to be complete.
Maybe because of the share price boom, or perhaps the inspiration for it, oil prices have gone the other way. Oil is now under 60 dollars/ barrel, well off highs earlier this year that were pushing 80 dollars/ barrel. Oil plants have tried to cut production in an effort to stabilise the price but seemingly without success. Expect further price cuts at the pumps.
In the background, rate rises appear to be inevitable after official data on Friday revealed that the economy grew more than expected. The ONS showed that the economy expanded by 0.7% in the quarter to September, a quarter that many feared would show zero expansion, and that growth in the year to September was 2.8%, way in excess of Gordon Brown's own target of 2 to 2.5% for 2006. The Treasury commented that it would support the Bank of England in any difficult decision it had to make, code used by the government to infer support for a clampdown, to counteract inflationary pressures caused by continuing economic growth of this magnitude. Many City analysts are expecting the base rate to rise by a quarter of one percent to 5% when the Bank's Monetary Policy Committee meet on the first Thursday of November. So should you.
(21:00 Wednesday 18th October 2006)
Unemployment in the UK has surged to a 6-year high of 1.7 million in the three months to August.
The Office for National Statistics revealed that an increase of 42,000 lifted the total to a new high, with the jobless rate standing at 5.5 percent. The number of people claiming jobseekers allowance expanded by even more, increasing by 10,200 over the previous quarter, to 962,000 in September.
Wage rises have cooled slightly, though, by 4.2 percent, down from 4.3 percent in the previous period.
(20:00 Sunday 8th October 2006)
A new cashback incentive for people to drive environmentally friendly hybrid vehicles is launched by yesinsurance.co.uk. Owners of hybrid cars are to get a return of £40 if they take out cover under the scheme with half of the cashback going to the driver, and the other half going to carbon offsetting schemes.
You may not know this but owners of hybrid cars already benefit from very low car tax and are exempt from London congestion charging. Don't get too carried away though Patients. These cars are still pricey to insure, cost a bomb to service, thanks to the fact that they have two motors, and aren't cheap to buy. And they still polute the environment. Really green, really cheap alternatives exist here.
(18:30 Saturday 12th August 2006)
First time buyers are borrowing more of their income multiple than ever, according to the Council of Mortgage Lenders. To get a foothold on the ever-lengthening property ladder, the average first time buyer is borrowing a record 3.21 times their salary, when they took out a mortgage this June. This is higher than anything seen in the property boom of the eighties, say the CML.
Many lenders are now offering up to five times a borrower's annual income. Yorkshire Building Society, for example, have increased their maximum income multiple to 4.75% for first time buyer mortgages. Many banks are using what they call "affordability" calculations to side-step income multiples to provide much higher loans. There are also a selection of 100% loans so that borrowers don't need to find a deposit.
All this is fine if property prices carry on climbing, but many observers have commented that house prices are over valued, and interest rates may rise again before Christmas. Some think that property prices will fall, not least those at housepricecrash.co.uk.
We can't predict the future so we won't pretend to know what'll happen to property prices, but we do remember the misery of negative equity, which is rather more than can be said of many mortgage lenders. First time buyers - don't over-borrow and don't expect your property to increase as much as property has done over the last ten years. And don't expect lenders to act responsibly on your behalf.
(18:30 Thursday 3rd August 2006)
The Bank of England has raised interest rates by a quarter of one percent today, in an effort to keep inflation in check. This makes their base lending rate 4.75%. It was the first rise for two years and the first rate change in eleven months. Expect building society and bank borrowing rates to follow suit generally, and hopefully savings rates too.
Experts were divided on whether the Bank would increase rates today, but we think the Bank's Monetary Policy Committee acted after recent energy price hikes. These will be fuelling an inflation figure of 2.5%, which is already above the government's target of 2%.
The latest savings and borrowing rates will be updated here, as they come in to the Surgery.
(09:00 Tuesday 1st August 2006)
People who make just the minimum payments on their credit card debts could reduce their "debt sentence" by 14 years if they increased their repayments from 2% to 3%, according to comparison site uSwitch.
3.4 million borrowers who can only manage minimum payments are paying twice as much in interest if they stick to the minimum 2% quoted on their credit card statements each month, rather than if they increased it to 3%. UK credit card debt has increased from £49 billion to £56 billion since 2004, while the average minimum payment has edged down from 2.62% to 2.49%. uSwitch is calling for the industry to apply a blanket 3% minimum repayment rate on credit card debts and for providers to print repayment scenarios.
Money Surgery is wholeheartedly backing uSwitch. We want monthly statements to illustrate what would happen if only minimum repayments are made each month, and for the interest rate to by highlighted above all. A lingering credit card debt can have appalling interest rates coupled with stinging charges if the minimum repayments aren't made. Play with credit cards and you play with fire. The best card is the one that is cut up and binned. Delete debt then pump-up your savings at the unsponsored Money Surgery.
(10:00 Sunday 9th July 2006)
Internet service provider AOL is planning to end its monthly subscription service and let it be supported by advertising instead.
Whether this applies to 56K modem users or broadband users or just for e-mail services is unclear but it is certainly worth watching out for the details. AOL will lose £1bn if the plans come to fruition and modem-based internet customers might save typically £17 per month (£201 per year).
If they do go ahead, we recommend that patients check that their new package is suitable for them. If you do get connected for free, save more money by visiting ad-free, click-thru-free, editorially free Money Surgery.
(07:00 Wednesday 4th July 2006)
You must be aware of Barclays Bank's insurance promotion where they promise to beat your renewal quote by £50. Well we thought we'd put it to the test seeing as one of our Money Surgery Doctors needed to get home insurance.
He received a very reasonable £148.00 renewal quote from his current insurer and, being the ardent Money Surgeon that he is, he thought he'd chop another 50 quid off it, seeing as it was a genuine, and uncommonly competitive, renewal quote.
Unfortunately, Barclays quoted £418. And they wouldn't budge on the price. They have a small print get out clause that goes something like this: "Barclays Insurance can only reduce their original quote price by a maximum £100". And they have rules concerning the level of cover too, so if your cheaper renewal doesn't match or exceed all of the details of Barclays Insurance's cover, the £50 rule isn't valid again.
Remember, Barclays, like any other bank, makes a profit for it's shareholders first, customers second. Choose a building society if you want to come first.
So much for a High Street Bank's promises. We thought we'd tell our loyal Patients.
(20:00 Tuesday 27th June 2006)
The Post Office is becoming a far more attractive place these days, for two good reasons:
First, it's installing another 500 fee-free cash machines in its branches, on top of the 1,000 it had already announced as part of its five year commitment to phase out links with cash machines that charge per withdrawal. Apparently, cash machine usage at one of its Liverpool branches increased 7-fold after they replaced a charging cash machine with just such a fee-free variant.
The second reason is that National Savings and Investments have one of the best Mini-Cash ISAs at the moment, offering a tidy tax-free 5.05% and opening balances starting from £1,000, although it is post or telephone operated, so don't expect too many visits to the post office after the account is opened. See our up-to-date Latest Rates page for details.
We were going to add a third reason and suggest their travel insurance but it's rather expensive and if you want to get rid of debts DON'T EVEN THINK about holidays until those debts have gone. Actually, DO think about holidays, as an incentive to get back in the black and reward yourself.
So there we are. The Post Office is the place to be... until your ready for St Tropez, Sydney, St Lucia, Spain, St Moritz...
(20:00 Thursday 22nd June 2006)
Almost one-in-five bank account holders ignore their monthly statements, according to Royal Bank of Scotland. Another quarter of us only sometimes look at our statements to make sure it's right. Two-thirds of us rely on current accounts for day-to-day money management but only one-in-five know what their balance is to within £50.
This kind of story keeps coming around and confounding us here at Money Surgery. It amazes us how so many people like to bury their heads in the sand when it comes to money and especially their debts. "I'm scared to look" quoted one guy on the radio today when quizzed about his attitude to bank statements, while another said "What you don't know won't hurt you". Unfortunately, it always does. Sooner or later. If you've been brave enough to peep inside your latest bank statement and decided that you're ready to get out of debt, you have come to the right place. Carry on looking... at our pages devoted to beating debt.
This is Money Surgery: Completely independent, with no sponsorship, advertising or click-throughs, helping you back into the black for free.
(21:00 Monday 12th June 2006)
We could well look back to this day and see it as the point when low interest rates, low inflation, low share prices and high house prices flipped to higher interest rates, higher inflation, and subdued property prices. Mervyn King, the governor of the Bank of England gave strong indications today that interest rates may have to rise in the near future as the global economy catches its breath after unprecedented years of growth. "Monetary policy could simply have been too accommodative", he said.
(14:00 Sunday 11th June 2006)
The cheapest supermarket grocer is Asda, for the ninth consecutive year, according to Grocer magazine, a dog-eared favourite in our Surgery waiting room.
The supermarket chain held off Tesco by just 0.7% based on a secret basket of goods devised by the magazine and compared across all major supermaket chains across the UK.
Wanna beat debt but still get all the essentials? Get the cheapest available own-brand products only and don't buy anything that isn't the cheapest supermarket own-brand product. For example, at Asda, they sell all sorts of soaps, including Asda branded soaps but go for the three-pack for 19p which is considerably cheaper than even their other own-brand soaps.
Get out of debt, then get out of the own-brand routine.
(22:00 Monday 20th February 2006)
The average price of a home in England and Wales has risen above £200,000 for the first time, a survey showed today. shortage of sellers and increased demand from buyers pushed the average property asking price up from £196,319 in January to £201,600 this month, according to property website Rightmove.
The 2.7% monthly increase was the biggest in almost two years and sent prices to a record high as the housing market continued its recovery. In seven of the 10 areas surveyed the average property price is below £200,000 - the lowest prices were found in the north, where the average is £146,376, in Wales and the East Midlands. In the north-west and Yorkshire the average price is below £170,000.
In Greater London, however, the average asking price has reached £295,685, and another month of growth like that seen in February would push it over the £300,000 mark. The survey measured the asking price of 70% of the UK market or almost 155,000 houses put up for sale between January 8 and February 12.
(19:00 Saturday 28th January 2006)
New gym members can find themselves tied into contracts for up to two years, the Government's consumer helpline has warned. Neglected memberships cost Britons more than £200 million per year, according to Consumer Direct. January is the peak time for gyms to attract new members, but many customers fail to spot credit agreements buried in membership small print.
Those agreements mean customers cannot simply cancel their direct debits once the lure of the gym has worn off. Consumer Direct spokeswoman Carol Brady said: "If you're joining a gym it's always worth checking the small print. "The law relating to gym membership is the same as that for any goods and services. A contract cannot always be cancelled simply because the member has a change of heart."
Around seven million Britons currently belong to a gym. Members spend around £200 million every year in wasted subscriptions, figures from Sainsbury's Bank show. Penalties for cancelling contracts vary from gym to gym but anyone breaking a credit agreement can be sued. Consumer Direct advises customers to double-check terms and conditions of gym membership contracts before signing up. The telephone and online advice service is supported by the Department of Trade and Industry.
(20:00 Monday 9th January 2006)
The Dow Jones US industrial index today broke through the 11,000 barrier for the first time today since the last century. Excellent, we collectively say, at the Surgery.
The position at the time of writing is 11,011.90.
(20:00 Thursday 22nd December 2005)
Store card providers are being targetted under new measures being drawn up by the Competition Commission. One idea is for store card issuers to include "Wealth Warnings" in their literature to highlight the interest rate charged on unpaid balances. The whole sector needs improving, according to the Commission.
It said that providers need to alert users of the high rates of interest charged and the consequences of only making the minimum monthly payments. Also, the Commission suggests that issuers include details of penalty charges users might expect, in statements.
Weren't they doing this already, we wonder? If not, then it's about time.
Patients, stay away from store cards. Of all the cards, these are the most useless, charging interest of 30% and more. The only bonus is that if you can transfer the balance to, say HSBC's 0% balance transfer card, see our Latest Rates page, the savings will be at their maximum.
Cut up store cards, cut out debt... like a Surgeon.
Merry Christmas, Patients.
(18:00 Wednesday 21st December 2005)
We don't stop for Christmas: We've just added another new page, and this one focusses on Bailiffs and what our rights are.
It's under our How To... section, page 16.
(05:00 Tuesday 6th December 2005)
The £3bn pension-plan tax incentive that has revived investment in buy-to-let and holiday homes was stopped yesterday after an 11th-hour ban by the chancellor. The controversial tax break, which would, from April next year, have allowed the well-off to put their properties into a Self-Invested Personal Pension (Sipp), effectively tax-free, was closed after the government said it was being abused by the tax-avoidance industry.
The U-turn stunned financial advisers and property developers. The Royal Institution of Chartered Surveyors had estimated that 50,000 properties, worth around £24bn, would be switched into Sipps over the next few years. At the last Property Investor Show in London scores of exhibitors were promoting buy-to-let Sipp schemes promising "40% off" the cost of property, while Abbey, which owns the UK's largest Sipp provider, called it "the hottest topic of conversation at middle-class dinner parties".
But yesterday a bewildered Standard Life, which has seen more than £1bn pour into its special Sipp fund, called the withdrawal of the tax relief "outrageous". In yesterday's pre-budget speech, the chancellor only briefly mentioned Sipps, saying that action would be taken to prevent "misuse". But a detailed note after the speech said: "Sipps will be prohibited from obtaining tax advantages when investing in residential property and certain other assets such as fine wines, from 6 April 2006." Many advisers are disappointed that the government has changed its mind on promoting investment in fine wine, stamps and residential property, however sensible this change of heart may be, and many deals will now have to be untangled for wealthy clients.
Yesterday, the Treasury said the scale of abuse has become too large to ignore. A spokesman said: "Clearly we had become alerted to the abuse of the rules by a number of providers, which were offering plans such as tax-free holiday homes on the Algarve. We always said that were we to become aware of abuse, obviously we would take action." However, the Revenue said yesterday there will be a modicum of protection for people who have already committed to buy off-plan residential property with their Sipp.
(20:00 Saturday 19th November 2005)
Here's an interesting fact: Only HSBC offers credit cards with 0% balance transfer rate AND no balance transfer charge. The days when there was an array of choices for your nought-percent credit card are over, as we forecast back on 10th April 2005. All of the other so-called 0% cards have balance transfer fees of at least 2% of the balance transferred, so beware.
Who's gonna be Best Bank in next year's MoneySurgery MoneyOscars?
Answers on a postcard credit card.
(20:00 Wednesday 9th November 2005)
We can't wait for Christmas here at the Surgery. Usually it's the Patients that are having cold turkey and shakey hands from withdrawing from spending, but at Christmas, we all join in, but induced by huge portions of the american bird and lots of (medicinal) alcohol. But Christmas can also be a time when we fork out on presents for the children.
According to Churchill, the insurers not the wartime prime minister, who incidentally knew a thing or two about medicinal alcohol, kid's presents will cost us £1.4bn this year. Nice. That's £119 per child, with some adults expecting to spend another 16 quid on children that aren't even their own, shockingly. Actually, we thought that this figure would be higher.
Churchill is warning parents to check that they are adequately covered in their home insurance. Churchill say that the average child's bedroom contents is £618, and that this is expected to rise by 20% over the festive season.
According to the Toy Retailers Association, the top 5 toys are:
Tamagotchi Connexion, Robosapien V2, Dr Who radio-controlled daleks, Ringtone Plush Characters, and Plug-it-in & Play TV games. So parents, you're sorted: You know what they want, what it'll cost, on average, and to make sure it's covered. It's just the turkey to worry about, then, like most of the European Community.
(08:00 Tuesday 8th November 2005)
A recent newspaper article probed this question. The Guardian asked its readers for advice for someone who has returned to this country after previously leaving behind credit card debts of over 3 grand back in the mid-nineties. Perhaps the best response quoted the 1980 Limitation Act which limits starting legal action by the credit card company to 6 years in England, Wales and Northern Ireland, to claim back the money owed, and that in any case lenders only usually keep records for the past 6 years. However, they said, such companies sometimes give credit reference agencies details of customers who have gone away without a forwarding address or who have accounts that aren't up-to-date, so it would be best to check with Equifax or Experian.
Other respondents advise on the need for the individual to take responsibility for his own actions, or to search his conscience, and pay-up. One suggested that, if the credit file reveals the outstanding debt, the debtor should make an offer to the company of a few pence in the pound rather than the whole amount, whilst not admitting that they owe the amount - the credit card company might prefer this to getting nothing at all.
(18:30 Tuesday 25th October 2005)
Age Concern says that more than one in ten of its equity release helpline callers are pensioners trying to cope with mortgage payments with just a pension for income.
Apparently, many people are caught out with slow-burning debts like casual credit card usage and personal loan payments that are harder to pay-off when income reduces, and can stack up over time.
Adjusting to life on the meagre state pension can be a very hard ordeal. The trick, as ever, is not to borrow but to cut back and live within the tight confines of your new income. Easy to type; not so easy to pull-off.
(18:50 Tuesday 25th October 2005)
1.8 million pensioners will be able to get £500 off their council tax bill, according to the government, and they'll get a phone call if their eligible.
What prompted the handout was that a pilot scheme uncovered 6,300 pensioners who hadn't taken advantage of their council tax benefit entitlement. Many were owed £700 each, with one couple receiving £ 3,000.
This is better news. Forking out for council tax is painful at any age and income but for many pensioners it is an unfair burden. Many pensioners can't be expected to wholeheartedly fill-in every means tested benefit application form, so it's good that the government recognises here that a helping hand is required. Just make sure you have a telephone and that your bill payments are up-to-date, OAPs.
(18:30 Wednesday 5th October 2005)
The average house price has dropped for the fifteenth month in a row, according to property web site Hometrack. Prices have eased 0.1% in September, they say.
Since June 2004, they have fallen from £167,700 to £160,900. Over the last 12 months, they have fallen by 3.7%. The most extreme regional change in a swathe of moderate nationwide adjustments was in East Sussex, with a fall of 0.7%.
(20:30 Monday 3rd October 2005)
Scarborough Building Society is offering mortgages with an incentive of an Apple iMac G5 package worth up to £2,600. The offer applies to their 5-year flexible base rate or fixed rate tracker deals, before 29.10.05, and for a minimum 50 grand loan.
The package includes a G5 iMac, digital camera, iPod and Bose stereo equipment. If you really want the equipment and think its time to (re)mortgage, it might be ideal, or should that be iDeal. If you prefer to work with real money or have to borrow a lot more, you could get a better mortgage incentive or discount somewhere else.
(20:30 Monday 19th September 2005)
No not the tinned meat. The scourge of the Internet: Unsolicited e-mails. Offers from unknown senders, often cronically badly misspelled to get past spam-blockers, and offering products that seem to recur every time you open your mailbox.
What we were wondering was... do these products represent the things we secretly want the most? It must be more than mere co-incidence that the same things are being offered all the time. If we knew that the seller was a reliable, trustworthy and totally law-abiding person, would we all be forking-out for Viagra? If the spam came from a well-known high street retailer, would we all be enrolling for penis extensions on the quiet? If there actually was a high street shop making "medications" freely available, and even if you were perfectly healthy and not in need of medication, would we still be tempted?
From "finding your ideal partner" to "making money from your web site", from "free software" to "gorgeous sluts that want you", spam targets the things we secretly want the most. But are too afraid to admit to. Well publicly, at least. If we didn't want them, they wouldn't try and tempt us with them.
Just a thought. Though, to be honest, tinned meat sounds a lot more appetising.
(19:50 Monday 19th September 2005)
A new initiative called Every Lesson Counts is encouraging off-term holidays by providing incentives like free children's places and big discounts off holidays booked well in advance. The government Department for Education and Skills has signed a deal with the Association of British Travel Agents in a move to reduce truancy. Big travel companies like Thomas Cook, Virgin and Kuomi look set to join. Look out for the new DfES/ABTA web site from November, where the holidays can be booked. We'll let you now when we know what it's called. Apparently the deals and discounts will be very good indeed.
(08:30 Tuesday 13th September 2005)
Last night, one of our Surgeons was stuck in a jam on the way to Asco's supermarket, caught in a queue for petrol that tailbacked nearly a mile. He only came out for some orange juice. According to a supermarket employee, it seems that most of the drivers were panic buying on fuel ahead of a feared blockade or fuel shortage or maybe a sharp price increase.
Given the luxury of several minutes of contemplation, he pondered the irony of many litres of wasted petrol burned by idling engines of cars in idle queues, all so that their drivers can maximise the amount of fuel they hold in their tanks. And all this because they are paranoid about the unlikely prevention of fuel sales by people who are protesting against the price of fuel. Should fuel price protesters make more fuel available? Because, A: They'd be very popular, and B: A shortage will naturally increase demand and the pressure to increase prices. "Yeah, I'm a fuel protester and I've just invented a cheap, legal method of turning waste bathwater into unleaded." Now that's what we call an effective protest. Just a thought.
Fuel costs too much. The impact on the gulf of hurricane Katrina is going to inflate the price of crude. But we just can't stop driving...and queueing. Waiting 20 minutes to get past petrol panickers just to get some groceries is laughable.
It isn't crude, it's impertinent.
(21:30 Monday 12th September 2005)
The number of people seeking help with their debts has increased by nearly 20% in just the past year, according to top debt help charity the Consumer Credit Counselling Service.
The average amount owed has also risen sharply, with today's assistance-seekers having debts of £28,600, compared with £24,000 through 2004. The charity also expressed concerns over an increasing number of people with over £100,000 of debts and on overspending and too much credit. If anyone out there feels that a chat to someone about their debts might be worthwhile, contact your nearest CCCS office on 0800 138 1111.
(20:30 Monday 5th September 2005)
An estimated nine million people expressed an interest in buying relationship insurance which would pay out if they married the wrong person, according to a survey by Abbey. Getting old, getting fatter and falling out of love were among the suggestions in the survey of things that people would like to buy insurance for but can't. Worryingly, 22% of us have no home contents insurance and 30% of drivers aren't insured.
The trouble is, insurance is a gamble we collectively won't win. If we banked all the money saved from not buying extended warranty insurance, for example, we'd have enough to pay for repairs when the things we buy go faulty. When we have a legal obligation to buy insurance, like car insurance, or when losing very expensive things, like your home and contents, would be disastrous for the sake of a moderate annual premium, then there is a healthy argument for buying cover. Similarly, life insurance may be a reasonable, and relatively inexpensive, regular payment for some of us, although I didn't see insurance against death in the survey.
(16:30 Sunday 4th September 2005)
Latest studies reveal that parents spend on average £185 per child for clothing and stationery. According to Morgan Stanley Consumer Banking, the uniform costs £84, the shoes £48, the trainers £31, and the stationery £12. Then, over the first term, £198 has to be found for packed lunches (£83), school trips (£60) and school activities (£36).
(17:30 Sunday 4th September 2005)
The worst kind of driver is the school-run parent, according to respondents to a survey by Direct Line insurance. They topped a poll of 70,000 adults, of whom 20% thought that they were the most careless, ahead of taxi drivers and 4x4 drivers. According to Direct Line, however, the kid carrying parents were most likely to observe speed limits.
So watch out commuters. The week ahead marks the return to the streets of the "school run". Expect twice the level of congestion before and after school times, with stressed-out, spent-out steam-breathing mums-n-dads behind the wheels of bull-barred four-by-fours: More dangerous than, but remarkably similar to, the running of the bulls at Pamplona, and the perfect opportunity for the rest of us to take time off.
(00:30 Tuesday 23rd August 2005)
Driving a motor vehicle is a never-ending stream of regular expenses. The worst is car tax or vehicle excise duty. You have to go to one of the few Post Offices that sells the "tax disc", bringing with you the completed renewal form that the DVLA send you, together with original versions of the active insurance certificate and MOT certificate, if applicable, and the payment, which is anything up to £165, for presentation to clerk for inspection. This often entails parking in a town centre and queing behind dozens of people, only to find that the insurance certificate is out-of-date or the car needs an MOT... fast!
Well no more. One of our trainee Surgeons has just paid for his new tax disc via the Internet. He went to the web site quoted on the renewal form, entered the 16-digit code, checked his car and personal details, then the web site searched successfully to validate his insurance details. After submitting his payment details, he was advised that the disc would take up-to 5 working days to arrive by post. It took about 5 minutes on the Surgery broadband.
This really is the only thing worth sticking to a car window and, boy, it just got a whole lot easier to get.
(21:30 Monday 22nd August 2005)
This is a military rather than a medical operation to hit big household bills and stop them coming in. Latest research shows that the home appliance that uses the most electricity over time isn't the iron or the washing machine or the kettle. It's the fridge. That baby keeps on going day after day, no matter how much food is in it, so keep the setting as low as possible while maintaining a reasonable cooling effect and some ice in the freezer section. Get into the same mindset with other appliances: run washing machines with full loads and on the short-wash setting is even better; don't overfill kettles when you boil them; keep lights, fans and televisions switched off if possible. But remember: The refrigerator is the worst.
If you use gas, cooking can be more expensive than microwaving, especially when using the full oven, but the biggest waster is central heating. After the little white box in the kitchen that keeps things cool, the next target for bill reduction is the little white box that makes things hot: the boiler. Avoid using gas for heating, but maintain your usual cooking, washing and bathing regimes and gas bills will tumble. There will be days and evenings when central heating use is unavoidable but be careful to switch it off well before bed-time and use the timer only when you know you won't waste any gas. To add to the cost don't forget that the pump and fan cost valuable electricity too.
You can't really blame gas and electricity companies for increasing their charges by more than the rate of inflation, when they have to buy their energy at incredibly high wholesale prices. So how come water companies are increasing their charges by double-digit percentages? One Patient reports that their metered water charges are increasing by more than 12 percent and the standing charge will go up by 30 percent. If you've signed up for metered water supplies, check your latest standing charge forecast, then ask yourself when water metering and standing charges became compatible? Top tips to reduce water bills: Don't flush everytime the toilet is used; take showers instead of baths; don't use hoses; turn the tap off when toothbrushing; get your servant to flannel wash you (only joking).
That's the end of your briefing for Operation Goldcrest - named after a bird with the smallest of bills. Your mission begins at 08:00 hours 23rd August. Target 1: The Fridge. Target 2: The Boiler. Target 3: The Water. Good luck, Patients, lets hope it's not a fridge too far.
(11:40 Saturday 20th August 2005)
Driving behind a car the other day, I noticed a small yellow, diamond-shaped sign suckered to the inside of the rear window that said "Baby on Board". Well, I had to pull-over. After glancing in the mirror, indicating and stopping, I waited until the car was out of sight before I set off again. It was a close one but I managed to avoid endangering the aforementioned "baby-on-board". Good job the driver had the common sense to warn other motorists. How many other drivers are carrying babies without such warnings?
My Surgeon colleagues tell me that there are other similar warning signs available, including "Dog on board", "Naughty Person on board", and "My Other House Extension's a Porch" but as yet no "Idiot Inside" in the style of Intel's famous tag-line.
Drivers, drive safely. Heed the warning stickers on the windows of other cars. Colliding with a car containing a baby, a dog or a "naughty person" could be most unpleasant, particularly in having to exchange details with an unforewarned "Idiot Inside".
(19:00 Thursday 18th August 2005)
Size isn't everything but it is starting to mean something to Royal Mail. From September 2006, they are to start charging for large but light items, and reduce charges for some heavier items, after having their proposals approved by their regulator, Postcomm. Overall revenue is expected to be unchanged but 30% of postage is likely to be affected by the new charging structure. The new charges will better resemble Post Office costs.
The letters most likely to be affected will be those that contain those huge cheques you see held by lucky lottery winners or charities receiving a large donation from a publicity hungry company. Imagine the extra cost to National Savings for posting all their letters each month to lucky Premium Bond winners...
(20:00 Thursday 18th August 2005)
From 1st September 2005, National Savings and Investments will reduce the prize fund rate for premium bonds to 3%, from 3.25%. The chances of winning a prize will remain the same, at 1 in 24,000 per bond per draw, so the reduction will mean a reduction in the size of prizes. The official reason is that the Bank of England cut its base rate earlier this month.
(17:30 Saturday 13th August 2005)
Just when you thought it was safe to swim the high street, we now collectively owe another £100 billion more than the £1 trillion we passed in July 2004. That's rising by £1 million every four minutes, and more of us are going under, along with our leaden debts.
The charity Credit Action has come up some amazing figures that reveal the darker side of Britain's personal finances.
Citizens advice has a shortlist of tell-tale signs that say you may be in danger:
Credit Action say that keeping debt secrets from partners is another indicator of debt trouble, as is paying over 25% of your income on card debts. Britain has enjoyed unusually prosperous economic conditions for the last 12 or 13 years which has meant that many people have borrowed more because good times are all they know. But, as Credit Action warns, times change and rising unemployment could result from falling house prices. Consolidation loans linked to your home can mean that you lose it if you default on the loan repayments, they warn.
If you see danger signs, or want to avoid them, call The Consumer Credit Counselling Service on 0800 138 1111, or why not visit your local Citizens Advice Bureau, or online at www.adviceguide.co.uk
(20:15 Thursday 4th August 2005)
It's a beautiful day. The Bank of England, that's the flat bit next to Wales, has cut its base lending rate by a quarter of one percent, from 4.75% to 4.5%. Many lenders have reciprocated and cut their mortgage rates by a similar amount, like Halifax, First Direct and Sainsbury's Bank. Of-course, for savers it's a bad day: They'll see their interest cut, however, as we pointed out in our article "Savings Rate Slide Indicates Impending Base Rate Cut", of 15.07.05, the Bank was the last to know about this cut. The market had already reduced rates across the board, and today the BoE tagged along.
Assuming you're one of many thousands of mortgagees that will save a few pounds a month from September, what should we spend our extra cash on, we hear you ask? Well, think carefully about spending it on a BMW, Mercedes, Alfa or Land-Rover. According to Which? magazine, they rank low in owner's reliability ratings. The worst model was the Renault Espace, apparently, with the most breakdowns and with a high 28% of these "people carriers" under 2 years old needing parts repaired or replaced. Most reliable marques were Ford, Honda, Hyundai, Lexus, Mazda, Suzuki and Toyota.
A better place for your monthly mortgage saving would be drip-feeding into an emergency fund to cover unforeseen household repairs. One of the drawbacks of being a homeowner is that repairs have to be paid for alongside the other bills, unlike tenants who can call on their landlords. The trouble is, emergency funds are boring. Much more fun can be had buying a car, for example. Maybe that's why we don't budget for unexpected home repairs.
Latest research by Direct Line puts the cost of average repairs at £1,200 per year, per home, or £17,000 during the whole residency, but most homeowners don't even have an emergency fund. Of those that do, most are inadequately funded to cover all eventualities. Many people choose instead to borrow the money, cut luxuries or even cancel holidays.
At the risk of making you change channel to a station with commercials, priority is debt-busting, second is a small emergency fund, third is to use up your Mini-Cash ISA allowance of 3-grand. It sounds easy, and it isn't a hard-and-fast rule, but it's a good 3-point route-map out of the red, to help us focus. Even better than a Ford Focus, perhaps.
(14:15 Sunday 31st July 2005)
Saffron Walden Building Society are offering market leading interest rates on a mortgage and a savings account, which makes them more tempting than a Wonka bar. See our Latest Rates page and you'll see Saffron Walden's Tracker ISA and its 5.25% rate, while they also have a good mortgage borrowing rate of 4.95% for the remaining term of the mortgage. There's lots more terms and conditions, but here's their contact number: 0800 072 1100, and this is their URL: http://www.swhebs.co.uk.
(13:15 Sunday 31st July 2005)
As of 1st August, National Savings is offering another £1,000,000 prize each month to Premium Bond holders. That's now two million-pound prizes. See our updated How to Understand Premium Bonds page for the full picture.
(20:15 Monday 25th July 2005)
A few Money Surgery Patients have harrassed us in the middle of the most delicate bank account surgery lately, complaining that they're overwhelmed by bills and bank statements and receipts and so on. Caught in cyberspace between Fools and so-called MoneySavingExperts, we get a barrage of "Should we keep current account statements from our old bank?" and "Shall I chuck all my receipts out?".
Hopefully, we'll answer a few, and hopefully pre-empt a few, of their questions here.
First the law: We all have a legal responsibility connected to recent tax returns, whether we are employed or self-employed. Employed persons should keep their P60 slips for at least 22 months after the end of the tax year to which the P60 is related. Those that were self-employed must retain records for a minimum 5-years after from the January after the tax year for which the tax return has been submitted. As a sensible rule, keep financial papers for at least 8-years.
Staying with legal requirements, you should retain any information relating to assets that may generate capital gains or losses for even longer, probably indefinitely. If you're tax returns are under investigation, these shuld be kept for several years after completion of the investigation. Old bills and statements should be retained while they may be relevant.
Items that could provide evidence for claims, such as receipts for goods that have a warranty, should be kept for at least as long as the warranty lasts, naturally, and should be retained for at least a year. This includes any credit card bills that include the purchased item. Other receipts that don't affect your tax liability or will not be the subject of a dispute can be thrown away, we understand, however, it seems sensible to us Surgeons that bank and credit card statements are retained for a long time. Even receipts for grocery can be most useful to prove that you bought goods that turn out to be faulty or substandard.
We strongly suggest that organisation and proper methodical filing of investment and banking statements, utility bills, insurance certificates, expensive goods receipts, employment contracts, mobile phone statements, car-related receipts and service history, etc., should make the discarding of these items a thing of the past. Many of us keep these pieces of paper permanently, with only grocery till receipts being thrown out after they have been checked-off against bank statements, and in as indecipherable manner as possible.
Invest in a good filing cabinet and store it in a place that is not likely to be damaged through flooding, and take care of your paper.
(17:15 Sunday 24th July 2005)
Don't let the "M" word put you off. Take out a best-buy personal loan, say Nationwide's 6.70% personal loan, and a 3-year £5,000 loan will cost £153.25 over 36 months. The total repayable is 153.25 x 36 = £5,517. At 0% interest, the total cost would be £5,000, of-course. So the total interest charge is £517.00.
If you put the five grand into an instant access mini-cash ISA with Nationwide, at 4.85%, at the end of the three years, you'd get interest credit of £763.35.
Just a thought.
(11:00 Saturday 16th July 2005)
Transfer your credit card debt to a card that's offering 0% interest on balance transfers, for 6, 9 or 12 months, and these days about half the card companies will charge you typically 2% of the amount transferred.
This is effectively a 2% introductory rate, NOT 0%, and we feel that it's our duty, here at the Surgery, to tell as many potential card users as possible, to counterbalance the disingenuous tactics of their card marketing.
If your bank offers a headline nought-percent balance transfer credit card with a small print two-percent transfer charge, how many small print charges have you failed to spot on their other products?
Just a thought.
(21:30 Friday 15th July 2005)
A whole tranch of market leading savings account rates have fallen away lately, which usually means that the Bank of England are going to cut their rates next month. Banks and building societies don't hang around these days for the Bank to announce their decision in the first Thursday of each month. They can read the daily reports relating to the economy as well as the Bank and need no excuse to avoid making a loss an an account that's paying too much interest.
If you're thinking of putting a few pounds aside in a bond with a good interest rate, remember that it may have an increasingly limited shelf life. Borrowing rates may be similarly affected and, conversely, consider carefully any fixed-rate mortgage deals that may work out slightly more expensive after August.
All of this is pure conjecture, of course, no-one has a crystal ball for interest rate moves, but the signs, and financial press predictions, mostly point downwards.
(21:00 Friday 15th July 2005)
Barclays bank is offering £50 to customers who open a new current account but the smallprint says "don't bother". The appallingly low interest rate, minimum £1,000 per month salary pay-in, £12 monthly fees (refundable after 10 months), lock-in and over-valued added extras really make the £50 sweetener taste a little bitter. If you're still interested, they're in the phone book.
(22:00 Monday 11th July 2005)
NatWest are actually going west with a travelling bank service across rural parts of Cornwall from the end of next month. It's new "mobile van", as many vans are, will park up at set timetables, five days a week, around various towns across the county, providing basic banking facilities. Could this be money deals on wheels...maybe for people needing a financial MOT?
The van will be fully accessible and allow customers to cash cheques, make deposits, pay bills, check balances, order foreign money and talk, by phone, to mortgage advisers. You can also withdraw cash over the counter, so don't expect an ATM. ABS, PAS and SatNav maybe, but no ATM!
If successful, the bank hopes to extend its coverage, perhaps to parts of Wales, but promises that the service will not threaten existing rural branches. The proposals by NatWest come after a similar successful scheme operated by its sister bank RBS in rural parts of Scotland.
This venture has to be welcomed by customers and consumers generally, filling the void left by so many closures of permanently sited rural banks and post offices. It's probably safer than using the Internet and you needn't have to endure any Internet access costs too. So, fair's fair, well done NatWest.
(15:30 Sunday 10th July 2005)
The Automobile Association is suggesting that drivers put their car on a diet to help save money as petrol prices soar to record levels. "Ditch the roof rack", they say, "and clear out boots to make cars lighter and save on fuel in the face of rising petrol prices." The AA also remind us to keep tyres properly inflated and to plan routes in advance to avoid hold-ups and to save fuel.
Worthy suggestions these may be but the AA has a vested interest in ensuring that as many people as possible continue to drive cars. That might be why they don't dare suggest that people reconsider the viability of driving at all. Ditching the car will save on fuel considerably. It will also save on motoring association subscriptions. In fact, it will save about four thousand pounds every year.
Are you ready, I mean really ready, to save money on driving? Then listen to Money Surgery, not the AA. We have no bias, no sponsors, and no (yellow-) vested interests.
(15:40 Sunday 10th July 2005)
Switch your bank account to Alliance & Leicester's Premier Plus and you'll get £25. Nice. Thanks, A&L. Now recommend a friend to do the same thing and you'll get another £50 plus your friend gets £50 too. Just goes to show how desperately they want current account custom, at all banks, not just A&L. The Premier Plus is also a decent account though, with market leading interest rates, low charges and a broad high street presence, although you must be able to pay-in your salary of at least £1,000 a month and sign-up for Internet operation. You can't just switch in and switch back, though: You do have to transfer your salary and direct debits and standing orders.
(16:00 Sunday 10th July 2005)
This is the first of a series of Just a Thoughts that we'll occasionally drop into Money News. The first subject: D.I.V.O.R.C.E. (which spells money hell).
We promise to devote a forthcoming page to Divorce but in the meantime...
we've written about how smokers are the luckiest people in the World because they, and only they, can do the best thing that anyone can do, which is to give up smoking (probably the biggest waste of money in the world). Well maybe we can add an extra line:
Married people are the unluckiest people in the world, because they, and only they, can do the worst thing anyone can do:
Get divorced.
Just a thought.
(16:10 Sunday 10th July 2005)
Are here. (New and expanded).
(19:40 Thursday 7th July 2005)
Thousands of children start their summer holidays tomorrow and that could mean more expenses for parents. While they give their teachers a break, it's their parent's credit cards and overdrafts that feel the strain. The cost of childcare alone, at up to £50 per day, could top £1,200 over the six weeks, say Abbey.
Nearly 2/5ths will rely wholely on relatives to care for their children to allow the parents to carry on working during the break, while a quarter will cut down their hours to care for the kids and a sizable 10 percent will stop work completely. Alternatively, they can pay someone to care for the child while they work. This childcare costs an average of £50 per week per child, however some parents fork out as much as £100 per week per child. For three kids that's nearly £2,000, including the arrangement/transport costs.
Permanently gagging children who moan over the summer hols is now illegal in Britain, meaning that the only way to stop screams, tantrums and moans of "I'm bored" is to keep them entertained, and this costs on average £35 per week per child, with 20% spending between £50 and £100 and another 6% even more than that. Those with three kids that spend £100 per week per child spend a total of £1,800, in addition to the childcare costs. Some parents are pushing £4,000 to look after three (out-of)schoolchildren for a month and a half. 24 percent take the plunge and pay-out for a holiday abroad for the family and, typically, 1 - 5 day trips are arranged during the summer break, with family/friends, seaside/countryside, local park, and home-based activities all favourites.
Abbey comments that families don't tend to plan for the financial impact of the summer school holidays with only 30 percent falling back on savings for the extra expense. 27 percent resort to credit cards, while 14 percent rely on family handouts.
Planning is essential and Abbey's tips include alternating days when a parent is at home (not so good good for single parent households); taking trips to places that don't have high entry charges, like museums and galleries; and allowing time to prepare packed lunches, with a vital bonus that mums 'n' dads can ensure that the food is low on sugar and high in energy to reduce tantrum potential, which affects parents' hearing first and wallets second.
A simple regular savings account might be enough to take the burden out of most parents' ironically named summer break.
See here for the best.
Summer school breaks...
how much do they cost over 12 years, for three kids, including good quality childcare and reasonable daytrips and treats but no holidays away?
Answer (including a sprinkling of lost compound interest): £56,400.
An alternative is a brand new Porsche Boxster and £11,000 spending money. Just a thought.
And that £56,400 is just for six weeks, or 42 days, in the summer, at home, each year.
We haven't included the cost of Christmas, holidays abroad, the first five years (£20,000), or any of the other days of the year when they just need to be fed, clothed, cleaned, cut, heated, entertained, Birthdayed, transported...
(22:00 Monday 4th July 2005)
The cheapest mortgage lender is egg.com, according to moneyfacts.co.uk, and the worst was The Mortgage Business. On a loan of £100,000, in the 12 months to 1st July 2005, the interest charged by egg.com was £5,697, compared with £6,857 charged by TMB. However, the survey was based on lender's Standard Variable Rates and ignored any special deals.
The top five cheapest lenders were egg, HSBC, First Direct, Intelligent Finance and Nationwide Building Society. The survey revealed that building societies and direct lending companies were significantly better value than high street banks: Barclays, Lloyds-TSB, Royal Bank of Scotland and Halifax all finished in the bottom half of the league table. If only they could be threatened with relegation.
The difference between the best and the worst, egg.com and The Mortgage Business, on a loan of £100,000 over 12 months, was £1,160. This isn't far away from the £1,200 we identified as the saving from not paying-off your mortgage in our article Mind the Mortgage/Savings Gap, below, for the same loan amount over the same 12 month term. The message is clear: shop around and save a small fortune. Home loans can be the cheapest form of lending and are also the largest lump sum that most of us will ever have to sign a contract for. The low rates offered by egg.com can be bettered by regularly remortgaging with the best available short term discount offers too, in our opinion, so you could save even more.
(10:00 Saturday 25th June 2005)
Some excellent mortgage deals are available at the moment, including a product for first-time buyers only from Portman BS, which is a 2-year discounted variable, currently discounted to 4.48%, and just a 2-year tie-in for maximum Loan To Value of 95%, and a £499 admin fee. Another good discounted variable is one from Alliance and Leicester, currently set at 4.74%, with a 2-year tie-in.
There are also a handful of tempting cash-back deals out there. Best value is a six-year tie-in from Tipton and Coseley BS, offering an 8% cash-back and no other fees, on an LTV of 75%. This is equivalent to a discount of 1.33% off the SVR of a 25-year mortgage, currently at 6.74%, equalling 5.41% and remember there's no fees. Chelsea BS do a similar deal but with a £200 fee, offering 6% cash-back with a 5-year tie-in, equivalent to a discount of 1.21%. Remember that with cash-backs, the money is received from the mortgage company up-front, so there is potential for a few years' top rate interest to further improve the value of the deal.
If you really don't want to shop around for a mortgage deal every few years, there's a nice mortgage from Chesham BS for the entire term of the mortgage for a discounted variable rate of 5.14% and no fees at all. We won't mention fixed-rate deals because if rates drop, you may be left high and dry, suffice to say that the rates offered for fixed-rate mortgages are near identical to those for variable-rate deals indicating that mortgagers are split 50/50 on whether rates are likely to rise or fall over the particular mortgage tie-in period.
Compare these borrowing rates with the best savings rates and you can see the gap between the lowest mortgage rate and the highest savings rate. The choicest Mini-Cash ISAs are at 5.50%, courtesy of National Counties BS, Portman BS and Leeds and Holbeck BS. See the Best Interest Rates here. The gap is at about 1%, is it not? Move your mortgage to the best deal available, when it's time to remortgage and keep moving around your accrued savings in the meantime, and the "profit" on a £100,000 loan is £1,200 each year. Don't forget the added effect of compounded interest on the interest: Imagine stashing the £1,200 away in a high interest account each year.
The effort involved in monitoring the market, calculating the remortgage deal and reading the small print in the accounts and the hassle of moving accounts to ones with better rates might put-off the average person, but that's why there's a gap in existence: Inertia. Banks and building societies gamble on headline grabbing, limited-term accounts that ought not make them a loss because people generally can't be bothered. They'll even tolerate the one-in-a-hundred customers who are savvy rate tarts and chase the best rates.
Do you fancy getting £15,000 over 10 years for not paying-off your 100K mortgage? Then mind the gap.
(21:30 Friday 24th June 2005)
We're fed up of the hassle caused by unwanted door-to-door salesmen, it seems, with the Trading Standards Institute promising to work with communities and the police to create no-go zones for unwanted cold callers. This could include a single street or a whole estate. Persistent offenders will be "reported" to the authorities.
This is the culmination of a 2-year campaign by TSI for action against unwanted doorstep callers. In a tell-tale pilot study done in parts of Cambridgeshire, there was a drop of 11% in distraction burglaries. The pilot scheme was prompted by surveys showing that 96% of us don't want people selling things turning up uninvited. Head of TSI, Ron Gainsford, says that people are sick and tired of uninvited doorstep sellers. "We are concerned about those who use it as a front for criminal activity", he said. Typical services offered include home maintenance and garden services. Unfortunately, the householder may be elderly and vulnerable. Indeed, it is Age Concern who have been particularly vocal regarding cold-callers.
In this nationwide scheme, householders will be given standard door stickers warning would-be sellers that they are unwelcome. Remember the techniques salespeople use for poor value products or services: If a product won't sell in a competitive market, thrust it in people's faces with a dash of hard-sell and smooth-talk. If it photographs well but is rather worse in reality, sell it in catalogues. Build-up a rapport for repeat orders...
Money Surgery hopes that the scheme is effective.
(22:00 Friday 24th June 2005)
British Gas customers are facing more price rises in forthcoming bills. Factor-in a rise of 15% and you won't have any nasty shocks. And this doesn't affect just British Gas; Scottish and Southern Energy have also sounded warnings. So there is no escape from gas price rises.
This is something we at Money Surgery like to hear: You have to pay this - there is no alternative. Wanna bet?
First, consider switching supplier - this could save a third off your bill, see here.
Second, consider using a regular payment scheme like a direct debit to squeeze out another tenner or so a year.
Third, consider fixing or capping your energy rate. This could at least help you budget.
Finally, and most importantly, CUT DOWN on energy consumption. What do we do when we hear that the price of petrol is rising to record levels? Answer: Buy as much as we can, as soon as we can. Shouldn't we lock up our cars and start cycling instead? Which is the more sensible reaction?
Think laterally. Avoid using gas. Look for alternative energy fuels. Soon, we'll be adding solar panels and mini-wind-turbines to our Veluxes and softwood decking. I remember my old geography teacher predicting that we'd all have a mini nuclear reactor in our homes as a cheap energy source when we grew up. He did wear rather large glasses which may have been rose tinted but you never know.
We've pondered this in previous articles: Will fossil fuel prices ever come down when demand is never going to relax?
Kick the Coal. Get rid of the Gas. Say Oi! to Oil. Your time is up, my friends.
(16:30 Thursday 16th June 2005)
Companies that persuade staff to join occupational pension schemes should get National Insurance rebates, according to the Association of British Insurers (ABI). If at least two thirds of staff became scheme members, pension saving could be boosted by £1.5bn a year, it said. It also called for automatic membership of company pension schemes with, confusingly, the option to opt out.
You've got to hand it to the ABI, they certainly know how to try and drum-up business for the insurance companies that they represent.
Question 1: What have pensions got to do with insurance companies necessarily?
Question 2: Why do insurance companies (annuity providers) get to keep pensioners' annuity funds after death, after drip-feeding a measly 6% a year to the pensioner until he/she dies?
Compulsory joining of personal/occupational/stakeholder (money purchase) pension schemes must never happen as long as the rules serve the insurance industry at the expense of the workers. As we've suggested in earlier articles, all that needs changing is the rule that currently says the bulk of accrued savings in pension schemes changes ownership from pension holder to insurance company at retirement date, should be changed to pass to pension holder's heir upon pension holder's death. Or maybe if insurance companies paid considerably more than mere deposit-account interest on annuities, that would fix it. Or maybe we dispense with the compulsion of annuity purchase at retirement date and get something of better value for retirees.
The ABI is getting increasingly vocal on compulsion; trying to force the government's hand on dealing with the looming pensions crisis by forcing workers to invest in pension schemes with the annuity rules intact.
The ABI see the government juggling with ideas on how to revamp pensions and are getting desperate, as evidenced by this NI rebate carrot-dangling brainwave. We see the picture from an impartial, independent perch and say, "ABI, is this A Brilliant Idea?". In fact, one of our patients says that each time she reads a new proposal from the ABI on this or that, she has at the back of her mind "Another Brilliant Idea", or was that "A Brazen Irony"?
(19:30 Tuesday 14th June 2005)
Latest figures show that moving home costs £5,551, on average, up £174 from last year in the UK. The Woolwich has calculated that a total of 10.6 billion pounds was spent in 2004 on moving, with none of this amount going on the actual property.
This figure can vary, of-course, but it is worth budgeting for a realistic figure. In more detail, selling a home for £150,000 and buying for £200,000 will mean typically £2,146 for the estate agent and £498 for the solicitor for selling, and £150 land registry fee and £571 for the solicitor for buying. Then there's stamp duty on the property bought, which is between 1 and 3 percent, depending on the purchase price.
Many people find themselves moving more than others. Move four times in ten years and that's easily past £30,000 with a sprinkling of interest. Move more than this, or simply choose to avoid the geographical restrictions of home purchasing, and we have another reason for renting your home.
(21:30 Wednesday 8th June 2005)
Halifax will break the 10 percent barrier on Monday, when it will unveil its 10% Childrens Regular Savings account. We think that this rate is a stormer, surpassing HSBC's way-too-restrictive-to-be-useful 8% regular saver. There are restrictions but there are also some really nice terms and conditions too, and you don't have to sign up for a rubbish current account to qualify, can you hear us Hong Kong and Shanghai?
Quick low-down: The cons are that the rate is fixed for the first year only, so be quick; withdrawals or missing a month's payment will mean closure; maximum £100 per month; children must be under 16. Take a breather. The pros include, more than one adult can save for the child, like parents, grandparents, uncles, aunties; the amount paid each month can vary; the interest is TAX FREE; minimum £10 a month.
It's a good one. 10 out of 10 percent, for effort, marketing, innovation, interest... Halifax.
(14:00 Sunday 5th June 2005)
The centre of Stratford-upon-Avon is a town full of two continents: Those from the American continent, and those of the grey-haired incontinent. And the business of taking advantage of these fleeting tourists in the nicest possible way seems to have evolved into the principal industry of the town. Where centuries ago, before "Shakespeare's birthplace" became the town's most treasured tourist trap, livestock was herded from barge to pen. Now the herding of groups of visitors, wearing identical blue and yellow backpacks instead of farmer's brandings, from birthplace to grave and from car-park to shop is synonymous with SuA.
These were the conclusions of a Patient who visited Stratford at the weekend. The church was charging £1 to look at Shakespeare's Grave. It could have cost nearly £10 to park. There were loads of shops but no bargains in Stratford - just the ubiquitous nougat bars, Bard paraphernalia, and craftgiftcrap. But in Stratford's defence it could have been worse, says our Patient. The place has at least three cracking theatres, and a pleasant canalside, and when it comes to parting dollars and "grey pounds" from tourists, Stratford isn't in London's league, by the sound of it.
When in debt, we have to be alert constantly to the likelihood of being overcharged for services or goods in the summertime, especially around visitor attractions, fairs, seaside, shops...
Don't give in. It is often easier to resist spending on tourist-trap-crap because a lot of the merchandise is tacky, but remember that taxis, hotels, meals and parking can be more expensive here too. As we said, be on your guard all the time.
In Twelfth Night, Shakespeare wrote, "Many a good hanging prevents a bad marriage".
Maybe we can paraphrase him with, "Many a tight fist prevents a loose purchase".
(20:00 Thursday 26th May 2005)
So the government is going to subsidise the purchase of homes for first-time buyers, so that only up to 75% of the property value needs to be borrowed by the buyer, with the remaining 25% being owned equally by the government and the housebuilder/mortgage company. The homebuyer then rents this remainder, with the option to add it to their mortgage in due course.
The intention is to help first-time buyers onto the property ladder. Why?
Does the government fear that because many first-time buyers are priced out of the market, the risk of house price deflation is more likely, or that "key workers" can't get somewhere to live? The problem is caused by excessively inflated house prices, which is caused by demand outstripping supply. Pumping public money, in the form of an indefinite loan, to bridge the gap between what people can borrow and the asking price is irrational, will push house prices up even more, and ensures that any correction crash will hit harder later. People are already risking their homes too much by taking on loans at 4 or 5 times their salary and are encouraged by some intermediaries to exaggerate their earnings.
The amount ear-marked for this exercise is £1 billion, enough to cater for 110,000 homebuyers by the year 2010. After that, there'll be another wave of people wanting to be on the property ladder and wanting the subsidy. If the crash comes, the government's share of the equity, our (public) money, will be written-off first from defaulted mortgages. This means that homebuyers have a shield from any negative equity risk - another incentive to buy.
This measure is a reaction to absurdly high property prices but effectively inflates the housing bubble further. Lets build more homes, but lets also be careful about where they go, how they're designed and how they're funded. Renting can be the alternative that takes the pressure off housing demand. People would be happy to live in rented accommodation, if it was made cheaper and more attractive. Renting will suddenly look very attractive if house prices start to drop.
Oh, and well done to the unbelievable Liverpool FC.
(19:00 Tuesday 24th May 2005)
We gather that April saw us actually repay more credit card debt than we took on, for the first time in ages. Maybe it's a change for the best, given the increase in card charging for balance transfers and the reluctance of card issuers to offer 0 percent credit. So if you can pay off the card balance and you haven't got a 0% credit card, this could be the best thing you could do. Then take pleasure in slowly cutting-up that plastic.
Scissors!
Which reminds me, did you know that we won the war on the back of the "Paper, Scissors, Stone" game? Churchill chose scissors, hence his famous two-fingered salute which everyone mistook for "V for victory", while Hitler plumped for paper, as seen in his flat-handed salute. True story.
Good luck to Liverpool FC tomorrow, going for European Cup number five.
(22:00 Friday 20th May 2005)
Are you sick of seeing drivers wearing bluetooth headsets? One of our Patients is. Though there aren't that many bluetooth headsets about, and they keep hands free for driving which is a great safety idea, our anonymous Patient wants them to be so miniaturised as to be unnoticable, so he doesn't notice them. He has a theory that drivers who wear bluetooth headsets can "look a bit swanky", whatever that means. At least I think that was what he said. Safe, clever, adopting modern technology in a practical way, but "swanky". It upsets him.
Why do people fork out for things that make them look like this? They say that the Smart car is iconic. We say that the term "Smart car" is ironic. Subtle difference. You can hear the Smart car owners now, my ears are burning. "Yeah, well I can park my car at right angles to the kerb." Big Deal. No offence to disabled people but Smart cars, even the roadster to a lesser extent, has an air of "car for the disabled" about them. They are throwbacks to those sky-blue three wheelers of the early seventies which were designed purely for disabled use. (Ask your Dad). "Yeah, but Money Surgery should promote Smart cars as a cheaper "smart" alternative". What's "smart" about driving half a car, which makes you look ridiculous, which handles like a tesco trolley, and costs the best part of 10-grand new? Wanna save money on driving? Then see here.
Someone came into the Surgery the other day moaning about his expensive new T-shirt. "Oh, it smells funny, and it's noisy", he whined. "And sometimes there's acrid smoke coming out the back of it." One look at the label confirmed that it was a Diesel. So don't burn my ears about how Money Surgery should promote diesels, either. The miles-per-gallon money saving advantage over petrol cars is negligible, when you look at the whole picture.
Good luck to those international superstars battling it out tomorrow on the world stage like true sportsmen, in one of the oldest, most celebrated of tournaments. No not the FA Cup Final, but the Eurovision final. Good luck to Royaume-Uni. In any event, don't gamble on either event. In-fact doing something else instead of watching either event would probably be wise.
(20:00 Wednesday 18th May 2005)
I have not seen anyone mention this anywhere, maybe it's just me, but have you noticed how the "shop window" of every amusement arcade in every town in Britain has awful china ornaments?
These ceramic "prizes" are the most tragic, kitsch, objets d'art in the world. If Brian Sewell was dead he'd be spinning in his earthenware grave. And each piece is assembled so carefully, like the display is a sort of shrine, each miniature china spaniel or victorian couple or old lady figurine on fake velvet fabric at varying levels and spot-lit with such drama.
Lets look at the evidence:
The big question is: Why?
Does every gambler secretly harbour a desire to blow his winnings on china crap? Sh** a brick, these things must put off the average punter. Anything would be better. How about a picture of a pretty young lady's head with a speech-bubble saying "You can't stop, can you?", or "This could be your lucky night, sexy". That'll draw the lads in. Perhaps if the lady in the picture was eating chocolate seductively, then she'd appeal to both sexes. Anything but pottery. No-one else uses porcelain in their shop windows at all, let alone all the time, apart from some branches of H Samuel, so just stop it. Now.
Still, hark at me suggesting, free of charge, how the gambling industry can get more custom: The less we gamble, the better, See here. Carry on using the ornaments, me old china, at least it gives me some amusement.
(09:00 Tuesday 17th May 2005)
A Patient of Money Surgery has seen a leather jacket selling for £1,100, by D&G we think, in a regional store. At the same shop were T-shirts with price tags for £120, £75, and £60. Maintaining the philosophy suggested in our article Consider Things from Another Point of View of 12th May, buying clothes like this can on one hand be seen as aspirational, but on the other, as complete madness. To beat debt, wearing a jacket costing over a grand is in the completely wrong category.
Good buy? No, bad buy.
Another has seen hand-made hi-fi speakers for the home for £44,000, in a magazine. Sounds incredible in more ways than one.
Play the top-ten CDs by Tony Christie or Shakin' Stevens through them and your 44 grand-plus hi-fi still sounds horrific. We wonder how many audiophiles spend half of their net income on the latest Bang and Olufsen or Nakamichi, only to force-feed it hundreds of hours-worth of Queen or Elvis or Dire Straits or...
Good buy? No, bad buy, again.
On the other hand, one of our Surgeons has just spotted a suitcase in "havana leather" for 1,600 pounds. Does it come with a note inside saying "only winding you up" tied around a bundle of £1,500 cash? This may well be aspirational if you have no debts and piles of savings and a little taste for the good things in life, but if you want to beat debt, get rid of the baggage.
Good buy? No, bad buy, again.
Focus on the new personal aspirational spending. See hand-made, leather, designer-embossed, portable, electronic gadgets as wastes of precious money. Make that fiver last 5-days. Make that tenner last for ten. Then, if you can miraculously achieve that, each purchase will have truly been a good buy. Thank you and... Good Bye.
(20:00 Thursday 12th May 2005)
Are you fed up of spending money on clothes? Not just the initial purchase, but the cost of washing, dry cleaning, plus the effort of ironing. We landed men on the moon 36 years ago but we still haven't invented one home ironing machine. Then let us introduce the Disposable Coverall from Screwfix Direct.
Costing £9.90 for a pack of 10, the one-size, one-piece white workwear, item number 17133-77, is "Breathable and comfortable. Protects against grease, paint splashes and non-hazardous dust". You could wear a new coverall each day, with maybe one for the whole weekend, that's just £300 per year. Come on, your Armani suit doesn't protect against grease, paint or dust. Blinking useless. Hey, Giorgio, prepare for an avalanche of complaining customers.
"I bought this Armani suit for £550 and it let in all this non-hazardous dust. Useless. I want a refund!"
If you sell all your other clothes except for underwear and a warm jacket and maybe a few ties, you could make a hundred pounds. Screwfix even do a Rain Suit for £3.35 each in any colour as long as its yellow, and this is - what's the word for non-disposable - durable? It comes in two pieces and is obviously an item to rival Armani in terms of quality, given that it is over three times more expensive than that disposable coverall. It comes in two generous sizes, the "large" is item number 33820-77.
(02:20 Thursday 12th May 2005)
As far as we can tell, there are three building societies that offer current accounts.
They are:
Nationwide,
Leeds and Holbeck,
and Norwich and Peterborough.
...Bless 'em.
Apparently, the wise buys on the Monopoly game board are the orange-coloured properties, Vine Street, Marlborough Street and Bow Street. In banking, however, there simply doesn't have to be a monopoly.
(00:20 Thursday 12th May 2005)
Consider things from another point of view, went a song on Radio 1, the other day. How right that is.
A Patient of ours ran into the Surgery yesterday, wailing that "Rover has gone missing".
"It's allright", said our receptionist trying to calm her, "there are other cars, and your Rover will last for ages yet."
"No, my Rover is a dog, and he's disappeared." moaned our Patient.
"Then why not put an ad in the paper."
"That won't do any good. Rover can't read", sobbed our Patient.
Clinging to her ever thinning line of optimism, our receptionist offered, "But just think of the dog food you're saving."
"You're right", snapped our Patient, "I never thought of that", and promptly trotted back out, beaming, tilting her head as she waved her "Cheerio".
This actual conversation, as recorded by our reception CCTV for your protection as well as ours, is typical of the way situations can be turned around, depending on your perspective. When in debt and determined to survive without debt, our perception of money has to alter. Spending money on luxury goods isn't a mark of success, even if other people are spending their own money. It's our perception of the act of spending that has to change.
To hold back that cash in your pocket is the goal. Resisting temptations to spend are the marks of achievement. Getting through the month on fifty quid is the new, personal, status symbol. Debt elimination is the only thing that matters, so blinker your view and focus on survival. Fancy cars, fancy holidays and fancy clothes are naturally, normally, aspirational objects, but think of purchasing these things as crazy, stupid, unnecessary.
It's easier than you think to will yourself to perceive the trappings of luxury, however great or small, to be foolish. The Money Surgery Philosophy can be compared with a more spiritual and less possession-orientated way of life. Materialism doesn't necessarily equal happiness, whether you're in debt-focus-mode or otherwise, but if you are going to eliminate debt, think about how things can be turned around, psychologically.
That car is gorgeous: I want one.
No, it costs 4K a year to run, depreciates more the more expensive it is, and they don't give you any exercise.
That house is lovely: Guess what, I want one.
No, the mortgage payments would be 975 pounds a month, the insurance, bills, council tax, distance from work would all add up, plus do I really need seven bedrooms living on my own?
Ok, then, that Bounty chocolate bar: I want one.
No, no, no, they taste like soap, last 30 seconds, clog-up your duodenum, have no nutritional content, and cost as much as three tins of mushy peas at Tesco.
Other chocolate bars are available.
Ready to Beat Debt? Then take a different view, with Money Surgery.
As the song Point of View by DB Boulevard goes, "Can't you see, life's easy, if you consider things from another point of view".
(18:00 Monday 9th May 2005)
The murder of the countryside, can it be called countricide?, is being assisted by Banks' decision today not to introduce shared, or "unbranded", branches.
Up to 1500 communities are threatened by this rejection of proposals to maintain services which was presented to the British Banking Association (BBA) by the Campaign for Community Banking Services (CCBS).
The BBA argue that customers can use the Internet, telephone or mail to access services from rural areas, and say that Post Offices are enough. The trouble is that Post Offices carry charging ATMs, and the numbers of Post Offices is dwindling. It is unfortunate that the BBA push the responsibility for maintaining rural banking on the shoulders of the Post Office.
The idea of "unbranded" branches has proven to work successfully in the US, claim the CCBS, but this rejection by Britain's banks will allow rural communities to sink beneath the undergrowth in the name of profit. The CCBS, which is made up of 28 organisations, including Which? and Help the Aged, called the decision "blinkered". What will the Countryside Alliance make of this we wonder? We know what Which? magazine will say. They say that, as a result of this rejection, there will be nothing but fee-charging ATMs in rural communities, there will be no access to services for less able or elderly, and even more revenue for banks under the guise of extra charges.
To see where the charging ATMs are, visit here.
As far as Money Surgery can tell, banks are able to ignore these less-profitable customers because they appear to have a monopoly on current accounts. 95% of all current accounts are operated by banks, with 80% run by the "big five". We concede that the spread of the Internet is continuing and thereby lessening the need to maintain face-to-face banking services. We concede that many customers prefer to run their accounts this way. However, this "unbranded" proposal by CCBS was proven, workable and profitable, and dismissed. ...But there is an alternative.
They are called Building Societies. These are mutual companies, in other words they have no shareholders who demand dividends. Their members are their shareholders and their members are their account holders. These companies value their place in their local communities. Their ethos is primarily to serve local communities: Visit any building society web site and you'll read again and again of the real work they do in the community and of how they are proud to represent their respective localities. Some building societies offer current accounts. Browse a few. Search for those that offer current account banking and search for your local branch.
When you're ready to close your account with one of the big five, ask one of the tellers, face-to-face of-course, how many fingers you are holding up. Their answer, if correct, should not be "the big five".
(20:00 Wednesday 4th May 2005)
Enter a bank... go on, I dare you... and amongst the dazzling product bombardment that permeate right through the retina will be one for Pet Insurance. "Pet Insurance?", we hear you ask, "But my dog can't drive." No, it's to cover the cost of illness or accidents, but is it worth it?
Latest figures show that pet insurance sales are booming, in an effort to cover similarly burgeoning vets bills. The number of policies on the market has increased by 56% since 2003 but cover might not be as comprehensive as you think.
One in three policyholders make a claim within 12 months but most policyholders have inadequate cover for vet's fees. For example, about half of pet policies have a limit for medical assistance payments of 12 months max., even if the owner is still paying premiums, and six of the top ten dog afflictions require medical care for longer than 12 months. The average restriction on vet's fees is £3,500 but again treating half of the main dog problems, like skin disease, may cost more than this. And apparently the pet claims customer service is nowhere near as good as for car insurance.
Imagine this: You're in debt. You've put on your shades and read all the bank's product literature and signed up for a few and now you're a fully loaded, properly functioning Joe or Joanne Public. Up to the neck in debt, you feel normal. But a little scared. Let's ...get a pet. No, no, no.
Pets cost a fortune to run. They have to be fed, need grooming, need exercise, need special clothing/leads, require medical care, need neutering, damage furniture/clothing, need cages/enclosures/tanks/housing/horse boxes, cost money to buy and cost money to die. So if you're in debt, don't buy a pet, or pet insurance: Dogs can't drive, even if they're called Rover.
So why do people have pets? A guaranteed welcome home, even if it's from Dave the goldfish, or maybe it's the companionship, or the love of animals, or the lack of human company substituted for by the artificial love and loyalty of a caged ex-savage that naturally greets the food source/prison guard with gusto? The word pets is one step from being pest. Pets are a Pest, to debt recovery.
(16:00 Saturday 23rd April 2005)
WARNING: If you were thinking of using your debit card to make purchases abroad, remember that your bank will charge you about a pound transaction fee on every purchase. And guess what? - Nationwide Building Society doesn't, not even through using its credit cards.
Latest to start charging their loyal customers is the well-groomed Lloyds-TSB, charging £1 for any purchase made in a foreign currency, and appallingly applies also to Internet purchases and home shopping in foreign currencies, so you don't even have to leave your home to get stung.
A major reason why customers stay with these bankers are their half-truth reasons for implementing a new charge. This time Lloyds-TSB say, "We are introducing the fee to cover the cost of anti-fraud measures to protect card users". That's an excellent excuse, isn't it, like saying 1. There is a genuine reason, 2.It is in order to protect you the customer, 3.If everyone else isn't charging then they are more susceptible to fraudulent acts. Brilliant, really.
Other leading lights in cutting-edge banksploitation are HBOS (£1.50), and NatWest (75p), however Barclays, HSBC and First Direct don't yet charge a fee.
On top of all this, most banks also charge a transaction fee of up to 2.75% of the purchase price when debit cards are used for foreign currency purchases. Withdrawing cash from ATMs abroad will always incur a charge too, with Lloyds-TSB raising its minimum fee from £1.50 to £2 from 20th May.
Some Patients say to us here at the Surgery that they are quite happy with their bank. "Why does Money Surgery say that banks are bad?" That's why the banks make so much profit: Inertia and Ignorance. The "Two I's". Use your two "eyes" and compare banks against building societies. And, if you have debts, stay home where it's safe.
Cut out Holidays, Cut out Banks, like a Surgeon.
Election thought for the day: In the party of the blind (BNP), the one eyed man is king.
(18:40 Wednesday 20th April 2005)
The looming pensioner time bomb is something that's discussed in party election broadcasts and we think it's about time the rosetted minority actually grasped the nettle and came-up with a radical solution, as we did back on 21st March.
The thing that worries Money Surgery is ...what if the pensioner time bomb goes off?
One went off in Bournemouth High Street in 1985. There were zimmer-frames embedded in the side of passing vehicles and beige flat caps hurled up hundreds of feet before landing upside-down on flat roofs. The post office, having taken the full-force of the time-bomb was so devastated that it had to be levelled. The brickwork on the nearby pound-shop still bears shrapnel scars from fragments of false teeth and NHS glasses.
This impending crisis has been looming for years. The time-bomb is certainly ticking. But where? Maybe the army could be called-in. They could take sniffer dogs into Bingo Halls or OAP homes to search-out the device, and then get it defused.
Talking of the army, one option that hasn't been considered, not even by the Conservatives as far as we know (are they thinking what we're thinking), is the notion of a National Service for OAPs. Providing pensioners with an activity, nay an employment, on a mass scale with the by-product of an ever diminishing pensioner population through combat, friendly-fire, or plain over-exuberance, sad though that is, must have tempted at least one party campaign manager. The figures stack-up irresistibly.
Until the pensioner time bomb is "defused", we must all be vigilant. Look out for anything suspicious: Are they curly red and blue wires poking out of the top of that little old lady's tartan shopping trolley or just packing ribbon? Is that a pack of dynamite sticks or some dodgy sausages in that old-fella's basket? Listen out, too, for the tell-tale tick-tick-tick wafting over from coach parties stopping-off at motorway services on their way to Stratford-upon-Avon. Don't tackle the pensioner yourself, they may be armed (with walking sticks or thermos flasks), often use sophisticated listening devices (hearing aids), and are capable of concealing weapons (under their summer-season overcoats). Only the army is suitably equipped for the situation.
If and when the pensioner time-bomb goes off, it won't be pleasant, but at least you've been warned.
And, yes I know, I'll be a pensioner one day myself, if I'm lucky. Can't wait.
(With a nod to Deborah Ross of The Independent newspaper).
(20:00 Wednesday 13th April 2005)
Forgive us for repeating ourselves, Patients, but can you trust anyone these days?
Firstly: With political soundbites out-shouting important news items like Liverpool FC beating Juventus hurrah!, consider this verbal equation: Politicians can never and will never tell the truth about opposing politicians or parties or their performance or policies if it flatters the opposing politician or party. We all know this. By definition, then, all politicians frequently avoid the truth, can't tell the truth or withhold the whole truth.
Secondly: Now tonight, after collapsing into the recovery position on the sofa after a busy day at the Surgery cutting-up plastic cards with sterilised scalpels, what do I see in my favourite magazine? Only Uma Thurman, who previously I had a higher opinion of since Kill Bill, on pages 2 and 3 flogging Louis Vuitton denim bags, and then on the back cover trying to shift Tag Heuer watches. C'mon, Uma, you're an artist, and a rich one. Can someone enter Integrity into www.dictionary.com? I've forgotten what it means. Maybe it dropped off with CSE or negative equity (Ask your Dad).
May the Fifth ...politician that I hear please tell the truth.
The latest opinion poll says that there is a 1 percentage-point swing to the We don't really believe you Party, to 89% of the electorate. What do you mean "Integrity's not there"?
Money Surgery: Not Sponsored, Not Biased.
(20:30 Tuesday 12th April 2005)
UK Online has just announced the UK's first broadband deal for less than a tenner a month, offering 512K speed for £9.99 per month and unlimited usage.
In addition it's also got another first, with Britain's fastest home broadband service at a massive 8Mb for £29.99 each month. Competition among broadband providers has finally taken hold since BT was forced to allow access to its exchanges for rival companies.
Isn't it nice when things get cheaper?
(20:00 Monday 11th April 2005)
Nearly two-thirds of us Britons have changed our bank accounts, according to those dark horses Lloyds-TSB. Of those who have switched, 24 percent changed only once, 18 percent twice, while 2 percent of us have swapped over five times.
Women are more likely than men to be "serial switchers" and the survey also discovered that 24 percent of us are more likely to swap change their partner than their current account.
As a long-standing and fully house-trained Money Surgery Doctor, I recommend frequent reviews of your current account, compared with the best of the rest. Use www.moneyfacts.co.uk to compare the market's latest. Ignore cash incentives to move. Take the cash and run, yes, but when the intention is to move permanently, look at the credit and overdraft rates, the full range of charges, the facilities offered, the convenient nature (such as Internet, postal, branch), and the locality of the account provider.
The Surgery Doctors are, on average, on their fourth current account and only move when they're really fed up with their account provider. To see the Money Surgery current account switching guide, see here. Happy switching.
(21:00 Sunday 10th April 2005)
Balance transfers on 0% credit cards may become a thing of the past as more and more card issuers are charging the cardholder to transfer a balance. Switching large balances from card to card means that savvy cardholders need never pay off the balance and instead put the spare cash in a savings account, as we've championed here. This follows-on from news of some rather nasty cards as in our article of February 15th, No More Card Tricks, here
The card issuers have become wise to the actions of what Anne Ashworth of the Times Money section called "Rate Tarts". This term describes people who exploit the incentives of card issuers to transfer their credit card balance to one that charges no interest for a limited period, then apply for another card and transfer this balance again, perpetually, while earning a good rate of interest on the money they would have paid off the balance with in the first place. The card issuers have previously made enough profit from the people who were tempted by the incentive, as is the card issuers' intention, and subsequently got stung when the 0% period expired, or they used the card for purchases and got sucked into the debt whirlpool. Back then, the activities of these clued-up "rate tarts" weren't an issue, but now an increasing number of people, like many of our Patients at Money Surgery, are profiteering from the card issuers' profiteering and the card issuers are seeking to stop it. This is a shame: It was like a mouse running off with the cheese while the trap is still cocked.
According to Moneyfacts, one of our favourite web sites despite being sponsored with those horrible pop-up ads, most lenders that offer 0% card deals are now charging a fee of 2% of the balance being transferred. Mint was the first to start "Tart" charging, that's the last time they get nominated in our MoneyOscars, with 2% (Minimum £5, Maximum £40). Then there's:
Barclaycard - 2%, £5 min., £50 max.,
Alliance and Leicester - 2%, £2 min., £35 max.,
Tesco Personal Finance - 2%, £2 min., £35 max.,
MBNA - 2%, £2 min., £50 max.,
Halifax is expected to be next.
Maybe the focus should be on paying off these balances: the days of the perpetual interest-free balance transfers are numbered. We'll keep tabs on the remaining card issuers to see if they all follow suit, and we'll highlight who the good guys are in terms of 0% cards. We've also noticed that remortgagers are having similar terms imposed on their home loan transfers, Leeds and Holbeck building society is the latest to increase its exit penalty for transfers to rival lenders, by a whopping 75%. This comes after increases by Co-operative Bank, Nationwide Building Society and Alliance and Leicester in the past year. When the Co-operative Bank raised its exit penalty from £85 to £195 in February, one Patient likened it to parking in a car park, with clearly listed charges, only for the charges to increase once you've parked your car, without any warning. We've also noticed that new mortgage deals all seem to have an upfront fee that has a serious effect, particularly on lower loan values.
They've become wise to us "Rate Tarts" but all this means is that there is greater emphasis on cutting-up credit cards and simply paying-off every single debt.
Cut-out credit cards and mortgage loans completely...like a Surgeon.
(12:00 Saturday 9th April 2005)
Energywatch has condemned utilities for generating a "myriad" of problems with billing and causing misery for consumers. The energy watchdog got 40,000 complaints last year, including reports of bills not being delivered for months and sometimes years. Energywatch has consequently asked the industry regulator, Ofgem, to investigate the issue, in what is being perceived as the first energy, or utility, "super complaint".
At Money Surgery, we're aware of a sliding decline in responsiveness of utilities to amend bills, and to answer customer queries. The ratings at web sites like Uswitch.com are also sliding depressingly. If they're all increasing their charges like they were charging for Council Tax, and their customer satisfaction ratings are all in the not satisfied at all, really category, what point is there in switching, or for that matter in having competition? Looks like switching is so 2003, and privatisation is like, sooo 1980s.
See our new guide here.
But remember, making money from child-bearing, like owning a car, is completely impossible, see here, and here.
Good luck to those old-age newlyweds, who are so often in the thoughts of our Patients and are leading cultural ambassadors for Britannia today, but ironically live a make-believe world distinct from real life:
Ken and Dierdre.
...Hmm, weddings, have we ever mentioned the cost...?
(10:00 Sunday 3rd April 2005)
When it comes to money, you need a place to store it. You need a cache for your cash. Obviously banks are better than the mattress, but the bank must be trustworthy and secure.
With the recent media frenzy over cashpoint (ATM) charges, we want to highlight how poles apart some banks and building societies are over their attitude to the people who store their money with them. More and more cashpoints are charging people to make a withdrawal, with average charges at £1.50p, and some charging £1.75. Also, we've learned that Royal Bank of Scotland has exploited this cashpoint charging by setting up a company purely to run charging cashpoints, Halifax has sold a tranch of its cashpoints to a similar company that operates charging cashpoints, Abbey is typically expected to follow suit, and the Post Office has three-quarters of its vast range of charging ATMs. BBC and ITV news highlighted the fact that most charging cashpoints don't specify what their charge will be until right before the customer withdraws their cash, by warning them on the screen.
These cashpoints automate the process of handing out the account holder's own money. While the money stays in the bank, the bank makes some interest on it and maybe passes some interest onto the account holder. But this automation saves the bank employing TWICE as much staff at branches. Charging customers ANYTHING to withdraw their own money is scandalous. It is a con trick. It is High Street robbery. But one company, as reminded by The Guardian, has continually acted as the consumer's champion on cashpoint charging, typical of many of its good value products and services. This is Nationwide Building Society.
They have had the most heated arguments with other members of the Link cashpoint network who have wanted to make all Link cashpoints charge for withdrawals, for quite a few years now, and must be relieved this week to witness publication of the Treasury Select Comittee's report into ATMs calling for regulations to PROTECT the customer's free access to their own money. When you pay nothing for taking out £20 from a cashpoint you have nobody but Nationwide Building Society to thank, and when you pay £11.75 to withdraw £10, you can curse Halif***s, Royal Bank of S**tland, or The P*** Off-ice. And don't forget to ask yourself, who do you trust with your money? - The consumer's champion or the profit exploiters?
Copyright 2000 - 2009 ©Kevin Anthony Jones. All rights reserved.
