Money News 2004 Archive
No Chances from the Chancellor
(Friday 3rd December 2004)
In his Pre-budget speech, yesterday, Chancellor of the Exchequer, Gordon Brown, outlined plans to retain the current contribution limit of £7,000 for Maxi ISAs and £3,000 for Mini ISAs. He had intended to reduce the amount to £5,000 and £1,000 respectively from April 2006.
For parents, he wants to extend paid maternity leave from six months to nine months and allow mothers to transfer the leave to the father. The childcare tax credit will also increase for parents earning less than £59,000 a year while three and four-year olds will get 15 hours of free nursery care from April 2007 (it's only 10 at the moment). Schools will also be given extra funds if they open from 8am to 6pm to look after children whose parents are at work.
In a further boost for new parents, children will get £250 from the government for their Child Trust Fund when they reach seven years old on top of the £250 paid at birth. (For parents on low incomes the contribution will be £500).
Single parents and the long-term sick are to get a £40 a week bonus for a year if they return to work and the winter fuel payments for the over-70s will increase by £50 to £250. The higher rate for the over-80's will increase to £350. An emergency £1 billion cash injection for local government aims to ensure that council tax will rise by no more than 5 per cent before the general election, but this ignores increases generally following rebanding.
Clearly, these measures were aimed at the electorate. And are likely to be very effective, covering all age, earnings and lifestyle bands, almost clinically. Now, lets update the MoneySurgery How to Understand ISAs page...
Home Information Packs Become Law
(Friday 19th November 2004)
Home sellers' packs aimed at speeding up the home-buying process in England and Wales will become law on Thursday. They will force sellers to have surveys and local authority searches done before putting properties up for sale. But critics say Home Information Packs, which will cost about £600, could go out of date before properties are sold and are a waste of money.
The Housing Bill comes into force on Thursday, but the seller's pack will not be compulsory until 2007, with pilot schemes due to start in 2006. The government says the Housing Bill will "help the most vulnerable and help create a fairer and better housing market". Millions of pounds are wasted each year when sales fall through before contracts are signed.
Peter Bolton-King, chief executive of the National Association of Estate Agents, warned that the cost could put people off selling their homes. However, Which?, formerly the Consumers' Association, supports the packs, arguing they will increase transparency and cut the time it takes to process a house sale.
Breach at Morgan Stanley Web Site
(Wednesday 10th November 2004)
Morgan Stanley, the credit card company with more than 1 million customers, has plugged an online security loophole that could have allowed people to access account holders' details and to move their money. Yesterday, it emerged that the Morgan Stanley website had allowed users to access their credit card information after entering just the first digit of their credit card number.
The incident comes just a few days after Cahoot closed down its website for 10 hours following a tip-off that users could view other customers' private details. Cyber crime experts said banks and other companies must take more responsibility for providing their online customers with security or run the risk that people will steer clear of these services.
At the Surgery, many Patients are unaware of how insecure using the Internet can be. Hacking can be as complex as viewing data using remotely installed bugging software, or as simple as looking at the screen over the user's shoulder. Either way, the Internet is not secure. Not even when it is used for surfing for the most inocuous item, let alone for banking or credit card account usage. No Doctor here at the Surgery has an Internet accessible savings or banking account, because we know how "accessible" those accounts would be.
Watch out for a brand new page outlining a few steps you can take and good habits you should have with regard to your money and security, here at Money Surgery.
Household Debt Behind Record Bankruptcies
(Monday 8th November 2004)
The number of individuals going bankrupt has hit a record high, with figures revealing that in the third quarter of 2004, 11,967 people were declared insolvent, which is up 31% on the same quarter a year ago, according to figures from the Department of Trade and industry.
Experts placed the blame on soaring credit card debt, with the typical bankrupt owing £50,000 on a variety of cards. The rise in bankruptcies - the tenth quarterly increase in a row - will renew concern over Britain's £1 trillion consumer debt, coming days after figures showed that home repossessions have risen to their highest level since early 2000.
Legal changes to bankruptcy, criticised for creating a "soft option" in which individuals can escape their debts in as little as one year, may also be behind the rise.
Stay solvent with the Surgery. Fight back and cut out your debts here at the Surgery that operates 24/7.
Tips for Buying a PC
(Thursday 2nd September 2004)
...Don't.
If you have debts, this is the last thing you should be considering. Maybe you are a patient of the Surgery or maybe your debts are giving you sleepless nights, if either is the case, act like a soldier, permanently out on maneouvres against debt until your debts have gone.
Think of a PC as your reward for shrugging off the last pound of debt. Don't look at the details, just have a hazy long-term reward in your mind for getting through the dark days of debt, which could be a PC, a car, a holiday, or something less expensive.
So when you get tempted, remember that this feeling will pass. It always does. One day you are convinced that you're going to the local computer store to look at that shiny new laptop that weighs a few grams, the next day the feeling isn't so strong and by the tenth day, you wonder why you even were tempted at all. So when you get tips for buying a PC, think "Don't".
Building Themselves Up
(Tuesday 1st September 2004)
Building societies last year enjoyed their strongest growth for nearly a decade, regaining some of the ground lost after the demutualisation/carpetbagging wave of the last decade, with many regional societies beginning to flourish once again.
The total assets of building societies grew by 14.6% in 2003-4, crossing the £200bn mark for the first time, according to a report by KPMG. Leading the way was the Kent Reliance Building Society, which increased its assets by 37% to £838m. Other societies which have expanded rapidly include the Swansea, up 25%, Dudley, up 21%, Newcastle, up 19%, and Manchester, up 18%. The Nationwide, which resisted carpetbagging attempts to end its mutual status, remains by far the biggest society. It makes up 45% of the sector and grew by nearly 19% in 2003-4.
Since the demutualisation of Halifax, Woolwich, C&G, Northern Rock, Alliance & Leicester , Birmingham Midshires and Bradford & Bingley, the sector was looking a little battered. Building Societies, however, continue to offer better rates, lower charges and a potential demutualisation windfall, however likely that event may be.
Be Disloyal
(Tuesday 24th August 2004)
Do you use loyalty cards of the kind offered by supermarkets and big-chain chemists?
Do they save you money?
If you answered Yes, do you know how much money they save you?
We are pretty sure that your loyalty card saves you Nothing, because the more you spend, the more you DON'T save.
At the Surgery, the only cards we advocate are: Credit Cards that offer Zero percent for Balance transfers until your debt is cleared and debit cards.
There has been some advocation of Loyalty Cards by some Money people on the Internet lately but for the most of us, most of the time, they only make you spend more. The most Reward that shoppers get from using their card is 4%, at a well-known chemist. The others offer even less. The "reward" is far outweighed by simply shopping around and getting your goods at other stores like supermarkets or "poundshops" or even through the Internet. Every time you're looking to buy something, sub-consciously you're aware that you "save" if you buy at your Loyalty Card store.
There is also an incentive to build-up your points to maximise your cashback total at the end of the year, or whenever. The stores also use the data collected every time you spend using your Loyalty Card, which can be stored on a database along with your personal details, to maximise their product positioning or to post offers to you that they feel will be most attractive to you. So you spend more again. You don't necessarily save more. You just spend more.
So ask yourself "why should I be loyal?" Big corporate stores who understand the psychology of incentives and the value of customer spending patterns are loyal to their shareholders and increase your debts to improve their profits.
So be disloyal, in the loyalty-card sense. Always shop around for the best prices and the best interest rates.
Cut-out Loyalty Cards, cut-out Debt. Like a Surgeon.
The Five Ages of Homebuying
(Tuesday 24th July 2004)
A new report by the Royal Institution of Chartered Surveyors (RICS), has identified five different "ages" of homebuying which influences where people in different age groups choose to live and buy property.
Over 90% of homeowners with children buy a property because it is close to good schools, it reveals. Last year, data showed that homebuyers were prepared to pay a premium of around 12%, simply to buy property in a good schools catchment area.
Of the first age, "Single Buyers", 77% felt the nightlife was an important factor, affecting where they bought a home. Public transport was important to 62% of people in this group while 59% said the shops in the area would be important.
For "Couples with No Children" the buying priorites evolve, with 62% saying having a garage or offstreet parking was important. The same percentage also wanted to be close gyms, theatres and art galleries.
For "Couples with Children at Home", gardens are also very important, in addition to schools and nurseries. To "Couples Whose Children have Already Left Home", the main selling point is likely to be the neighbourhood, with nearly 80% saying that a quiet neighbourhood was important. Homebuyers "Over 65" are also keen on quiet neighbourhoods, with security and safety an important factor for nearly 80% of respondents. The RICS said: "This research highlights a natural segregation or "ghettoisation" when it comes to buying a home. People tend to gravitate towards places which provide them with the facilities they want during different stages of their lives." Could the ideal home be one that satisfies ALL age groups or is that home simply the most expensive?
Bank Raises Rates ...Again
(Thursday 10th June 2004)
The Bank of England has just raised the it's base rate by 0.25%, taking it to 4.50%. This is the 2nd rise in as many months, and the 4th rise in 5 months, and it surprised most people in the city. Pencil in more rises before the end of 2004, Patients.
Bank Raises Rates
(Friday 7th May 2004)
The Bank of England has raised the it's base rate by 0.25%, taking it to 4.25%. This is the 3rd rise in 4 months and many predict that there's more to come, as forward market rates are pricing in a base rate of 4.75% by the end of 2004, climbing to 5% in 2005 and 5.25% in 2006.
Bank Freezes Rates
(Thursday 8th April 2004)
The Bank of England has just announced that it will keep it's Base Rate at 4%, deciding against making it three monthly rises in a row.
Nationwide Wins Two MoneyOscars(Tuesday 6th April 2004)
Nationwide Building Society has won two MoneyOscar Awards from MoneySurgery.co.uk, for Best Building Society and Best Current Account Provider. For more details, click here
Standard Life to Convert
(Friday 2nd April 2004)
Standard Life, Europe's largest member-owned life assurance company, has announced plans to float on the stock market and issue windfall shares to its members.
In addition, it will close its final-salary company pension scheme to new joiners from 16 November 2004. The firm employs 14,500 people worldwide, including 11,000 in the UK, 8,000 of whom are based in Edinburgh, and manages over £90 billion on behalf of investors.
Standard Life is a big player in the with-profits investment market, but these products have declined in popularity following a lot of bad publicity, and are expensive to maintain. Hence, the company has decided that demutualisation (converting to a public company and listing on the London Stock Exchange) is the best way to enable it to access the capital that it needs to invest in its business and compete with its rivals.
Standard Life plans to ask for members' approval to do this at its 2006 annual general meeting, after which it will issue shares to members. The life assurer has
five million customers worldwide, four million of whom are in the UK. However, only the 2.6 million with-profits members (of whom 2.2 million are in the UK) will receive shares when the firm demutualises. Customers who are not with-profits policyholders, such as those with mortgages, savings accounts, unit-linked funds or healthcare products, will not be entitled to receive windfall shares or vote on this proposal. The same goes for anyone taking out a with-profits policy from today. These people must sign a three year waiver confirming that they agree to these restrictions.
At the time of writing, if the group is valued at £4 billion, the average windfall to qualifying policyholders would be less than £2,000. That's a fraction of what loyal policyholders have lost in recent years and a drop in the ocean compared to what they stand to lose in future.
Halifax's New 6% Savings Account
(Friday 20th February 2004) The Halifax has announced the launch of a new savings account that pays a whopping 6% (6.05% AER). It will be available from 1st March 2004 and is a monthly saver type account.
Apparently, nearly 19 million of us have no savings at all and, of those who do save, only about half do so regularly. According to research carried out by the Halifax, nearly half of those who don't save said they'd make more of an effort to do so on a regular basis if they could find an account that paid a good rate of interest and which only required a small monthly deposit (£25 was the example quoted). In response, Halifax has created this exceptional new account.
You have to commit to saving for one full year and your monthly deposit must be at least £25 up to a maximum of £250. The rate is fixed for 12 months and is open to anyone over 16. At the end of the year, the account will be automatically switched to one of three instant access accounts chosen by the customer at the start. The account is limited to one account per customer per year and if it's closed early the rate will be reduced to the rate of the Halifax Web Saver account which currently pays 4.3%, which in itself is competitive. At Money Surgery, the Greatest Debt Busting Machine on Earth, we have always championed Monthly Saver account types. Take a look at our "Rate of the Month" on our Home Page. They offer market leading rates, and the account holder trickle feeds their often modest deposits, so the payments are not hard to bear. What we must all do, and we urge all Patients and readers to try and do, is to open one of these accounts, once your debts are finally paid off, of-course. If there is a low take up of these top rate accounts, Halifax's competitors will not bother to try and compete. Let's show the financial world that savers are not going to accept low savings rates. Let's endorse Halifax's new account and at the same time count the interest.
Rates Rise to Curtail Consumer Debt(Thursday 5th February 2004)
The Bank of England has just raised its base lending rate to 4%, from 3.75%. The record levels of borrowing are to blame, with the average non-mortgage consumer debt at a scalpel blade thickness under £6,000. The rate was widely tipped to rise, the Bank opting for a modest 0.25% increase compared with a possible 0.5% hike.
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