Personal Finance with Charlie Weston

Charlie Weston is the personal finance editor of the Irish Independent where he writes stories on money matters almost every day, and edits a Your Money section which appears every Thursday. Charlie is an award-winning journalist and very much on the side of the consumer. He is married with two young daughters and supports Liverpool, for his troubles. He can be heard on The Last Word with Matt Cooper show at 4.50pm every Wednesday.

If you have a query or question you'd like to ask Charlie, simply send it into lastwordfinance@todayfm.com.

Costly college

01/09/2010 17:10:05

COLLEGE days may be the best of young person’s life but for parents they are among the most expensive. A recent Bank of Ireland survey estimates that it costs €10,400 a year to put a young person through a year in college.

Student accommodation
Rents have fallen by 25% during the housing crash. Good places to look for accommodation include college noticeboards, college housing or accommodation, shop and community noticeboards and newspaper classified ad. For those heading to college in Dublin the ‘Evening Herald’ is considered very useful. Word of mouth from friends and classmates is another good source of accommodation. Try to agree a monthly rate. Some landlords charge a weekly rate or a “four-week rate” - this adds up to more than a monthly rate, according to the National Consumer Agency.

Loans
Taking out a loan is one option to consider, but flexible repayment plans are essential to ensure that the debt doesn’t get too unwieldy to handle. Credit unions tend to knock the socks off banks and building societies when it comes to their interest rates on education loans. Many credit unions have rates as low as 4% if you are borrowing to fund an educational course. All the main banks offer student loans, with Ulster Bank the best value with a 7% rate for €5,000 borrowed over five years. The maximum loan amount is usually about €4,000.

Registration fees
If you are an undergraduate student at a publicly funded third-level educational institution you generally do not have to pay fees. However, free fees do not apply to courses in private colleges. There may not be fees in most colleges at the moment but there is an annual student services charge that all students (except those who qualify for maintenance grants) have to pay. It is also known as a registration fee and it covers student services and examinations. The amount of the charge varies from one institution to another. It was announced in Budget 2009 that there would be an increase in the student services charge from €900 to €1,500 for the year 2009/2010.

Grants
The maintenance grant, paid by local authorities, is the main source of financial help available from the State for. Family and/or personal income is a key factor that will be assessed when you apply for a maintenance grant but there are also some other conditions One in three students - or around 52,000 a year - are in receipt of a full or partial grant. Under the grant system, families with three or fewer children and with income of below €41,100 get a full grant for a child in college. A full grant is worth €3,420 for a student living away from home and €1,370 for a student living at home. Disadvantaged students can get a top-up on these figures.
You can apply for the Higher Education Grants Scheme if you are a student undertaking an approved full-time undergraduate course of at least due years in duration or a full-time postgraduate course. This is paid by vocational education committees and essentially applies to courses in institutes of technologies.

Tax relief for third-level fees
Tax relief is available in respect of college fees paid in private third-level institutions, in institutions abroad and by repeat students and part-time students.
Tax relief is given at the standard rate (20%).

Credit cards
All the main banks offer special credit card accounts to students. But the interest rates and fees on these are just as high and nasty as the ordinary credit cards.
Ulster Bank is the most expensive as it charges 17.9% for purchases and 22.9% for cash withdrawals. National Irish Bank is at the other end of the scale with a rate for purchases of 11.6% on its standard card. However, money experts advise that credit cards are “inflexible fiends” and are best avoided as getting into debt on a credit card is one of the biggest pitfalls of college.

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mattc
Holiday savings

01/09/2010 17:07:41

IF you are lucky enough to be able to afford a holiday abroad this summer, the last thing you will want to do is end up getting stung by unnecessary costs. Here are three cost cutters that will help you avoid getting fleeced on holiday:

Credit cards
If you use your credit card in the eurozone to get cash from an ATM, you will also have to pay cash-withdrawal fees. Also, with some cards, you will be charged interest from the day you take out your money.
One idea is to preload the card – most issuers charges nothing for this (AIB, BoI, Permant TSB), except MBNA, EBS, Tesco. Pay off balance first. However, there is a security risk if you lose the card. Always have a note of card numbers.

Airport parking
Holidaymakers can avoid rip-off car parking rates by shopping around for the cheapest deals long before they take off for the sun. Those who simply turn up and park as near as possible to the terminal could be landed with a bill for up to €280 for a week’s parking - compared with just €35 if you book to park a little further away.
Dublin Airport Authority also offers ongoing discounts on its long-term car parking rates for advance bookings - the nearest long-term “Red” car park costs €52.50 for a week booked online, a 21pc discount on the standard €66.50 rate.
The cheapest deals we found were for the Carlton Hotel on the Old Airport Road, which charges €35 for a week’s parking and is open to non-residents; and €38.50 with the Crowne Plaza, both sourced through www.airportparkingsite.ie.

Car hire excess cover
When you hire a car abroad you should consider buying excess insurance cover before you leave Ireland. Otherwise, you will be liable for the first €2,000 of any the repair or replacement cost of the hired car. This is because most hire companies only cover collision damage waiver (CDW) and theft.
Excess is a voluntary insurance. You can save significant time and money purchasing a car hire excess policy before collecting your vehicle at the car hire desk. Decline the car rental company’s excess cover at the counter when you collect the car. If the car is damaged or stolen, the car rental company will charge your credit card for the excess amount and you can then claim for reimbursement on your policy.
The policy covers the excess on a car hire policy up to a maximum of €3,000 of damage to windows and tyres, fire, vandalism, theft or loss of use of the vehicle.
You can buy a policy to cover a one-off trip or you can buy an annual policy, which covers any number of trips. Typical costs for a one-off policy covering Europe are about €2.99 a day. The same policy covering worldwide and USA costs €4.99 a day.

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mattc
How the Westons saved €600

01/09/2010 17:05:09

I have had a good week on the money-saving front. Between the home insurance and the health insurance polices, the Weston family has managed to save more than €600. And there has been no loss of cover. In fact, we ended up with better benefits on our health insurance.

Home insurance
The family home and contents cover is with Axa Insurance. We were quoted €556 to renew the cover. The renewal date is early next month so we did the usual of ringing round for a few quotes and we went online to seek out a better deal.
We got a number of other insurance quotes but none of them were much better, until it struck me. I have been writing and broadcasting that many of us are over-insured on the rebuilding part of the insurance. Time to follow your own advice, Weston.
In our case we had, up until now, allowed for €300,000 for the rebuilding cost of our four-bed semi in north County Dublin. But that is too high, according to the Society of Chartered Surveyors, which provides a very useful table on the likely cost per square metre or square foot of rebuilding your house (see the website at www.scs.ie).
It transpired that we were vastly over-insured on this, and we had insured the contents for far more than their worth. With two young daughters we do not tend to buy too much expensive stuff for the home.
Radically adjusting the rebuilding cost and the value of the contents, we ended up knocking €130 off the cost of renewing our house insurance.

Average family can save €400 on healthcare
On our healthcare insurance, we managed a €484 annual saving. This is because we cut the cost of the health cover and increased the level of benefits by opting for a "corporate plan".
We are with VHI. Switching the adults to the Level Plus 1.1 corporate plan and away from Plan B Parents and Kids meant the annual premium is €665 per adult, compared with €907.
We got the VHI corporate plan at last year’s rate of €665 because we are not due to renew our health cover until August. If you are not so lucky you will be charged €775.
We left the children on Plan B Parents and Kids, because the children's rate for children on the corporate plan is higher.
Corporate plans are available to everyone, but healthcare providers do not advertise the fact that they are better value. These plans are only marketed to companies but by law must be made available to everyone.

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mattc
Pensions – women are from Venus

30/06/2010 17:38:10
NEVER mind the latest designer handbag or Jimmy Choo shoes, the accessory every smart woman should have is a pension. However, when it comes to pensions men are from Mars and women are from Venus.
If we assume that women who are not in the workforce do not have a pension, it means that almost three out of four women do not have a pension. Half of all women in the workforce have a pension compared with 58pc of men, according to the Pensions Board. This is crazy as women actually need pensions more than men because:
- Women earn less than men. Women’s income in 2007 was around two-thirds of men’s income, according to the Central Statistics Office (CSO).
- Women live longer. Life expectancy for women in Ireland was 81.6 years in 2006, nearly 5 years more than the value for men of 76.8 years, according to the CSO. There are 111,000 more widows than widowers.
- Divorce is more common. Almost one in three marriages ends in divorce or separation. The 2006 Census showed that there had been a 500% rise in marital breakdown since 1986 with over 200,000 people in Ireland now divorced or separated.
- Women are more likely to be hit by career interruption. It is common for women to take a career break when their children are young. This can deny them promotional opportunities and ensure they earn less than men.
- Women are more likely to work part-time.
- The 2006 Census recorded 400,000 people working in the home, of which 96pc were women.
A recent study in the UK estimated that it could cost on average £30,000 (or €36,222) to replace a women or man who works in the home, in terms of the cleaning, child minding and other jobs they do.

What women should do
It is hugely important that women start a pension, even if it is only small at the beginning. A PRSA (personal retirement savings account) is a flexible pension allowing you to stop and start contributions, and take it with you to different employments.
The big advantage of pensions is the tax relief. For working people, contributions (up to Revenue limits) benefit from tax relief at your highest rate of tax. So if you contribute €100 a week to your pension and pay tax at the higher rate (41%), the net cost works out at €59 a week. And the contributions are relieved of PRSI and health levy.
Even if a women qualifies for a full Contributory State pension (€230 a week), many women will still suffer a lower standard of living in retirement. So it seems that stay-at-home yummy mummies risk a lower standard of living when they put their feet up later in life.
No wonder they say pensions were invented for men, by men!
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mattc
How the Westons saved €600

30/06/2010 17:35:41

I have had a good week on the money-saving front. Between the home insurance and the health insurance polices, the Weston family has managed to save more than €600. And there has been no loss of cover. In fact, we ended up with better benefits on our health insurance.

Home insurance
The family home and contents cover is with Axa Insurance. We were quoted €556 to renew the cover. The renewal date is early next month so we did the usual of ringing round for a few quotes and we went online to seek out a better deal.
We got a number of other insurance quotes but none of them were much better, until it struck me. I have been writing and broadcasting that many of us are over-insured on the rebuilding part of the insurance. Time to follow your own advice, Weston.
In our case we had, up until now, allowed for €300,000 for the rebuilding cost of our four-bed semi in north County Dublin. But that is too high, according to the Society of Chartered Surveyors, which provides a very useful table on the likely cost per square metre or square foot of rebuilding your house (see the website at www.scs.ie).
It transpired that we were vastly over-insured on this, and we had insured the contents for far more than their worth. With two young daughters we do not tend to buy too much expensive stuff for the home.
Radically adjusting the rebuilding cost and the value of the contents, we ended up knocking €130 off the cost of renewing our house insurance.

Average family can save €400 on healthcare
On our healthcare insurance, we managed a €484 annual saving. This is because we cut the cost of the health cover and increased the level of benefits by opting for a "corporate plan".
We are with VHI. Switching the adults to the Level Plus 1.1 corporate plan and away from Plan B Parents and Kids meant the annual premium is €665 per adult, compared with €907.
We got the VHI corporate plan at last year’s rate of €665 because we are not due to renew our health cover until August. If you are not so lucky you will be charged €775.
We left the children on Plan B Parents and Kids, because the children's rate for children on the corporate plan is higher.
Corporate plans are available to everyone, but healthcare providers do not advertise the fact that they are better value. These plans are only marketed to companies but by law must be made available to everyone.

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mattc
Halifax shutdown – the options

30/06/2010 17:33:38

THIS Friday (June 18) Halifax will start shutting the doors of its 44 branches for the last time, and some 750 staff will be left without a job. The second phase of branch closures will occur on June 23.
Current accounts, credit card accounts and short-term savings accounts will be shut down. Customers need to cancel any direct debits or standing orders, and any money left in accounts will be paid back to customers.

Current accounts
Once your Halifax branch closes you current account will be closed and your debt card (Visa debit) will no longer work. You must clear any money you owe the bank, including an overdraft. If you can’t, you will be offered a personal loan at 10% for between one and five years.

If you have exceeded your authorised overdraft facility for four consecutive months or more the loan won’t be offered to you. Instead, the current overdraft rate of 12.93% for an authorised overdraft (and 23.75% for an unauthorised one) will apply.

Switching code
The Irish Banking Federation has put in place a switching code that it has standardised the switching process to help you switch current accounts across all banks so no matter which bank you choose, it should be smooth and easy. You should also be up and running in about seven days with all of your payments and direct debits ready to go. Best of all, the banks will do most of the work for you.
Best alternative: Permanent TSB’s Switch account pays 2% interest if you lodge €1,500 into the account every month. Fees and charges are low.

Credit cards
If you cannot clear your credit card balance, and provided you are not more than one month in arrears, you can avail of a loan. Instead of paying the 13.4% credit card rate the loan rate is 10% and you can still pay as little as 3% of the balance each month. The loan stays in place until the loan is cleared.
Best alternative: AIB Click card with a purchases rate of 9.5%.

Personal loans
Your Halifax loan will continue under the existing terms until it is paid off or you decide to close it early. If you wish to redeem your personal loan early the bank may force you to pay an early settlement fee

Mortgages
Your mortgage will continue under its existing terms as normal until it is paid off or you decide to switch to another financial provider.

Deals
The bank insists it will not do deals on outstanding credit card or loans. If you cannot pay the bank says your debt may be taken over by a debt collection agency.

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mattc
Greek crisis – is my money safe?

05/05/2010 18:56:17

THE Greek debt crisis and the resultant bail-out from the International Monetary Fund and the eurozone countries has prompted Irish consumers to worry about the implications for our economy. Here are some of the ways the unfolding eurozone debt debacle may impact on us.

More cuts/tax rises to be needed
Ireland’s debt is still AA rated by rating agencies such as Fitch, Standard & Poor’s and Moody’s. But in the past fortnight Spain and Portugal have been downgraded. The Irish Government is already committed to another €3bn or cuts in expenditure and tax rises in the next Budget. These austerity measures may need to be brought forward to convince markets our debt is not out of control. Plus, we have to contribute €1.3bn to the Greek bail-out.

Borrowing costs to remain high
Many bond traders believe that borrowing costs for the country are set to remain high. Already the National Treasury Management Agency, which manages the State’s debt, has postponed a bond issue due this month, because of the high cost of raising funds in international markets. Irish banks are set to find it more expensive to raise funds – Bank of Ireland is currently raising €3.6bn and AIB needs to raise funds soon. If banks find it more expensive to raise funds these costs will be passed on to consumers and businesses.

Pay down debt
Consumers and businesses would be wise to pay down debt, if they are vulnerable to rate rises. Already a number of banks have increased standard variable rate mortgages and have been upfront about more rises to come.

Deposits are guaranteed
The blanket guarantee for banks ends in September but all accounts in Irish regulated banks and building societies are guaranteed up to €100,000. This includes credit union accounts.

If you are worried about the safety of Irish banks put some of your money in a bank with a guaranteed from another state.

·         British banks operating in this market that are covered by the British deposit guarantee (£50,000) include Nationwide (UK), Leeds Building Society, Investec and Northern Rock.

·         Danish-owned National Irish Bank has its deposits fully guaranteed by the Danish State until September with this set to be replaced by a €100,000 guaranteed. Denmark is not part of the euro.

·         Dutch triple A rated RaboDirect offers decent rates – 2% on its demand deposit account (Holland is part of the eurozone).

Open a foreign currency account
In theory you can open a sterling bank account as a British non-resident with the likes of Anglo Irish Bank, Ulster Bank and Investec. Alternatively, you can open a sterling account with a bank in the North. You will have to pay tax on the interest and any rise in the value of the sterling currency.

Consider gold
Gold is seen as a “hedge” against inflation and declines in the value of currencies. This is partly why the price of gold has been surging in the past two years. But you should not have more than 5pc of any money you have to invest in gold. This means if you have €10,000 to invest you should only buy €500 of gold. Gold does not pay a dividend or an interest rate.

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mattc
Self-employed left to sink

28/04/2010 17:30:03

A self-employed person is in business on their own account. They are, by definition, not employees. This presents a number of problems.
If their business collapses they will be given little or nothing by the State to bide them by in unemployment.

No redundancy
A self-employed person will not be entitled to statutory redundancy (two weeks pay for every year of service up to a maximum €600 a week). Unless the self-employed person has formed a company and paid themselves a salary, and deducted PAYE and PRSI (which means they will be an employee) there will be no redundancy.

Self-employed pay PRSI
A self-employed person pays PRSI (pay related social insurance) at a rate of 3%, on all income. This is Class A.

A employee – Class A – pays 4% up to €75,036 (you pay nothing on the first €127 a week). The employer pays an additional 10.75%.

No social welfare
In general, a self-employed person who business has collapsed has no entitlements. They are not covered for benefits such as illness and Jobseeker’s Benefit. The Depart of Social Protection says this is similar to other European social protection systems. All they do get is maternity benefit and contributory pension.

Means tested
A self-employed person with no income may qualify for Jobseeker’s Allowance – this is means tested. The means is taken as the net profits they will earn in the next year. Earnings in the last year are looked at, but it is not assumed they will get that in the coming year. You will need proof of earnings and audited accounts for two years.

If a self-employed person “passes” the means test, they can continue in their business and do not have to sign off the Live Register for any days spent in this way.

Stress and suicide
Up to 29 suicides are attributed to business failures, with many of those thought to related to the self-employed. Those whose business collapses are often faced with huge debts, a loss of reputation, a hit to their ego, and increased stress.

Fostering entrepreneurs
For a country that claims it is aiming to foster entrepreneurial activity, it is not going to encourage people to take risks and set up on their own.

Short-term mortgage support
A short-term mortgage support, paid by Community Welfare Officers, and known as mortgage interest supplement may be available to the self-employed. The money is only to pay the interest on the mortgage. There is a means test, and the mortgage must not have been too expensive when taken out, in the view of the community welfare officer. You or your spouse must not work for more than 29 hours a week.

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mattc
Cut your insurance costs

07/04/2010 17:36:17
Insurance rates have been rising for a year and a half now. Motor premiums are up 7.5% in the past 12 months, with home insurance up 14%. Health insurance is up 24%.
This is despite the fact that second-hand car prices and the number fatalities on the roads are well down, and the cost of rebuilding a house has plunged.
However, the move to appoint administrators to Quinn Insurance has raised fears that premiums will continue to rise. Here are some ways to fight back.

Motor insurance:
- Drivers should buy their policy on the internet as there are big discounts for those who complete the process online.
- Most drivers prefer to have comprehensive cover, but it makes more sense for those with low value cars to choose third party or third party fire and theft cover.
- Accept an excess on your policy. An excess is the amount of any claim you have to pay yourself before the insurance company pays the balance. You will not be able to claim for amounts less than the excess figure.
- Security features such as an alarm or an immobilizer will reduce your premium.
- Scour the market for the best value. Regular surveys carried out by the Financial Regulator show that drivers nationwide can potentially save between €200 and €1,800 on their motor insurance if they shop around.
Home insurance
- Make sure you are not over-insured. The cost of rebuilding a house has fallen by up to 14% in the past two years. The market value of the house is not relevant when it comes to rebuilding costs. For a guide to rebuilding costs check out www.scs.ie
- Some insurers have had fewer claims than others. Shopping around can save you several hundred euro.
- Make sure the contents is not over-insured. Prices falls across the economy mean it will be cheaper to replace a carpet if there is an accident.
- You can get a discount if you have no previous claims; there is somebody over 50 living in the house; the residents of the house are non-smokers; the house has an alarm; you have a smoke detector installed; and you have another insurance policy with the same company.
Tip: Many insurance companies automatically increase the amount of your buildings and contents cover when they renew your policy each year. This is called indexation. Check the amount of cover you have to make sure you are not insured for too much or too little.

Health insurance

VHI has introduced the One Plan to stop people switching away from it. This is just €710 a year compared with €907 for Plan B. The introductory price is €639 to the end of April.
However, there is a €125 excess per claim for most private hospital treatments, and less maternity benefits and less cover for emergency treatment overseas. This plan will really only suit young people making few claims.
Other good value plans include Quinn’s Essentail Plus (€730 for adults) and Aviva Level 2 Hospital - €780 per adult.

Send questions to lastwordfinance@todayfm.com
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mattc
Get back at your bank

31/03/2010 17:42:57

Consumers would be wise to lessen their dependence on banks as they push through a raft of mortgage, credit card and loan rate rises. This is despite the State taking massive stakes in most of the domestic banks.

Loans
Bank of Ireland has already hiked it personal loan, student loan and overdraft rates and the rest of the banks will follow suit. Get a fixed rate loan, which cannot increase.
Alternatively, try your local credit union which tends to be cheaper than the banks. Another option is to borrow from family or friends, but give them something as security (like a watch or jewellery) until the loan is repaid.

Mortgages
AIB has increased its fixed-mortgage rates, and others will now do the same. AIB was the cheapest so the pressure is off the other lenders now that AIB has moved.
Despite the hike, AIB fixed rates still make sense if you are on a standard variable rate and not a tracker. If you are with another lender and can get a rate of less than 4pc for three years take it.
You have, at most, a few days before other lenders mimic AIB and hike fixed rates.

Savings
Around half a million adults are saving every month, with regular savers typically younger people who do not own their own home. Permanent TSB says it has 53,000 monthly savers saving an average of €200. EBS, Bank of Ireland and Permanent TSB pay 4pc on amounts up to €1,000 a month.
The best demand deposit rate is with Nationwide UK – 3.3%.
The best one year fixed rate is with Anglo Irish Bank at 3.5%.
An Post has the best tax-free rate at 3.53% a year, over three years.
But these rates are unlikely to last as banks will cut deposit rates in the coming months.
Do not let a balance build up in your current account.

Credit cards
Stop using your card if you continually find yourself running up large balances that you struggle to pay off. Use your debit card (Laser or Visa) instead and virtual cards like 3V for online purchases.
Another option is to sign up for a credit card elimination deal with a credit union. With this if you can prove you have stopped using credit cards you will get around a third of the amount outstanding on the card from the credit union in a loan. After three months, if it can be established you have stopped using the card, you will get a loan for the rest of the outstanding balance.

Bank products
Only buy services and products you need from your bank. Do not be persuaded to buy something you do not need. Bankers are going to be under huge pressure to sell a range of products – insurance, investments and pensions – in the coming year. Be careful. Think twice about agreeing to a free “financial check-up”.

Economiser.ie
Check out National Consumer Agency’s www.economiser .ie website which shows householders how to save money on groceries, phone bills, energy costs and TV and broadband charges.

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mattc
Debt advisers – tread carefully

24/03/2010 17:11:47

There has been an explosion in the numbers of private companies offering debt advice and debt management services to over-indebted consumers. New companies are opening every week, many of them run by former mortgage brokers. A large number of companies are setting up here.

Not regulated

Only two countries in the EU do not regulate debt advice companies – Greece and Ireland, according to the Law Reform Commission. In the UK, the Office of Fair Trading (OFT) licenses and regulates debt managers. In Ireland, however, there are no legal rules in relation to the debt advice sector.

Heavily indebted people are extremely vulnerable.

How it works

A number of debt advisory companies operate a system where they take over the management of debts of a consumer. They will negotiate with lenders on behalf of the cash-strapped consumer, and try to strike a deal with the bank/credit card provider. The consumer agrees to cancel all standing orders or direct debts and redirect them to the debt management company which pays the lenders on behalf of the consumer.

High fees

The debt management company takes a fee of €500 upfront and up to €50 a month. Alternatively, the first month’s rescheduled payment is taken by the debt management company and up to 20% of the rescheduled monthly loan repayments.

Misleading claims

Some unscrupulous operators are making false claims. For example, claiming that they can get up to 75% of your debts written off. Some operators claim to be operating as charities or non-profit organisations, while others claim to be linked to MABS. Others claim their services are free when they are not. The reality is that some banks will not even deal with debt management/debt advice firms.

Problems

Some commercial debt advisers are designing inappropriate repayment plans. Payments can be made late, or not at all. Some debt advisers have been accused of predatory practices – by advertising in credit unions and social welfare offices.

Attempt to have regulation

Some of the more upstanding operators in the sector have been lobbying the Department of Finance for regulation. A number of firms have come together to

form a new association and draw up a code of conduct.

Go to MABS

The State-supported Money Advice and Budgeting Service is free and operates in 60 offices around the country. Its offices are open five days a week between 9am and 8pm. Its website is www.mabs.ie, or telephone 1890 283 438.

Email: lastwordfinance@todayfm.com

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mattc
Cut up the card

10/03/2010 16:14:30

We owe €2.9bn on 2.17 million personal credit cards. Consumers have been desperately trying to reduce this debt mountain. Payments on credit cards have been greater than the amount spent on them in 10 of the last 12 months. New spending on cards in January was the lowest since April 2005. Consumers paid down €83m more than they spent on cards in January.
The average credit card debt is €1,200. But the Money Advice and Budgeting Service (MABS) reports its clients owing €8,000 on average on credit cards.

Don’t pay the minimum
Households in financial difficulties have been found to be three times more likely to be only paying the minimum (which can be as low as 1% with MBNA) on their card each month, according to the Law Reform Commission.
It will take 20 years to clear a €8,000 debt if you pay just 2.5% of the outstanding balance every month. In that time you will have paid €6,000 in interest alone.

Switch card
Tesco will give you 0% on balances transfers for six months and on purchases in Tesco. (Typical annual percentage rate (APR) of 14.9%).
MBNA offers 0% for 10 months, but this card issuers has recently admitted overcharging customers by €18m, is aggressive when people are in arrears and can charge interest for two months if you are one month behind in payments.
EBS member card also offers 0% on balance transfers for 10 months.

Get the interest frozen
If are heavily indebted it is possible to have the interest and penalty charges frozen on your card.
Credit card companies don’t admit this, but if you are heavily in arrears they will agree to freeze the interest and penalties.

The best rate on purchases
AIB’s Click card (an interest only account) has the lowest rate on purchases of 8.5%. But the rate for cash withdrawals is 23.4%.
Bank of Ireland’s Clear card has a rate of 9.5%, with cash withdrawals charged at 19.9%.

Clear you card debt
Get a personal loan (rates average at around 11%) or a credit union loan (average rates of around 7% to 8%) and clear the debt.
Cut up the card.

Get a prepaid card
If you need make online purchases then get a prepaid or disposable credit card. You do not need to have you credit history checked to get one of these.
Get a 3v disposable card. You register online then take the card to a retailer, hand over the cash and the card is loaded up. You get a 16-digit visa number. It is free to load up to €20 on the card, then €2.5 for between €30 and €100, and €5 for between €110 and €350. 300,000 people have registered for 3v cards.
Or, get a prepaid Mastercard from www.neteller.com. The physical version of this card can be used to book Ryanair flights without incurring the €5 “administration charge” per flight.
You need to register online, then send off a colour photocopy of your passport and a utility bill. Once registered and “authenticated” you can then load the card online from you bank account. There is no charge for this. If you load the card from a credit or debit card there is a 1.75% charge per transaction.

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mattc
Motor Loans

10/03/2010 16:09:58

SALES of new cars are up 12% on last year, according to the Society of the Irish Motor Industry (SIMI). Mind you, last year was the worst on record for car sales. There are some signs that car loans are getting a little easier to come by but banks are still not eager to fund motor deals.

Fewer dealerships
Around 100 dealership shut down last year as the motor market went into freefall. Last year just 57,000 new cars were sold. This is down from 186,000 in 2007. It is expected that between 65,000 and 70,000 cares will be sold this year.

Banks are not lending
Lack of finance was one of the main reasons people did not buy cars. Halifax/Bank of Scotland, Lombard Finance, Friends First and GE Money have all pulled out of the car finance market in the last year.
AIB, Bank of Ireland and Permanent TSB are the main banks left in the car finance market. But Volkswagen Bank, Ford Finance, Toyota Finance and Renault Finance have stepped in to try fill the breach. Some of these rates are very competitive and are as low as 5.9%.

Credit unions are cheaper
But some of the cheapest deals are from credit unions. The average credit union loan rate is 7% compared with an average of 11% for five of the leading banks, a survey carried out by the Irish Independent and the Irish League of Credit Unions has shown. Credit unions are reporting a surge in business coming to them from people who have been turned down for credit by the mainstream banks.
Almost a third of all car buyers secure a loan from their credit union, making it one of the most significant sources of motor lending. A survey of bank lending rates showed that for a €10,000 personal loan over five years the interest rate varies from 10.5% charged by Ulster Bank, to 11.47% for National Irish Bank’s variable personal loan.

Avoid hire purchase
Bank of Ireland is making anyone who needs to borrow more than €7,000 for a car take out a hire purchase agreement. With hire purchase you do not own the car until the last payment is made, you can have it repossessed if you miss payments and there are a range of fees and charges.

Scrappage deals
Some dealers are topping up the Government’s €1,500 scrappage offer with up to another €3,000.

TIP:
Check there is no money owed on a second-hand car before buying – telephone hire purchase information on 01-2600805.

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mattc
Charlie answers some of your questions...

19/02/2010 16:43:49

Switching your mortgage
Hi Charlie,
Can you advise us whether there would be any issue in trying to switch our home mortgage (roughly €200,000) from one provider to another, given that we have taken out a top-up loan on this mortgage about three years ago (a separate mortgage agreement for €50,000).
We have the main mortgage now with the same bank for nine years. It was taken out for 30 years. It is currently a standard variable mortgage.
Both my wife and I work in the public service.
Can you provide examples of financial institutions which are offering good rates and which might cover include legal fees for switching.
Thank you in advance.
Kevin

Charlie says:
Some points worth noting:
1. Make sure if you have a tracker that you are not going to give it up.
2. Figure out the loan to value (LTV) on the property. If the LTV is still very high, then options for switching are limited. The best deals in the market are where the LTV is low.
3. Decide if you want a fixed or a variable rate home loan. If a variable, then you are at a severe risk of mortgage repayments rising significantly. Maybe look at a fixed rate to guarantee more stable repayments.

The best deals in the market are from some of the banks that have become less keen on offering switcher mortgages to new customers so you need to do your homework on this one. For example, Bank of Ireland and AIB are less keen now on switcher business but have excellent rates, Frank Conway of Irish Mortgage Corporation points out.

The best deals in the market are generally for new customers. Moving from an existing provider may be best option in some cases.

KBC Homeloans offers an inclusive package for legal fees but the interest rate in much higher, exceeding 4% so may be better value going with their non-legal fee deal, where interest rate 2.45%.

Children's Bank Accounts

Charlie,
I have a 20-month-old daughter and another baby due the end of April. I would like to set up savings accounts for both of them and wondered whether you would recommend a particular bank or would I be better off going for a post office or credit union account?

Denise

Charlie says:
I have two girls (9 and 6) and I have two AIB Parent Saver accounts. These accounts pay 5pc, but for a year only and there is a €200 monthly maximum you can put into each. After a year the money is transferred into a parent deposit account paying 0.5pc. The banks know that inertia will earn them money, in that most of us (me included) will be too lazy to take our money out of the likes of the parent deposit account and put it somewhere where you will get a better return.
Other good regular savings accounts include the EBS Building Society one which pays 4pc with a monthly maximum of €1,000, and Permanent TSB’s one which pays 3.75pc and has the same monthly maximum.
Each credit union has a different rate (they are all run independently) so you need to check your one out.
An Post’s Childcare Savings account pays just 1pc.
But it also has a Childcare Plus account. This is a long-term account where you are encouraged to lodge the child benefit monthly payment from the State. You put a maximum of €12,000 into it each year and you are guaranteed 20pc interest tax free if you leave it in the account for five years.
Apart from the Childcare Plus account, all the other savings products mentioned above are subject to DIRT (deposit interest retention tax) at 25pc.

Consolodating your loans

Charlie,

I have a query regarding our mortgage that I hope you may be able to advise me on. We currently have a variable rate 3.69% mortgage with Permanent TSB.
We would like remortgage while consolidating all our other loans i.e. car, bank and credit card.
The current balance of our mortgage is €177,400 and 22 years is the remaining term.
I contacted morgages.ie they recommend we remortgage with KBC home loans as our criteria does not suit AIB or BOI.
Any advise on this matter Charlie would be greatly appreciated.
Kind regards and thanks
Paul

Charlie says:
The question here is how much equity is in the property, (I know you probably know this, but equity is the difference between the current market value of the property and the current outstanding balance on the mortgage). This will determine whether switching and consolidating is possible.
KBC Homeloan's maximum loan to value is 80% so it are probably the best fit for you. KBC offers a competitive standard variable rate at 2.45% so you should be able to save a little money.
KBC will also allow debt consolidation and what most mortgage experts recommend is that you split the loan, where the short-term debts are paid over a matching term to ensure you get the best value for money, according to Frank Conway of Irish Mortgage Corporation. In other words, a five-year loan being consolidated into a new mortgage should be paid off over five years, and not the 22 years left on your mortgage.
You should also note that standard variable rates pose personal budgeting risks if and when interest rates increase.
Of course, this is a constant with all lenders but consumers need to remain cognoscente of the risks. Fixing is also an option.

Visa Electron

Charlie,

Is it possible to obtain a visa Electron card in Ireland. I notice on Ryanair they charge for using the normal visa cards. I am wondering if there is a way around paying this charge.
Noel

Charlie says:
I got a Visa electron card (a sort of disposable charge card) by registering and opening an account with www.entropay.com and filling out my details.
However, a Visa electron card is of no use to you any more because since January Ryanair has been imposing an “administration charge” of €5 on the Visa electron card as well as on credit cards. Ryanair has now decided to accept the prepaid Mastercard debit card without imposing the administration charges. It also keeps obscure way of getting flights without the admin charge so it does not have to mention the admin charges in its adverts.
However, what you save in credit card charges you could lose to the Mastercard. One of the main issuers of this card is Payzone, which supplies it to retailers in around 500 shops nationwide. But it cost €6 to buy the card and a user pays €3.50 to load up to €350 on it. Also, there is a 2.95pc commission for purchases.

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mattc
Boost your income

17/02/2010 15:57:15
We are all feeling the financial squeeze – from three savage Budgets, the Finance bill and job losses and pay cuts.

Last week’s Finance Bill will mean higher gas, heating oil, local authority and toll charges. But it is not all hopeless. Here are some ways cash-strapped consumers can boost their income.

Rent out a room
If you have the space, you can earn up to €10,000 a year without paying a cent in tax. Nor do you have to register with the Private Residential Tenancies Board as a landlord. Advertise your spare room on daft.ie. But do draw up a written agreement for your tenant.

Rent a parking space
If you live in an urban area parking spaces can be quite valuable. You could earn up to €200 a month. Undercut the “pay and display” rates. In rural areas, if you have spare land, you can rent out storage/parking facility. Advertise on a supermarket notice board.

Host a foreign student
Your spare room could earn money for you by accommodating a foreign student. You can earn up to €450 a week. Students stay from one to three weeks, and it is not just during the summer. Language Travel Ireland organise student visits to this country.

Work as a movie extra
This is where you make up a crowd scene with a non-speaking part. It costs €89 to register with the likes of MovieExtras.ie. Jobs likely to be in Dublin and Wicklow.

Be a mystery shopper
Mystery shoppers pose as regular customers to get information on the standard of products and services. Crest Ireland accepts online applications. Also try Recruitireland.com, according to research by the Consumers’ Association.

Other ways to boost your income:
- Sell unwanted items on eBay and Amazon and earn extra money.
- Alternatively, couples can child-mind. You can mind up to three children and as long as you earn no more than €15,000 a year you are not liable for any tax.
- Take a second job, if you can find one. The advantage of working unsocial hours or nights is that they tend to pay more. Check in your local pub to see if they need extra bar staff. Tips usually make up for a lower wage.
- Buy a more economical car. You could save yourself almost €900 a year by driving a more economical car. If you drive 18,000 miles per year and your car averages 25 miles per gallon, it will cost €3,096 (assuming 95 cent per gallon). A car that averages 35 miles per gallon costs just €2,211. The savings will pay for your road tax and insurance in 2010.
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mattc
Tackling debts – in three easy steps

03/02/2010 17:20:38
Households owe a mountain of debt - €171.5bn to be exact, according to the Central Bank. Some €150bn of this is owed on residential mortgages, with around €2.9bn owed on personal credit cards.
More and more people are struggling to meet their repayments, with many people getting into arrears.
Many people who get into arrears on their mortgage or credit card are tempted to ignore the problem. Instead, you should take immediate action.

1. LIST YOUR DEBTS

Make a list of all your debts. List the most important debts first – mortgage or rent, followed by electricity and gas. These bills have to be paid first. Never pay your credit card bill if it means you can’t pay you ESB bill.
Separately list your other debts – credit cards, overdrafts, personal or motor loans and set them out with the most expensive first. Pay the ones with the highest interest rate first.

2. MAKE OUT A NEW BUDGET

Work out how much you have and what you can afford to pay each lender. Check if you are entitled to Mortgage Interest Supplement, mortgage tax relief or Family Income Supplement.

3. CONTACT YOUR LENDERS

Contact your lender as soon as possible. Have all your facts and figures to hand, including how much you owe.

Do the following:
- Make an offer to your lenders. Contact your lenders by letters, and not by phone.
- Know what you can afford and do not agree to pay more on the phone.
- Be honest and open. Stay calm and never be aggressive.
- Get anything you have agreed on in writing.
- Assure them that if your situation changes you will revise the your situation with them.
- If they refuse to negotiate ask for someone senior.
Remember, some 30,000 people have successfully re-negotiated their mortgage deals with banks and building societies, according to the Irish Banking Federation.
For more information see www.mabs.ie, and www.itsyourmoney.ie.

You can email Charlie Weston at lastwordfinance@todayfm.com.
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mattc
Watch Out - mis-selling about

27/01/2010 17:53:32
Banks, insurance companies and brokers are “cold calling” people at the moment offering them a free financial review.
But be wary. What they are really at is trying to push protection polices, like life insurance, on consumers.Do not become a victim of insurance mis-selling.
Sales of mortgages, pensions and investments products have collapsed. As a result, the emphasis has now switched to pushing products such as life insurance, serious-illness cover and income protection.

I have received two cold calls – one from a from a life company I have never dealt with - suggesting that a representative sit down and do a review of my finances. But as soon I told them what I do for a day job, the phone call ended.
Now, why is it that the man from the life company who rang my home did not want to go ahead and arrange the appointment once he learned that I wrote about personal finance?
- Be aware that in a recession sales of these types of protection policies traditionally rocket as consumers become much more risk-adverse.
- If you do agree to a request from your bank, life company or broker to sit down and discuss your finances, make sure you do not end up being sold something you do not really need.
- Because those who sell protection policies are adept at playing on your fears and they sometimes use scare tactics to get you to sign up for additional and unnecessary cover.
The basic policies you need are motor, home and life cover.
If you have a mortgage, you will have been required by the lender to take out mortgage-protection insurance, so that ticks the life-cover box.
Note that you may also have life protection and/or income protection as part of your company pension – many people have.
Also note, that credit unions offer some of the best rates on life insurance, if you need that, through a mutual company called CUNA Life.
During the boom many people were sold inappropriate life products. Check that the cover you have is what you need and that you are not paying too much.
For more information, see the Regulator’s website, at www.itsyourmoney.ie, under ‘Planning for the future’.
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mattc
Overdrafts: high enough to make you weep

27/01/2010 17:30:10

Overdraft rates are second only to credit card interest rates when it comes to bad value in banking. We have some of the highest overdraft rates in Europe.
A recent survey, commissioned by the European Commission, found that Irish current accounts are less transparent than the European average, with more complex pricing structures.

Rates
AIB has the highest overdraft rate at 14.79%, according to the Financial Regulator. That is almost 15 times the European Central Bank rate. BoI – 13.7%; Ulster – 13.55%, Permanent TSB – 13.6%.

Surcharge rate
But it gets worse because if you go overdraft without having an overdraft facility in place there is an additional surcharge. AIB has a surcharge of 9%. This means an unauthorised overdraft with AIB will cost a whopping 14.79% + 12% or almost 27%. You would get a better rate off a moneylender.
So, if you had an unauthorised overdraft of €5,000 with AIB for a year it cost you €1,350 in interest alone.

Set up fee
To set up an authorised overdraft with AIB will cost you €25.39 initially, with the charge recurring every year. In contrast, Halifax has a zero set up fee.

Referral item
Any debit or cheques that cause an account to exceed its approved limit is/are subject to a referral item fee, per item.
Most banks charge €4.44 each time you don't have enough money in your account to cover a cheque.
Bank of Ireland does not charge a referral item fee but it will charge you €12.70 for a bounced cheque.
Postbank has not referral item fee.

Solutions/tips
Get a term loan or a credit union loan. Term loan for €20,000 – AIB 10%, Ulster 9.9%. Typical credit union loan between 6% and 12%
Alternatively, pay your bills directly. An Post BillPay allows you to pay 120 different types of bills in 1,200 post offices.
Internet current accounts are cheaper than traditional current accounts.
For more information see the Financial Regulator’s website, www.itsyourmoney.ie.

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mattc
Claim back your taxes

27/01/2010 17:27:00

Some 800,000 workers claimed a tax refunds totalling €580m from the Revenue Commissioners in the first 10 months of last year alone.
Here are some items you should claim:

Medical expenses
You can get 20pc of the money you spent on health expenses last year and 20pc of your spending on medical expenses this year.
This only applies to medical expenses that have not been reimbursed by a private health insurer.
Medical expenses include GP costs, drugs and medicines, hearing aids, home nursing and maternity care, among others.
If you are claiming medical expenses for 2008, and you are a higher rate taxpayer, your claim should be granted at 41pc.
Expenses last year of €400, will generate €80 in a cheque from the taxman.
Download a form called Med 1 from www.revenue.ie,

Service charges
Income tax relief is available for individuals who pay local authority and other service charges. Relief is given for service charges paid in full and on time in the previous calendar year.
The total that can be claimed for service charges is €400. This is given at the standard 20pc rate of tax. So if you paid €300 last year you will get €60.

Rent a room
Where a room in a person’s main residence is let as residential accommodation, gross annual rental income of up to €10,000 in 2008 and 2009 is exempt from tax.

Trade unions
Tax relief is available at the standard rate on subscriptions paid to trade unions up to a maximum of €350, which means a tax credit of €70 for someone who pays this much.

Home carer’s credit
The home carer's credit of €900 may be claimed by a married couple where the husband or wife cares for one or more dependent children, and where they are jointly assessed.
A tax credit has the effect of reducing your payable tax by the amount of the credit.
If the home carer earns an income of less than €5,080 they can still claim the full credit. If they have income between €5,080 and €6,880 - reduced credit.
The tax credit is not available to married couples who are taxed as single persons.
Neither is the tax credit available to married couples with combined incomes over €45,400 in the tax year 2009 and who claim the increased standard rate tax band for dual income couples.

Tuition fees
Tax relief at the standard rate of tax (20pc) in the tax years 2008 and 2009 is available for certain tuition fees.
The maximum limit on such qualifying fees for the academic years 2008/2009 and 2009/2010 is €5,000.

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mattc

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