Earn 4.10% on your savings

Posted by on Oct 21, 2011 in Uncategorized | 0 comments

West Bromwich has launched a new Regular Saver account for adults paying a fixed rate of 4.10%.

You only have to pay in £10 a month to qualify for the account, which – like most regular saver accounts – runs for one year.

Consequently, it is a great choice for anyone trying to get into the habit of saving – even if you can only manage to set aside £10 a month.

What’s the deal?

The new West Bromwich Regular Saver Adult account is available to both new and existing customers.The 4.10% interest rate is fixed for the 12-month term, making it one of the leading accounts of its kind.

You can get higher rates elsewhere, for example with HSBC.

However, its regular saver account paying 8% is only open to existing HSBC Premier, HSBC Advance, HSBC Graduate (Advance) and HSBC Passport customers, while First Direct’s account paying the same rate is also restricted to holders of its 1st Account.

Other advantages of the West Bromwich account include its low minimum requirement of just £10 a month, compared to a minimum of £25 a month with most other accounts of this kind.

For those with more cash to spare, however, the account also offers the option of paying in up to £250 a month. The maximum you can pay into the account over the year is therefore £3,000.

Another bonus for anyone concerned about having enough money to pay into the account every month for the next year is that it allows you to miss payments during two months.

Miss more than two months, though, and your interest rate will plunge to a much less competitive 0.5%. Interest is paid on the anniversary of the opening of the account.

Any catches?

As with all regular saver accounts, you cannot make any withdrawals during the 12-month term. It is therefore vital to only pay in money that you know you can manage without until this time next year.

The account, which is only open to customers aged 17 or over, must also be opened in a West Bromwich branch. This makes it unsuitable for anyone planning to set up and manage a regular saver account online or over the phone.

As mentioned above, if you fail to pay in at least £10 in more than two of the months between now and the end of the account term, the interest rate you will receive will also plummet to just 0.5%.

Verdict

While there are some regular saver accounts on the market offering higher rates, the new West Bromwich account is the best account for those who do not have regular saver accounts linked to their existing current accounts and are unwilling to make the switch.

Its flexibility and low monthly payment requirement make it a great choice for anyone saving up for a short-term goal – especially those who are concerned about being able to make a payment in every single one of the next 12 months.

Top tip

With Christmas just around the corner, many cash-strapped families are already worrying about how to fund the expensive festive season.

But while it is too late to do much saving up for this Christmas, opening an account of this kind could help you avoid ending up in the same situation this time next year.

And anyone opening a West Bromwich account now will get their money – plus interest – in October next year, making it a perfect way to get into the savings habit and make a head start on your 2012 Christmas present funds.

Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct. 

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10 tips to beat financial woes

Posted by on Oct 21, 2011 in Uncategorized | 0 comments

In the face of fresh economic uncertainty and rising living costs, it’s little wonder that near three-quarters of us are worried about our current financial situation – but there are things you can do to help ease your money worries.

According to a survey by the independent financial advisers’ trade body, Unbiased.co.uk, despite our money problems, 38% of consumers are not doing anything to improve their situation.

Here, we take a look at the top 10 most common financial woes and how you can sort them…

1. Shift your savings

With interest rates remaining slumped at 0.5% since March 2009 it’s a torrid time for savers.

However, many are suffering more than they need because their money is sitting in savings accounts that are no longer paying a competitive rate of interest.

To ensure you earn as much interest as possible, keep an eye out for bonuses that disappear after the first year and make sure you move your cash to another account when the rate falls.

The best easy access accounts are paying around 3%. Nationwide’s MySave Online Plus account has the highest rate at 3.12%. This includes a 12-month bonus of 1.58%. However, you must pay in at least £1,000 when you open an account and only one penalty-free withdrawal is permitted each year.

If you would prefer more flexibility, Santander’s eSaver Issue 4 pays a marginally lower rate, 3.10%, although you can make unlimited penalty-free withdrawals and the minimum deposit is just £1.

The introductory bonus is bigger than that of the Nationwide account at 2.60% so you should definitely look to move your money again after the first year.

If you have money you can afford to lock away, you can earn a higher rate of interest with a fixed rate bond. The AA’s five-year Fixed Rate Savings account is paying 4.60% while BM’s five-year Fixed Rate Bond has a rate of 4.50%.

This type of account only suits those with a lump sum to invest as you can only make one deposit at the time the account is opened.

2. Address your pension

How to fund retirement also features high up on the nation’s list of money worries, so if you don’t already have a pension, take action now.

Patrick Connolly at independent financial adviser AWD Chase de Vere, says that if you don’t have access to a scheme run by your employer, a good place to start is with a stakeholder pension: “Minimum contributions start at a manageable £20 each month and contributions can be varied.”

If you already have a pension, consider using some of your savings to boost the pot, especially while interest rates on savings are so poor.

3. Transfer expensive credit card debt

With the average balance on a credit card currently at £2,221, according to research by MoneySupermarket, and rates as high as 19.9% APR, debt on plastic is another big headache for British consumers.

Transfer languishing credit card balances onto a different card that offers a 0% interest for a fixed period.

Top of the tables is Barclaycard Platinum which is currently offering new customers a 22-month 0% period on balance transfers as long as you make the transfer within 60 days of opening the card.

You will be charged a transfer fee of 2.9% although if you apply for the card directly from Barclaycard and transfer more than £3,000 you’ll receive a £40 refund.

Use MoneySupermarket’s Smart Search tool to see which cards you might be accepted for prior to applying, as this will not register on your credit file. Remember that no credit card company will accept balance transfers from one of their own cards.

4. Switch your mortgage

Your mortgage is likely to be your biggest monthly bill, so ensure you are paying the lowest possible rate.

With plans for another round of quantitative easing, the base rate is likely to stay low for some time, which puts cheap tracker mortgages in a favourable light, says David Hollingworth at broker, London & Country.

 “However that has to be countered by an individual’s preferences and ability to deal with rising mortgage payments if the current forecasts do not pan out as expected,” he says.

 “In this case, fixed rates also remain very competitive and allow borrowers to budget by insulating them against future rate rises.”

For information on the best mortgages currently available, visit our mortgage channel.

5. Insure your income

The latest official figures show that unemployment has increased by 114,000 in the three months to August, bringing the number of jobless to 2.57 million.

This is beyond the 2.5 million peak seen earlier this year and marks the worst levels of unemployment since the early 1990s. But rather than lose sleep about the prospect of losing your job, get adequate insurance in place.

Income Protection (IP) insurance for example, will provide you with a regular tax-free income in event you lose your job, have an accident or become too sick to work.

IP continues paying – up to 60% of your salary – until you can resume the same kind of work, or until the policy ends.

6. Reduce your energy bills before the cold kicks in

Five of the ‘big six’ energy suppliers; Scottish Power, Scottish and Southern Energy, British Gas, Eon and npower, have already introduced double-digit gas and electricity price hikes -and EDF Energy will follow suit from November.

The result is £155.75 added to the average cost of a typical household’s energy bill each year. However, you can combat price increases this side of winter by shopping around for the cheapest supplier and tariff.

If you want know exactly what your bills will cost during winter and beyond, consider taking a fixed rate tariff before the deals become more expensive. Simply switching to online billing and direct debit payments can save a further £200 each year.

Use our energy calculator to find the best deal for you and start saving now.

7. Fight back against inflation

The Consumer Prices Index (CPI) measure of inflation currently stands at a 4.5% – more than double the government’s 2% target. But while there is nothing shoppers can do about the rising cost of living, they have a raft of online discounts at their fingertips.

MoneySupermarket’s voucher channel allows shoppers to search for voucher codes and discounts by typing in a store or item.

You can ensure your savings stay ahead of inflation at all times by choosing an inflation-linked bond, The Post Office for example, pays 1% above RPI (Retail Price Index) for five years in return for a minimum £500 investment.

But remember if inflation falls over this period, you will only get the 1% on your savings. Read more about inflation-linked accounts here.

8. Don’t crystallise your stock market losses

Recent turmoil on the stock market is extremely unsettling, but think very carefully before rushing to cash in all your investments as this will simply crystallise existing losses.

Have a sound basis for selling your shares and be wary of market panic. Historical evidence shows that shares still outperform cash over long term periods so if you can afford to, experts advise sitting tight and trying to weather the current storms.

9. Make use of tax shelters

While savers have little choice but to swallow the bitter pill of paltry returns, make sure you take full advantage of tax-free shelters available.

 In the current tax year (to April 5 2012), each individual can stash up to £5,340 into a Cash ISA, which means you won’t pay a penny of tax on interest earned.

But it’s still important to shop around for the best rates on ISAs. West Brom has the market-leading easy access Cash ISA paying 3.07%.

It also accepts transfers on which means if you have money invested in previous tax years sitting in ISAs that are no longer paying a competitive rate of interest, you can transfer it to the West Brom without losing the tax-free status.

10. Don’t be afraid to seek help

According to a recent report by MoneySupermarket, more than a quarter (26%) of UK adults suffer from ‘Bill Phobia’, where they feel stressed and anxious prior to opening household bills.

This results in one in five (20%) of householders delaying opening and paying their bills, as they are too afraid to tackle them.

The worst thing to do in this or any other financial tight spot, is to bury your head in the sand, says Clare Francis, editor at MoneySupermarket:

“If you feel things have got too much and you can no longer cope financially, speak to one of the free-debt charities such as the Consumer Credit Counselling Service (CCCS) or Citizens Advice. The sooner you seek help, the better.”

Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct. 

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What is a cash ISA?

Posted by on Oct 21, 2011 in Uncategorized | 0 comments

A cash ISA (individual savings account) is a type of savings account with special tax advantages: you do not have to pay income tax on the interest you earn.

There are limits to how much money you can put in a cash ISA in any tax year (which runs from April 6 to the following April 5).

In the 2011-12 tax year, the limit is £5,340 per person, and this is due to be raised in line with inflation every year from next year onwards.

If you have put money into a stocks and shares ISA, it may affect how much you can put in a cash ISA. In 2011-12, if you put more than £5,340 in a stocks and shares ISA, your cash ISA allowance will be reduced – your total ISA savings can not exceed £10,680 in this tax year.

So if you put £8,000 in a stocks and shares ISA in 2011-12, for example, you would only be able to put a maximum of £2,680 in a cash ISA.
You can also choose to invest in a self-select ISA which is a type of stocks and shares ISA. Self select ISAs allow you to pick and buy your own shares if you are confident in making your own decisions.

As well as investing this year’s cash ISA allowance you can also transfer money invested in previous tax years without it losing its tax-free status. However, not all cash ISAs accept transfers in so bear this in mind when comparing products. You might also find that you can only make a transfer if you invest some of this year’s allowance as well. In other words you can’t use all of your 2011-2012 allowance for a stocks and shares ISA and open a new cash ISA purely to transfer an existing investment into. Some deals have very low minimum deposits though, so you won’t necessarily need to invest the full £5,340 cash ISA allowance in order to make a transfer.

As with standard savings accounts, there is a wide range cash ISAs including easy access accounts, fixed rate bonds and regular savers.

You have to be 16 or older to open a cash ISA.

What are the advantages?

The tax savings on ISAs can be significant, especially if you have built up a large holding over a number of years.

For example, if a cash ISA was paying 3% annual interest, a basic-rate (20%) taxpayer would have to find a non-ISA account paying 3.75% to get the same return after tax.

A higher-rate (40%) taxpayer would need a non-ISA account paying 5% – and someone in the new 50% tax band would only get an equivalent return from an account with 6% interest.

Research from moneysupermarket.com found that a higher-rate taxpayer who had used their full cash ISA allowance every year since ISAs were introduced in 1999, and moved their money to the highest paying account each year, would be nearly £6,000 better off than if they’d kept their money in a standard savings account. Someone in the basic tax band would be £3,000 better off.

You can move money into a new cash ISA without losing the tax-break if the interest rate on your existing account becomes uncompetitive.

What are the disadvantages?

The maximum you can pay in to a cash ISA is capped and you cannot exceed your annual allowance.

Not all accounts accept transfers in and often those offering the highest interest rates are only available for this year’s allowance. You therefore need to bear this in mind when comparing products.

Extra care should be taken when moving money from one ISA provider to another. If you withdraw money from an ISA, it loses its tax-free status.

To switch accounts, you need to ask your new provider to make a transfer, which means you keep your tax advantages.

You can transfer money from a cash ISA into a stocks and shares ISA but not the other way round ie. money in stocks and shares can’t be moved into cash.

Who do they suit?

If you pay income tax, a cash ISA is probably the best home for the first £5,340 of savings you have. But make sure you compare accounts to ensure you get the best rate possible.

While easy access cash ISAs will let you get at your money whenever you want, try not to dip into your ISA savings unless it’s absolutely necessary. If you take money out of an ISA it can’t be put back in and you lose the tax-free status on it. You should therefore use other non-ISA savings first.

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What type of card is best for me?

Posted by on Oct 21, 2011 in Uncategorized | 0 comments

There are basically three ways of using a credit card: straightforward purchases, moving an outstanding debt over from another card (known as a balance transfer), and withdrawing money from a cash machine. Providers tend to charge a different rate of interest for each, and then implement a payment hierarchy whereby the cheapest debt is cleared first, leaving you accruing interest at the highest rate.

Say you took out a new credit card and transferred £1,000 over from another card, made a £500 purchase and withdrew £200 from an ATM. You can’t afford to clear the £1,700 in full at the end of the month, so instead you plan to repay £150 each month. However, rather than being charged interest at one rate, you are charged 5% for the transferred balance, 16% for the purchase and 25% on the cash withdrawal. The chances are, the provider will use the £150 you pay off each month, to clear the balance transfer first – the last debt to be repaid will be the £200 you withdrew from the cash machine, and that is the balance you are charged the highest rate of interest on.

Annual fees are still unusual, so the best way to avoid such tactics is to use a different credit card for each different purpose, that way you’ll get the most out of your credit card for the minimum cost. (One tip though, is never use a credit card for withdrawing cash – not only are the interest rates for cash withdrawals usually significantly higher than those for purchases and balance transfers but you also get no interest free period. Interest is levied from the day you make the withdrawal, so even if you pay off your balance in full at the end of the month, you will not be able to escape it.)

Comparing credit cards has become easier. Providers are now obliged to summarise their key product features such as interest charges and fees in an easy-to-understand format, known as a summary or “honesty” box. This will appear in all credit card marketing information.

To make things even easier, we’ve identified four common scenarios which should help you work out what type of card is best for your circumstances:

I always clear my balance in full:

If you often use your card for purchases but clear the balance in full each month, you avoid paying interest.

Most cards offer an interest-free period of up to 59 days from the date of the transaction, which gives you some breathing space before your payment is due. However, there are a few deals that do not offer any grace period even if you clear your debt in full each month, so watch out for these.

If you always pay off your credit card, the interest rate is irrelevant. Instead look for deal that will reward you for spending. A number of cards offer reward schemes either in the form of cashback, charitable donations or loyalty points. Some are more generous than others so go for the card that gives you the best return on your spend.

If you can afford to clear you balance in full each month, but have a tendency to forget, or be late, making your payment, then set up a direct debit. This is the easiest way to guarantee you’ll always pay off your debt on time and avoid a penalty charge.

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Advice For Credit Cards

Posted by on Oct 21, 2011 in Uncategorized | 0 comments

If you are unable to meet your monthly repayments and are struggling to repay your outstanding balance, contact your credit card issuer. The earlier you approach them, the more sympathetic they will be to your situation.

Alternatively, consider switching your card to one with lower rates and fees before you become too bogged down with your repayments but beware – if you leave it too long you may struggle to find another company that is willing to lend to you.

If you are refused a credit card and wish to make enquiries concerning your own credit file you can apply to the credit reference agency for your record. This will show your past repayment history, any County Court Judgments or defaults registered against you, electoral roll details and previous credit searches.

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£300 for switching current account

Posted by on Oct 21, 2011 in Uncategorized | 0 comments

The idea of switching current accounts can seem like a lot of unnecessary hassle, but banks are offering increasingly tempting incentives to persuade us to move.

Santander, for example, is offering customers who switch the opportunity to earn up to £300 cashback.

We take a look at how you can qualify for the free cash and whether this is the right account for you…

What’s the deal

Santander is offering a £300 switching incentive to existing Santander mortgage customers who open a current account, provided they can deposit at least £10,000 in a Santander savings account as well.

Mortgage customers who do not want to open a savings account as well as a current account with Santander get £200, and anyone else who chooses to switch to a Santander current account will receive £100.

Customers must switch their main current account to either a Santander Preferred, Reward or Premium current account to qualify for the cashback.

All three pay a market-leading 5% AER in- credit interest for 12 months on balances up to £2500 and offer a free, arranged overdraft for the first year, dependant on circumstances.

For customers looking to switch and receive additional benefits, the Santander Reward Current Account may be worth considering.

Although this comes with a fee of £10 a month, it offers more than £400 worth of benefits.

Along with 5% in-credit interest for 12 months, customers will also receive worldwide travel insurance, breakdown cover, identity protection and a free arranged overdraft for four months.

The Santander Premium Current Account is another option. This comes with a £20 monthly fee, but offers a host of extras worth over £830.

Along with the benefits of the reward account, customers can expect to receive mobile phone insurance, legal assistance, and commission-free travel money among others.

Any catches?

You must open the account by 6th November and commit to paying in at least £1,000 a month to receive cashback. Any less then this and you will be liable for a £2 underfunding fee on the Preferred Current Account.

Monthly account fees apply on the Reward and Premium account. You must also have at least two active direct debits or standing orders set up on the account within 13 weeks of opening.

If you currently hold or have held in the past 3 months any Santander or Alliance and Leicester current accounts, you will not be eligable.

Verdict

If you are considering switching, it’s important to make sure that you choose a current account that will suit your needs in the long run and are not dazzled by the switching incentives.

However, if Santander ticks all the boxes, then switching is definitely an attractive option. With the market-leading 5% in-credit interest along with the prospect of cashback and free overdraft for a year, it is sure to be a popular choice.

Top tip

Remember that the 5% credit interest on the Santander account is only on the first £2,500 balance and only for the first year. That means after a year, you may want to consider switching any savings built up in your account to a high interest savings account instead.

Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

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Business bank account guide

Posted by on Oct 21, 2011 in Uncategorized | 0 comments

What is a business bank account?

A business current account works in a similar way to a conventional bank account, but enables you to keep your business transactions separate from your personal finances. This makes life much more straightforward when it comes to managing cash flow and calculating your tax liability at the end of the year.

Anyone who has started up as a limited company or partnership must have a business bank account. The most basic business accounts consist of a chequebook and paying in book.

If you are a sole trader you can use your own personal account, but many people still prefer to set up a separate small business bank account.  Business accounts are also available for charities and clubs, pension funds and client’s money.

What to watch out for

Don’t automatically open a business account with your existing bank, as it might not offer good value for money.

The best business bank accounts will offer you both low charges and decent rates of interest when you are in credit, so make sure you compare accounts to find the right deal to suit your requirements. If you think you will mainly be making payments electronically, go for an account that offers free or low-cost electronic transactions. Alternatively, if you think you’ll be using a lot of cheques, look for low charges on paper transactions.

You should look for an account which provides online business banking, so that you can check the status of your account day or night.

Remember that you will need to provide various documents in order to open your account, including a business plan and details about your company. These will include your Certificate of Incorporation if you have set up as a limited company, as well as documents proving your identity such as a passport and driver’s licence.

Unfortunately if you have a history of bad credit, opening a business account is likely to prove difficult, especially given the current economic climate.

Charges

Most UK business bank accounts come with an introductory offer such as free banking for 12 or 18 months. While these are tempting, always make sure you know how much you will end up paying once the introductory period is over.

As a general rule, the more transactions you make on the account, the higher the charges are likely to be.

Some business current accounts require a regular monthly or quarterly standing charge. This will typically cost you around £15 to £20 per quarter, but a there are plenty of accounts which don’t charge this fee at all.

Make sure you read the small print carefully if you go for business current account which offers free banking indefinitely, as these usually only let you pay in a set maximum each month and a limited number of cheques, which would be no good if your income is going to vary dramatically from one month to the next.

Extra benefits

Some banks have a dedicated small business advice team, while others offer a telephone helpline, so check to see what is on offer when comparing accounts. Branch-based chains of advisers can be useful if you want face to face contact to discuss any issues that might affect your business.

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What are the advantages and disadvantages?

Posted by on Oct 21, 2011 in Uncategorized | 0 comments

  • Free, short-term credit – as long as you always pay your balance in full by the due date shown on your statement.
  • Credit cards offer a safe and convenient way to pay for goods and services both in the UK and abroad, particularly if you are purchasing over the internet, phone or by mail order.
  • Purchase protection – under Section 75 of the 1974 Consumer Credit Act card issuers and retailers take joint responsibility for faulty purchases, If you pay for something with a credit card, valued between £100 and £30,000, that turns out to be faulty or which you do not receive because the company goes bust, you can claim a refund from the card provider.
  • Protection against fraud — if you are the innocent victim of fraud you will not be expected to pay if a criminal uses your card.
  • Incentives for using a card such as loyalty points and cash back, or payments to support a charity.
  • A truly global currency, as credit cards are accepted in virtually every country around the world.
Credit cards offer a convenient and secure payment method as well as a flexible borrowing facilityClosing Quotes

Disadvantages:

  • You will incur interest if you are unable to repay your balance in full every month. Interest rates vary significantly so if you can’t afford to clear your debt you should look for a card that offers a competitive rate of interest.
  • The amount you can spend on a credit card is capped so you may not have access to as much money as you expected. Limits of between £300 and £500 are common for those who have never had access to credit before, while those with a good history who have shown that they use cards responsibly are likely to be offered a higher credit limit. That said, because of the credit crunch and rising levels of bad debt, providers are now more cautious about the amount they will lend. So even if you have a good track record with managing credit, you may be offered a significantly lower limit if you apply for a new card.
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Why use us for your Mortgage requirements?

Posted by on Oct 21, 2011 in Uncategorized | 0 comments

Whether you are a first-time buyer looking for a new mortgage or aiming to switch home loans at the end of a deal with an existing lender, you want to find the best option to meet your needs.

 

That’s not always as easy as it seems: The financial crisis has had a massive impact on the mortgage market: there are fewer loans available and lenders are more cautious about the amount they’ll lend and who they’ll offer mortgages to.

 

For example, a new homebuyer may want the security of a fixed rate mortgage and an existing borrower may just want a cheap remortgage deal – and those with bad credit will simply be looking for a specialised lender willing to give them a chance.

 

All borrowers, regardless of personal status, want to be able to compare the best mortgages on the market and find out what might suit them. Which is where our mortgage comparison service can help. It covers the entire market – be it trackers, fee-free, flexible or self-certified loans – and, effectively acting as a mortgage calculator, can tell you within seconds what products might suit you best.

 

To find the right deal, all you do is answer some simple questions. Our search tool will narrow down the field on your behalf, tell you what loans are available, how long the deals last for and their true cost.

 

The service even tells you the monthly payments and how much interest you might pay, allowing you to decide if it is affordable or not. You can then apply, either online or by phone.

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Glossary of terms Community

Posted by on Oct 21, 2011 in Uncategorized | 0 comments

AER

Annual Equivalent Rate: shown as a percentage, this is shows what rate you’ll earn over a year if the interest is compounded. If interest is paid monthly, the AER will be slightly higher than the gross rate, but if interest is only paid annually, the gross rate and AER should be the same.

Annual interest

Interest is calculated and paid once a year.

Base Rate

The country’s official rate of interest set by the Bank of England.

Basic rate tax

Basic rate tax is charged at 20% on the first £35,000 of income above your annual personal allowance. The personal allowance is £7,475 for the under 65s, £9,940 for those aged 65-74 and £10,090 for the over 75s.

Cash ISA

A tax-free savings account into which you can invest up to £5,340 this tax year. (The tax year runs from 6 April until 5 April the following year).

Easy access account

A savings account that allows you to access your money at any time. Also known as an instant access or no notice account.

Fixed rate bond

Also known as a fixed rate account, these pay a fixed rate of interest for a set term. This can be anything from six months to five years. Most only allow you to make one deposit at the time the account is opened and you can’t usually access your money during the fixed term.

Gross

Total interest before tax.

Higher rate tax

Higher tax rate is charged at 40%. It kicks in for people earning £35,001 – £150,000. Those earning more than £150,000 a year pay the additional rate of income tax which is 50%.

Junior ISA

A tax-free savings account for children, into which parents, relatives and friends can invest up to £3,600 this tax year. The child can take over responsibility for the account at 16-years-old, but cannot withdraw any of the money until he or she turns 18, when the junior ISA becomes a standard ISA.

Monthly interest

Interest on your savings is calculated monthly, and can be paid back into the savings account or another account specified by the holder. Accounts that pay interest on a monthly basis are ideal if you want to use your savings interest to supplement your income.

Net

Interest after tax.

Notice account

An account that requires notice to be given before a withdrawal is made – typically between 30 and 120 days. You will be penalised, often with loss of interest, if you need access to your money more quickly.

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Savings Guides

Posted by on Oct 21, 2011 in Uncategorized | 0 comments

Savers are suffering from a double dose of high inflation and low interest rates, which is why it makes sense to seek out the best possible deal on your savings.  If you aren’t prepared to monitor your rate – and possibly switch accounts – you could end up with a dud deal. You can compare all types of savings accounts on the moneysupermarket website.

Are there different types of savings account?

There are literally thousands of savings accounts on offer, but they fall broadly into four categories. An easy access account is the most flexible because you can usually withdraw your cash as and when you like, with no penalty.  Notice accounts – as the name suggests – require notice of any withdrawals, so you have to be a bit more organised with your money. But if you are saving up for an event in the future, such as a holiday or wedding, a notice account might be a good option.

Then there are fixed-rate accounts, sometimes called bonds. They pay a fixed rate of interest for a set period, usually between one and five years. The rates on bonds are currently higher than on easy access accounts, so they are becoming more popular with struggling savers. But you should only open a fixed-rate account if you are prepared to lock your money away for the full term. Also bear in mind that an attractive fixed rate today, might not look quite so appealing in five years.

Regular savings accounts often pay high rates of interest, but there are several restrictions. The accounts usually run for one year and you have to deposit money each and every month. The amount you can pay in is also restricted to about £250 to £300 a month.

In addition, there are accounts for people over 50 and accounts for children. National Savings & Investments, which is backed by the government, also offers a range of savings accounts. There are also offshore accounts that allow you to deposit money in sterling, Euros or dollars.

The interest rate is obviously important when you compare savings accounts. But you should also consider how much you can afford to save, how frequently you can put money away and how often you will want access to the cash.  You can work out how much interest you’ll earn by using a savings calculator.

Do I have to pay tax on my savings?

Tax at 20% is normally automatically deducted from any interest on your savings. If you pay tax at the higher rates of 40% or 50%, you must make up the difference through your tax return. Savers who are not liable for tax, including children, should apply to have the interest paid gross, before tax is deducted, by filling in form R85, available from your bank or building society.

However, you can save up to £5,340 in a cash ISA in the current tax year and the interest is tax-free. If you are a taxpayer, it’s a good idea to use up your ISA allowance before you look at standard savings accounts.

Is there anything I need to watch out for when choosing a savings account?

Minimum deposits
Some savings accounts insist on a minimum deposit or impose a maximum deposit, so you must be sure you can satisfy the deposit conditions.

Internet access
Internet savings accounts tend to pay higher rates of interest than branch based accounts, so you might get a better deal if you are happy to run your account online.

Short term bonuses
Many banks and building societies are desperate to make it to the top of the best-buy tables, so they offer headline interest rates which include short-term bonuses that apply for the first six or 12 months. There is nothing wrong with bonuses, as long as you are prepared to switch to a better deal when the bonus expires and the rate plummets.

Withdrawal restrictions
Some savings accounts carry withdrawal restrictions. You may only be able to make a certain number of withdrawals in a 12-month period, or you may receive no interest in the months you withdraw cash.

How is interest paid?

Interest on savings accounts is generally paid either monthly or annually. Accounts that pay annual interest often offer a better deal if you are saving for the long term – in other words if you will not need to make any withdrawals over the course of a year.
If you expect to dip into your savings, however, you may well be better off with a monthly interest account.

Are my savings safe?

If you put money into a savings account you will get your cash back, plus interest, as long as the bank or building society doesn’t go bust. Even if the firm collapses, as long as it is regulated by the Financial Services Authority, the first £85,000 is guaranteed.

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Credit Card Guide

Posted by on Oct 21, 2011 in Uncategorized | 0 comments

Credit cards: who can imagine life without their ‘flexible’ friends? There’s no doubt that credit cards are a quick and easy way to pick up the tab for a night out or  pay for those designer shoes we simply must have – now.

But let’s not forget that credit cards are not the same as debit cards. When you spend on a credit card you are potentially spending money that you don’t have, so you could run up an expensive debt.

How do credit cards work?

Credit cards allow you to buy something now and pay for it later – you are essentially borrowing money. You will receive a statement each month and if you pay off the balance in full within the agreed time – usually 56 days – there will be no interest to pay. If you can’t clear the debt, you will be charged interest on the amount you owe. Interest rates vary between lenders, so you should always shop around for the best deal. Most cards these days do not charge an annual fee, but it’s always worth checking, just in case.

What type of card is best for me?

Different cards suit different people, so you need to think first how you will use the card. If you intend to pay off the balance in full each month, then the interest rates are largely irrelevant. Instead compare cards that give you cashback or other incentives.

If you aren’t such a goody two shoes, then you need to scrutinise the interest rates. Customers who like shopping should pay close attention to the rate of interest on purchases. People who want to juggle their debts and transfer a balance from an existing to a new card should compare the balance transfer rates. Or you might want to transfer a balance and go on a shopping spree, in which case both the purchase and balance transfer rate are important.

A word of warning: never use a credit card to withdraw cash as the fees and charges tend to be high. You should also be wary of using a credit card abroad as most firms levy costly foreign usage fees. If you are planning an overseas trip, a pre-paid card is a possible alternative.

What about 0% cards?

A number of cards charge zero interest for an introductory period, typically about 12 months. The 0% rate will apply to purchases, balance transfers, or sometimes both, so you need to check the details carefully. A 0% card can be a great way to manage your debts, but you must make sure you clear any outstanding balance by the time the deal expires; otherwise you will start to rack up debt at a higher rate of interest.

Is a credit card right for me?

Credit cards are convenient – and they don’t have to be expensive. But they are not for everyone. A credit card should primarily be used for one-off, big ticket items, such as a holiday or a washing machine. It’s well worth using a credit card for purchases of £100 or more because you have greater protection than if you pay with cash or a debit card. Under Section 75 of the 1974 Consumer Credit Act credit card issuers and retailers take joint responsibility for faulty purchases between £100 and £30,000. If the retailer goes bust or the goods are faulty when they arrive you can claim a refund from the card issuer.

If you regularly use your credit card to pay essential bills, such as food and energy, you should probably seek some debt advice. Credit cards are also best avoided if you are forgetful and lack financial discipline as charges for late payment can be high. And if you can only afford to make the minimum payment each month, it will take years to clear your debt. A personal loan might be a better option if you want to spread you payments over several years.

Top tips

If possible, clear your debt in full each month. If you can’t afford to pay off the whole balance, at least pay more than the minimum payment.
It’s a good idea to pay by direct debit – that way you will always pay on time and avoid incurring a late payment fee.

Don’t use a credit card to withdraw cash from an ATM – you’ll probably be charged a higher rate of interest than on purchases, plus a withdrawal fee.

Keep an eye on your spending and make sure you stick within your agreed credit limit.

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Guide to loans

Posted by on Oct 21, 2011 in Uncategorized | 0 comments

Looking for a cheap loan?

 

We all need to borrow money from time to time, but debts can quickly spiral out of control. So it’s important to make sure that you are signing up for the right deal at the right price.

What is an unsecured loan?

When you take out an unsecured loan, the bank or building society will usually lend between £1000 and £25,000 over a period of between one and seven years.  The interest rate and the monthly payments are fixed over the term of the loan. For example, you might borrow £5000 over three years at a fixed rate of 8.1% with monthly payments of £156.25.

The fixed payments make it easier to budget. Be careful, though, because some lenders penalise customers who want to pay off their debt early.  So always read the small print carefully.

Interest rates on unsecured loans can be less than 7%, but it pays to shop around for the best deal. Bear in mind that you might not be offered the advertised rate. Lenders often vary the rate according to your credit score:  if you have a poor credit score, you might have to pay a higher rate of interest.  The amount you want to borrow could also affect the rate as lenders tend to charge higher interest if you borrow a smaller amount.

Is an unsecured loan right for me?

If you want to borrow money to pay for a holiday or a new car, then an ‘unsecured’ personal loan is often the best option.  Do not take out a personal loan unless you can afford the monthly repayments. Your home is not usually at risk if you default on an unsecured loan, but you could end up in court with a big legal bill.

What is a secured loan?

If you are a homeowner, you can secure a loan against your house. The interest rates on secured loans are usually lower because the lender can sell the property if you default on the debt.  But the charges on secured loans are often high. And do you want to put your home at risk for the sake of a new washing machine?

Is a secured loan right for me?

Secured loans can be useful if you want to borrow larger amounts over a longer time period, or if you have a poor credit score and cannot get a good deal on an unsecured loan. But it is essential that you keep up the repayments or you could lose your home.

What are payday loans?

Payday loans are becoming increasingly popular, as more people are struggling to make ends meet. The loans are intended to plug a short-term gap in your finances and you can usually borrow between £100 and £500 over 31 days.

Payday loans are not for everyone. The annual interest rates can be as high as 4000%, so you need to be absolutely certain that you will clear the debt with a month – and that you will not need to top up the loan. Read our guide to payday loans for some impartial advice.

Can I consolidate my debts into one loan?

If you have several debts with different lenders, you might want to take out a single loan to consolidate your borrowings.

A consolidation loan can make it easier to manage your finances as you have to make only one monthly payment. It could even be cheaper as you might be able to arrange a lower interest rate. But remember to pay off your existing loans and cut up any credit cards straight away so you aren’t tempted to run up more debts.

Also, you often pay more in total with a consolidation loan because you are usually borrowing a larger amount over a longer period.

Do I need payment protection insurance?

If you fall ill, have an accident or lose your job, what would happen to your loan repayments? Payment protection insurance (PPI) is designed to help cover your monthly loan payments for a set period, usually 12 or 24 months.

Your lender will probably try and sell PPI when you take out your loan. But you do not have to buy insurance from your lender – and you will probably find a cheaper policy if you shop around.

Always scrutinise the small print carefully.  Many people have in the past been mis-sold PPI so it is important to check all the policy exclusions. You might also decide that you can manage without PPI, perhaps if your loan is only small or you would be entitled to long term sick pay in the event of an illness. In our guide to payment protection insurance, we explain exactly what PPI does and does not cover. We consider who needs such insurance, who qualifies for it and how to find the best

Are there any other ways to borrow money?

Most current accounts offer an overdraft facility, which can tide you over until your next payday. But interest rates on overdrafts can be higher than personal loan rates. Some banks also levy overdraft fees. Always seek permission from the bank for an overdraft because charges can quickly mount up if you slip into the red without the bank’s agreement.

Credit cards are another useful way to borrow money. Again, they are better suited to people who want to borrow smaller amounts over a shorter term.

If you are eligible to join a credit union, you might be able to borrow money at a competitive rate of interest, even if you have a poor credit rating.

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