January 04, 2006

An alternative guide to loans

As any parent will know, the second hardest routine situation to deal with comes at the end of a hard day when all physical and emotional barriers are down. It is the 'I don't want to go to bed' conversation.

For non-parents, it goes something like this:

'It's time for bed.'

'I don't want to go to bed.'

'Go to bed.'

'I don't want to go to bed. And, do you know what dad?'

'What's that, darling?'

'I hate you!'

Now, that's the second hardest.

The first hardest is the 'I want it' conversation, usually performed - for it is performance artistry of tragic Shakespearean proportions - in public. In shops. And the performance will either culminate in a tantrum, simulated death or a mutual compromise otherwise known as 'giving in'.

'All right, have it! I just find it a little unusual that a three year old needs, or even likes, mature gorgonzola wrapped in vine leaves, soaked in chilli-based balsamic vinegar. That's all. But hey. Have it!'

Adults don't have this problem. It's not that adults have lost the desire for the unattainable. Adults can have whatever they like whenever they want it. Adults have loans.

Managed carefully, loans can be wonderful things. They allow entire economies to remain buoyant by allowing you to buy things that otherwise you could not afford.

Things like big-screen TVs, four-wheel-drive cars and telescopes. Things that without which we'd drag ourselves through our sorry lives with a huge vacuum - not to be confused with the huge wet 'n' dry vacuum cleaner we'd be able to buy if only we could borrow another few hundred quid.

If you are tempted by the lure of the loan, there are a couple of things to remember.

1. You will have to pay it back.

2. You will have to pay more back than the amount you borrowed because you will be charged interest.

Interest. Did you know, interest is called interest because it is interesting?

Well no not really. But a word of warning about interest. At the marine-world end of the money-lending spectrum is a vast shoal of scavengers who will lend you £100 and expect you to pay back anything up to one hundred million pounds. If you borrow money from these people, or sharks as they are often rather kindly referred to, and fail to maintain the inflated repayments, they will bite off your legs and face.

And no matter how big your TV screen is, it's very hard to see the picture if you don't have a face.

The best way to avoid dealing with these sharks is, obviously, not to borrow money in the first place. Certainly never take out a loan for anything your child insists they want while out shopping. It has, I'm sure, been clinically proven somewhere that they really don't like chilli-laced vine-wrapped cheese anyway.

The second best way to avoid swimming with sharks is to use to use a comparison tool such as the one on This Is Money.

Now, before anyone writes in, I am not for one minute suggesting that anyone takes out a loan for the sake of. Far from it. If you think that's the case then go back to the top of this page and read again with your irony radar switched on. (Congratulations for getting this far by the way).

But if you have woken up in 2006 with a financial hangover and you are considering a loan, far better to use a comparison tool such as the one on this site than a backstreet lender or even your own bank, which is no doubt bombarding your letterbox with apparently great offers. There's absolutely no obligation, you can simply use the tool for research.

If your financial hangover is such that you are worried about the level of your debts, please visit our Dealing with debt section for sensible help and advice and sort yourself out before it's too late.

And for those people happily living within your means and happy with the size of your TV why not check out our digital TV finder? Remember, in a few year's time if you haven't got digital you won't have television at all - and your children really will have something to moan about.

Richard Browning, This is Money

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January 03, 2006

Pillar-to-post for an HSBC card

Happy new year to all our Money readers out there - a new year which will have got off to a predictably taxing start if, as I did, you applied for the HSBC credit card just before Christmas. This is one of the top balance transfer cards at the moment, with nine months at 0% with no fee for the transfer (and the 0% on purchases also).

I began my quest in late November by filling out one of those 'You have already been approved' forms that get flung at HSBC customers on a monthly basis (for I have the privilege of banking with the World's Not Very Local Bank). Ten days later I received the response that the date on that particular offer had expired some days earlier and that I could make a regular application, by mail or online.

I received a letter about ten days after my online application stating that I had been approved, enclosing the contract for signature and return. Now one might think that the card was now signed, sealed and delivered. But I return to London after the Xmas break to find a curtly uninformative letter on the doormat from 'Customer services manager Marie Curtis', asking me to 'call her' before my application could be approved.

Now, you might think that, as I'm a customer of 17 years and trying to obtain another of their products (- why, god only knows), if there's some little snaggle in the process, they might call me. But let's get back to reality ....

It should come as no great surprise that Ms Curtis did not enclose her direct line to call 'her' on. 'Her' of course means 'the HSBC credit card customer services line'. On the morning of Monday 2 January, I was on hold for 25 minutes before hanging up. The sound of a chimp banging on a toy piano in a lock-up garage had started to grate.

On the afternoon of the same day, I flipped my mobile to loudspeaker and got on with some chores as the holding musak delivered its tinny torture for a further 35 minutes, before I surrendered again.

And what arrived on the doormat this morning? 'You have been approved for the HSBC credit card. Simply sign and return ...'.

Today I'm going to try again, so watch this space folks ...

- Adrian, This is Money

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More advice on credit cards

Carry on complaining

The usual festive frenzy was made twice as hectic this year by hosting a wedding reception for two friends a week before Christmas. So it's hardly surprising I forgot about my credit card bill.

I have used the same card for years and I have never before forgotten to make a payment. When the new bill arrived the other day it included a demand for an immediate payment of £5 (yes, a fiver) and a £25 missed-payment penalty charge.

This is not my idea of customer service and I phoned the card company's call centre to say so.

Their response? The penalty charge was out of all proportion to the outstanding balance, they said, and they scrapped it. I was told the computer was to blame because it automatically imposed the charge regardless of the outstanding amount or the customer's previous record of good behaviour.

Regardless of that feeble excuse, it pays to remember that card companies are all too aware how easy it is to switch to a new provider. They are not going to risk losing your business for the sake of £25.

So just say no to unfair charges, you know it makes sense.

- Simon Moon, This is Money

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More advice on credit cards

December 08, 2005

Don't cheque this out

Credit card cheques are evil.

That is my opinion anyway. if your credit card provider sends you any through the post this Christmas my advice is to do to them what you do to all junk mail: Rip it up and recycle it.

Most people out there simply do not understand what interest rate you will pay when you use them. It is bad enough that credit card rates are already around 16 pc, but credit card cheques are around 20 pc.

On top of this there is a handling fee or a minimum charge of £2 (though it has to be said that some providers, such as Halifax, do not charge this).

Thankfully, the Office of Fair Trading seems to want to act. It has launched an investigation into how consumers understand the terms and conditions on the cheques and is threatening to force companies to stamp the interest rate on the front.

Even so, I'm with the Consumers Association, which wants them scrapped outright.

Have you got any thoughts? Post your comments below. No URL necessary.

More tips on credit card profits

Robert in a blog from the other day asked about high credit limits on credit cards. He wants to earn interest from credit card borrowings by taking 0% money and either putting it in a savings account. (How to get a refund on bank charges).

Robert, if you are struggling with finding a high credit limit it may be down to two reasons - that you have not borrowed much previously so therefore have no track record of proving you are a reasonable borrower (although I'm sure you are) or it may be that you are playing down your household income.

I have previously been given a limit of 40% of my salary by Citibank - the best so far - but Abbey, Halifax and others have all offered me around 10%-20%.

But a word of warning: Don't take on more debt than you can manage even it is to make money on borrowing (here's how I did it). Do the sums on our calculators at www.thisismoney.co.uk/calculators and then try our credit card finder at www.thisismoney.co.uk/cardfinder.

Our partner Uswitch will offer a choice of the best cards on the market - and taking the card through This is Money helps us to keep on writing more of our entirely independent and advice-packed stories - and it helps avoid the need for the site to take intrusive or annoying adverts.

Regards the other comment about Egg (you ask how to take money from an Egg card and put it into a savings account). I'm not sure whether Egg still allow you to switch a balance in that way - that Money Mail story was from a year ago (the Card-trick king). But lots of banks do a similar thing. They send you a cheque for the credit card. You can write the cheque to yourself, ensuring its for 0% credit with no fees, and pay it into a savings account.

Alternatively you can switch all your day-to-day spenidng on to a 0% card that gives cashback on spending - it means you can then build up savings on the side and take advantage that way. Tell our card finder that you want cashback and it will find a 0% card for you...

- Andrew Oxlade

November 15, 2005

The Hard Sell

Yesterday I was in my bank. After having a cheque put in the assistant looked up and said: 'Are you planning any big purchases soon?'

What? I must have looked puzzled.

'Any big purchases? A new car? Holiday?'

'No, why?'

'Oh. It's just that we have some new loan rates and you have been pre-approved.....'

I stop there because I couldn't be bothered to listen any more.

Then today in the Post Office. Sending a letter to a friend in the US.

The assistant says: 'That's £1.50 please. And do you have a credit card? It's just that we have a new card out that...........'

Aside from the fact that both sales pitches were blatantly being regurgitated by staff that could not care less what they were offering and to whom, is there anywhere that is safe from someone trying to sell you a loan or take out credit?

It is no wonder that UK consumers owe more than £1 trillion. Is getting rid of this relentless flogging of financial products the way to cut our debt problems?

November 10, 2005

My £1,200 credit card profit

I, like thousands of wise consumers, have borrowed on 0% credit cards and put the money into an Isa to earn the interest. It makes me a bit of a money geek but there's something satisfying about making money for nothing from banks.

I started doing this around four years ago, shifting around £6,000 - it wavers depending on the state of my finances.

I get the money at 0% and put it into an Isa paying around 5%. I make £300 a year or £25 a month - over the years the profits have built up, although I have been stung by the odd late charge. Tip: Apologise for late payment and say it won't happen again. Three out of four times banks have refunded for me.

I'm due for another card shift. Halifax is offering one of the longest interest-free period at 12 months but it's only good for spending as there is a 2% charge on balance transfers - a common trick these days. I have been there and done that with Halifax before.

HSBC announced yesterday that it was extending its catch-free 0% offer, giving me another nine months. I might give that a try.

You can compare the best 0% deals with our card finder. The small amount This is Money makes from each referral means we can keep offering all this great, free and independent advice.

You should also check out this great advice...

Credit cards with stealth charges

Balance transfer fees on the rise

Watch out for this...

Nationwide scraps 0% balance transfers

Credit cards fall out of fashion

And see how this guy does it properly and makes £300 a month...

The card-trick king

- Andrew Oxlade

November 04, 2005

How to beat rising debt

So we've already seen repossessions on the rise and now we've got bankruptcies at an all-time high.

Liz Phillips' report should help if your home is at threat... Find your way out of a debt crisis - while our brilliant debt guides can help with your wider credit and debt problems.

You can also see my ramblings about dealing with debt in a TV slot I did on BBC Breakfast. (It's a bit old). See the advice and watch the video. Feel free to be rude about my on-screen manner.

- Andrew Oxlade

P.S. TV people feedback - Bill (Bill biog) and Sian (Sian biog) were a bit serious (although they did seem very pressured) but Kate Sanderson was an absolute star (very chatty in the 'green room'). She's since gone to Five. That said, there appears to be a growing Bill Turnbill appreciation club.

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November 03, 2005

My credit card phoneline hell

I was going to rant today about something highbrow...such as new pension ministers or hidden bank charges......but I can't.

Why? I am stuck in hell.

Not 'fire and brimstone' hell, but proper real hell: 'Credit card customer service line' hell.
'Please press 1' 'Press 1 again' 'All operators are busy, please hold' 'Dooo do doo dooo doo dooo dooo' (that is the sound of all call waiting music).

All I want to do is pay off the balance on my new &More M&S credit card.
I tried doing it online, but not for the first time my bank account flumoxed me. So I opted for the phone, afterall, I tell myself,  it is always better doing these things personally.....isn't it?

Just to make my life that extra bit difficult I use a mobile phone to call. This means that every time I take my phone away from my ear to press the next button I either miss the start of the next message or the beep that confirms the button was pressed correctly. When I return phone to ear I've no idea what to do next.

And guess what? When I do get through to a real, live person I can't hear them. 'I'm sorry,' she whispers, 'we are having problems. Can you call back later?'

Is there a world without hellish customer services lines? Someone must have an answer. It's the sort of idea that will make you a millionaire.

- James Coney

p.s. Also see:

Lost loyalty at M&S

My credit history blemish

November 01, 2005

My credit history blemish

I move around £7,000 of debt on 0% credit cards. M&S Money is my present victim. They deserve it (read more). They have given me 0% for five months with no transfer charges.

I'm one of the thousands of people using the money to earn interest in an Isa. It earns me about £25 a month (I think). The Isas, which I've had for more than two years, happen to also be with M&S. (Best Isa rates)

Anyway, I did a credit check today to make sure I'm going to be okay to shift the money on okay and came across a slight problem.

Our chums at Equifax told me I had a healthy score of 492. The scale runs from from -299 = very poor to 475+ = excellent. However, I have a "danger" warning because of my "very poor" electoral register section. Apparently, because I've moved three times in the past five years (most recently in September) this would be "negative" in some lenders eyes.

I can start by ensuring I'm on the Electoral Roll and ensure I've moved all credit cards over from my old address - beyond that, I could find my days of credit card switching coming to an abrupt halt. I'm all ears to solutions.

- Andrew Oxlade

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October 28, 2005

Paying for your money abroad

I can't help thinking HSBC's marketing department must have a fine sense of irony.

One of our colleagues here at This is Money was telling me this week that he feels he has been fleeced for withdrawing money from the bank's overseas cash machines.

The £2.50 for each withdrawal and the loaded exchange rate*, although difficult to justify, are par for the course. But also, because the withdrawals took him into unauthorised overdraft territory, he was charged £20 for every day he stayed overdrawn. He was not able to view his account balance on the ATMs.

Which then begs the question, why were the withdrawals authorised? Why with its global reach can HSBC not refuse withdrawals when funds are not available, as it would in the UK?

The only thing that's 'global' about HSBC is its multinational presence and its investment banking business - as far as the travelling customer is concerned, it makes no difference whatsoever. Its service is put to shame by Nationwide: a domestic building society whose current account offers free overseas ATM use AND an unloaded exchange rate.

And when you consider HSBC's awful record of branch closure at home - it will have closed one every week by the end of this year - it's not doing too well on the other prong of its ad slogan: 'The World's Local Bank'? Do we look stupid?

Check these out:

Cards you can't afford on holiday

The best cards to go away with

The Nationwide FlexAccount debit card is almost certainly worth looking at if you're a frequent traveller. But the credit card may not be entirely right for your needs - although again it compares favourably with others on overseas charges. The figures in this link for Nationwide cashback are based on spending £200 a month and clearing your balance.

- Andrew Oxlade

P.S. See our two-second guide to posting a comment

*Effectively, with many banks, a commission charge is factored into the exchange rate you get on foreign ATM withdrawals or credit card payments, which you only see when you get your statements through. The rate is often worse than that you would get at a decent UK forex bureaux like M&S or Travelex.

October 26, 2005

The reasons for repossessions

So repossessions are soaring. Let's get this in context. Yes, a rise as sharp as this is very worrying. But on the upside, we're a long way from the appalling sitation of the early Nineties.

At the peak, nearly 75,000 homes were repossessed in a year. This year, the figure is likely to be around 10,000. Furthermore, the long-term average is 30,000 a year.

And the spark for the recent rise - it seems likely the interest rate hikes of 2003 are only now taking full effect.

What is more worrying is that there are now far more people with personal loans secured against their homes. That, together with lenders' willingness to bend the rules when dishing out large mortgages, has left UK borrowers in a delicate position.

I had the pleasure of explaining these issues in an interview with the charming Shiulie Ghosh from ITN this afternoon. You should hopefully see the finished result on ITV's 10.30 news tonight. Let me know what you think. (Quick guide to posting a comment).

And if you're struggling with your own debts, check out our brilliant guides to managing your borrowing.

- Andrew Oxlade

October 25, 2005

Denied a good rate? - then complain

Have you applied for an attractive credit card or loan and then been given a worse rate than the one on offer? One reader, Alan, posted the following in response to our Capital Junk blog, below: "I applied for a 0% Capital One card online and was accepted. They sent the credit agreement by post. On studying the small print, there was no 0% but instead 29.5%."

You're far from alone. Rules were introduced last year to try and stamp this out, but it looks like companies are flouting them - see here.

The rules say that two thirds of successful credit applicants should get the advertised offer. But it's unenforceable nonsense. For a start, many card companies offer several deals all at once, advertising in different media. How is the Office of Fair Trading, which is supposed to police this issue, going to keep track of all that?

Secondly, there's no rule saying how many applicants a credit company can reject outright. A firm could reject every single applicant for a certain advertised deal, if it wished. What's more likely is that it would accept a minority of applicants and then (seeing as it now has the rejected applicants' details conveniently stored) offer the rest a another, worse deal in due course.

That way the company gets to advertise great deals and appear in Best Buy tables, when in fact the majority of what it's selling is lousy. And nobody ever gets to know...

So what can you do? Well, it's worth complaining to your local Trading Standards office, though I wouldn't be too hopeful of achieving much that way. What's more important is to make a noise about it on the web. Companies offering credit are never going to come clean about this issue, so all we can do is hope to shame the worst offenders. So please keep posting.

- Richard Dyson

October 24, 2005

Lost loyalty at M&S

For those who might have missed it, Debenhams is in hot water again for sending store cards to customers who might not want them. Read the story.

M&S was exposed doing this sort of thing by Financial Mail on Sunday and This is Money more than two years ago. They were switching store card holders on to credit cards.

Now I may be wrong on this but M&S doesn't seem to have any sort of loyalty card any more. It also strikes me that people who opt for the company's newish &More credit card may assume they can use it as a store card.

Last year, a charming shop assistant and a 10% discount persuaded me to take an &More card. I immediately switched a credit card balance to the 0% balance transfer offer.

I was buying something a few weeks later in M&S and thought I'd use the card merely to earn points (not pay). The shop assistant swiped the card for payment. The result: I end up paying interest on the amount I spent (you have to pay off the 0% credit BEFORE the more expensive borrowing - a popular catch used by credit card companies).

I should have asked first and should have been aware of how the card worked, but I can't help thinking there may be more people out there making purchases on their M&S 'store card' by accident.

- Andrew Oxlade

October 20, 2005

Capital junk

Card company Capital One has to be Britain's most prolific junk mailer. Heaven only knows how many forests that awful company ploughs up in its quest to flog credit, but you could print a bible on what it shoves through my letterbox each year. And that's just MY letterbox. Every time I get a mailing, and that's about every two weeks, I open it up and write on the top: 'please don't send me your trash ever, ever, ever again'. Then I shove it back in the reply-paid envelope and post it. Any reasonable person would think that that, surely, would be an end of it.

Oh no. Whatever I write, however hard I beg, plead, or berate in my little jottings, there's no difference and no halt. Capital's unstoppable tide of junk gushes away through the door like untreated sewerage.

A mate has suggested a new plan: don't open Capital's junk, he says, just forward it all to the home address of one of Capital's bosses. Details are available from Companies House. I quite like that idea, except for one thing: we can't be sure that he would re-cycle it....

More seriously, I suspect that Capital has one of the worst records for turning card applicants away or offering them a worse deal than the one they applied for. Last year UK boss Fergus Brownlee admitted that just 28 per cent of people who applied for a particular best-buy rate got that specific rate. The rest were rejected outright or offered something worse, see here.

There's nothing illegal about doing that - but there's no doubt that some companies do it more than others, and it's very hard to identify the worst offenders. So if you've been rejected by Capital One or offered a worse deal than the one you applied for, and you think there's not much wrong with your credit rating, let us know by commenting here on the blog.

- Richard Dyson

October 17, 2005

Interest-free credit, disappearing fast

Anyone know where I can borrow lots of money, for free, to invest in Premium Bonds? I'm not a huge fan of PBs, but if someone else is lending the cash at no cost to me, why not? It was a ruse that worked well in the days when card companies were chucking a year's interest-free credit around like confetti. But now the banks are pulling in their horns.

You can't buy PBs with a credit card, so you need to make the purchase and then switch the balance onto a credit card by using the balance transfer facility. The longest interest-free deal I can find today is Halifax's One Visa, zero per cent for a year. All the other zero deals are shorter.

Alas, I already have a Halifax card (no borrowing on it, though) which means Halifax won't give me this one. Also, as is increasingly the case, Halifax levies a two per cent fee on balance transfers, which is what you'd need to be doing to buy the PBs.

In fact fee-free zero percent balance transfer deals now appear to have gone the way of the dodo. Intelligent Finance offered a zero per cent for nine months deal, fee free, but pulled it - on October 12 – the day I called to sign up for it.

After Halifax the next best deals are from Alliance & Leicester Online, Abbey, Virgin and Sonycard: all offer nine months at zero per cent, but all charge two per cent of the balance transferred, capped at £50 (£35 in the case of A&L).

I have a feeling that none of these card providers will lend much, even in cases where the applicant's credit rating is impeccable. However, I'm going to apply to A&L and whatever they offer, I'll spend it on PBs. With average luck, that'll get me three per cent tax-free. With good luck, buckets more. When the nine months is up I'll see what fresh deals are on offer.

Meanwhile Egg, where I have a card with a stonking £15,000 unused limit (yes, Egg does offer ludicrous credit, see here), has emailed me to say I can transfer balances at 3.9 per cent till the end of March. Can I do anything with that? The odds of coming right with premium bonds are too poor to consider given that I have to cover Egg's 3.9 per cent. Although I have an enormous mortgage, sadly it ain't the current account type, where I could just bung in the £15,000 and effectively reap the difference between the mortgage rate and 3.9 per cent.

- Richard Dyson

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Andrew Oxlade Richard Dyson James Coney Charlotte Beugge This is Money team