Tag Archives | Credit Card Interest Rates

Plastic fantastic? Being smart when using your credit cards

Irish News of the World

Sunday May 31st, 2009

Diarmuid MacShane

Plastic fantastic? Being smart when using your credit cards

Do you remember the advertising for your “flexible friend”? That was how Access (now Mastercard) credit cards were advertised in the 1980’s. Credit cards are fantastic in making it easy to spend our money – ore more particularly other peoples money – they can also be a severe danger to our personal financial health if we let our use of them get out of control.

The Central Bank said that in February new spending on credit cards was only €766m which was the lowest in 3 years. However, year-on-year spending still increased, but by only 3.3% – a value that was normally about 10%.

On the other hand, MABS (the Money Advice and Budgeting Service) said that consumer debt in Ireland is a growing problem. They have reported that already this year, more than half of those calling their advice lines where having problems with repaying credit card debt, as well as personal loans and overdrafts. This was a 25% jump in just 12 months.

So, playing your cards right by following the top tips below will mean that you can get all the benefits with none of the troubles when using your credit card.

Don’t break the rules

The key thing to remember about using a credit card is that any time you use your card outside the basic rules of your credit agreement you’re going to be charged extra by your provider.

If you go over your credit card limit, you’ll be charged between €6.25 and €12.70 each time.

Make sure you pay your bills on time or else you’ll be hit with the late payment charges that can range from €6.35 to €15.24.

And if you make a payment and it bounces (you don’t have enough cash in your bank account to pay the credit card debt), then you’ll be charged an “unpaid item fee” ranging from €3 to €19.05.

It’s worth remembering that if you end up in difficulties, these charges could end up being charged to you each month until you get things under control again.

Looking after your flexible friend

There are some simple things that you can do to make sure you don’t get hit with any of these fees – in a worst case scenario fees that could cost you over €500 per year.

The first simplest trick is to pay your bill by direct debit. This will mean that you’re always going to get your payment in to the credit card company on time.

To make sure that you always have enough money to pay your bill, you could avail of the text message service provided by some banks that lets you know when you bank balance drops to a certain level.

Lack of interest

Obviously the best way to save yourself cash on credit card interest is to make sure you pay your credit card bill in full when it’s due ever month.

If you can’t, then the next best thing is to be on the credit card with the lowest interest rate. The AIB Click card has the best rate in the market at the moment at 8.5%. This compares to the worst in the market of 17.9% on the Ulster Bank Classic card.

Wherever possible you should avoid withdrawing cash from your credit card. Interest on cash advances is anything from 5% to 7% higher, with the highest rate being the AIB Platinum card charging 23.4%.

And that doesn’t include the 1.5% that each credit card provider will charge you on each cash amount that you withdraw. Which they’ll charge you interest on as well.

Minimum Repayments

Unless you’re “snowballing” your debts which I wrote about in the past, you should never just restrict yourself to paying the minimum repayments on your credit card.

Martin Lewis, the UK Money Saving Expert, has a minimum repayments calculator on his website to show just how long you’ll be stuck in debt if do.

As an example, say you have €5000 on your credit card at 14.5% with a 2% (or €10) minimum repayment amount. If you only pay the minimum amount, it would take you 28 years and over €6000 in interest to clear the debt.

If you pay the minimum amount in the first month – about €100 – but then pay that amount every month, rather than the 2% minimum, you could save yourself nearly €3000 in interest.

Pay per use

Of course, one of the most frustrating aspects of using a credit card in Ireland these days is that it actually costs us to use one. The most infamous companies credit card surcharges are found when buying tickets for travel.

One trick that does work to avoid these surcharges is to buy vouchers from the same companies, and then using the vouchers to pay for your travel tickets – this works particularly well on the Ryanair website.

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Tip the Balance – Keep an eye out for small print

News of the World, January 25th, 2009

Diarmuid MacShane

The Trouble with Saving Money

A recent Financial Regulator survey told us that two thirds of us     were going to make changes to our personal finances as we enter 2009. Even without the difficult times the country is facing into now, one of our most popular New Year resolutions has always been to spend less and save more.

So, this year if you’re going all out to cut your costs and save a bundle, you’ll be keeping your eyes open for the best offers and deals on everything from food to phone bills. But are all special offers the great bargains they seem, or could we go too far and end up spending more than we’re trying to save? Here are a few things to watch out for:

Thinking of changing your television or phone package or your insurance coverage? The headline figures suck you in, but make sure you check the sneaky small print before changing.

Speaking of small print, find out the costs when introductory period ends – particularly with 0% credit card offers. When your 6 months free are over, you could be hit with a higher rate than you’re paying now.

If you’re changing service providers – phone, television, broadband, banks, etc., make sure you’re getting exactly the same as you had before. Are you getting the same service and benefits from the new company at the lower price – particularly when it comes to insurance? If the lower price seems to good to be true, it just might be!

Sometimes you might want to cancel a contract early because you want to change to someone else because they’re cheaper. You should check to see if there are contract cancellation penalties. Mobile and broadband companies will probably make you pay out the rest of the year before you can leave. NTL will even charge you €10 if you downgrade your service, even though you’re staying as a customer.

Many people will switch credit cards to one with a 0% introductory rate. You should remember that by default you’ll end up paying the ridiculous government credit card tax twice. You’ll be charged once when you close your old card, and once again on the new card – €30 too much tax for you to pay. Get a “letter of closure” from your old provider and send it to your new one to let them know that you’ve already paid the tax for the current year.

Retailers will put up big flashy sale signs to try to get us into their shops – making us think that we’re going to save some money. January sales are normally only held to get rid of the stuff nobody wanted before Christmas, so make sure that you check that what you’re buying is actually on sale. Don’t be afraid to ask if you have to.

You should always be careful not to assume that just because an item marked as “on sale” in one shop, that it can’t be bought cheaper somewhere else. You should always shop around to confirm the item isn’t cheap somewhere else.

A popular trick by retailers, supermarkets in particular, is to offer 2 for 1 and multi-pack offers. Remember though – just because something is on sale, it doesn’t mean you have to buy it. Surveys tell us that 30% of grocery purchases are eventually just dumped. Do you actually need the items? Do you really need 2 for 1 or 3 for 2?

Finally, it’s important to remember that saving money by buying cheap doesn’t always mean you’re getting value for money. It could cost you even more in the long run – particularly when buying bigger items like clothes, electronics, furniture etc.

This was my first lead article published in my new column in last Sundays Irish News of the World.

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Save money on your Ulster Bank Credit Card interest rate

I know I’m supposed to be on holidays at the moment, but here’s a quick tip if you’re reviewing your finances as we’re heading into the New Year, 2009.

If you have a credit card with Ulster Bank the advertised interest rate is 17.9% (or 15.9% on the Zinc card that I have had).

I rang this morning to close my account having paid off the balance and they immediately offered me their “staff only rate” of 7.5% – a full 10% less than their basic rate and 8% better than their Zinc rate – more than a 50% reduction straight off.

So, if you’ve an Ulster Bank credit card, and don’t always pay off the balance monthly, give them a ring straight away, tell them you’re closing your account because you’ve got a better deal elsewhere, and see if they offer you the same rate.

I guess a lot of service providers (financial and otherwise) will be similarly keen to keep our business in 2009. It’ll probably be worthwhile ringing all of them that you deal with in the coming weeks to see what they can do to keep your business.

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