Tag Archives | halifax

Make your cash work harder for that rainy day

Irish News of the World

May, 2009

Diarmuid MacShane

Working Cash Hard for Rainy Day

Sometimes these days it’s hard to know whether to laugh or cry. As jobs are lost nearly every day, yet with the end of the Celtic Tiger comes cheaper shopping – prices fell by 3.5% on average in April alone.

Falling interest rates means some of us have cheaper mortgages while others are stuck paying fixed amounts every month. And falling rates are causing headaches for those of us who are trying to save a little nest egg for a rainy day.

Saving Ireland

In 2007 we were saving 3% of our disposable income, while now we’re saving over 3 times that at 10%. According to the NIB who releases those figures, “Irish households are saving by buying less”.

Do what mother says!

Growing up, we were always told that we should have a little savings in reserve in case of a rainy day. Some of us, unfortunately, may experience that rainy day sooner rather than later, and not just because our summer hasn’t started yet.

A rainy day fund should probably contain enough money to allow you cover your monthly expenses until you find a new job. To avoid having to wait to get access to your money, it should also be easily accessible in an emergency. Depending on your line of work, your rainy day fund could be anything from 4 weeks to 6 months or even more in the current job market.

Getting any Interest?

Even though keeping large amounts of money in your current account means that it’s the most accessible possible, apart from Halifax who pay 7% up to a balance of €2000, current accounts pay the worst interest of all – generally less than 1% for most banks.

But beware the small print

When picking an appropriate savings product, you should first check a couple of things. How long will the bank pay that rate for – many accounts are limited to some time in 2010? Is there a maximum or minimum balances? How often will they allow you get access to your money – is it days, weeks, months or years? Do you have to make regular minimum deposits – some let you save €1 per month, others want €100? Are there interest bonus’ or penalties  – either extra interest to leave your savings there, or penalties if you stop saving early?

Show me the regular money!

I think that the best way to build up the rainy day nest egg is to save a little amount regularly – and preferably to have the money taken straight from your account as soon as your salary is put in. That way, you don’t get the chance to spend it on something else.

Therefore, a Regular Saver account is the account to go for. If you had an SSIA, it’s almost the exact same concept, except this time there’s no free money from the government.

The best rate available at the moment is the Family Saver Account from the EBS that pays 5.1%. Next best is the Regular Saver account from the AIB that pays 5%. The worst accounts just pay 1%. If you’re saving €100 per month, that’s almost an extra €50 in your pocket (before DIRT tax).

More interesting

If you’ve got a bit of money put away already, and you want to try to earn a bit more money, you could lock away the money for a bit longer – but remember, the longer the term, the less easy to get at it in case of an emergency.

The best rate for a 6 month deposit is 4.07% with Investec. They also provide the best 1 year rate at 4.5%.

And try as we might, even when it comes to earning interest on our savings, the government will still take their chunk. For most of us, DIRT tax means they’ll take 25% of our interest as tax. This was only 20% back in November before the budgets kicked in.

More Interest, less Tax
There are ways to avoid paying this DIRT tax. You don’t pay DIRT on the money you make on your savings with the Credit Unions. But, the money you earn from a credit union isn’t treated as interest – instead it’s considered a dividend – or income. So, instead of paying DIRT, you must declare the income and be taxed on it.

For most of us, the main way to avoid DIRT means investing with the An Post through their Savings Certificates or Savings Bonds. These are longer term savings of 3 or 5.5 years so you’d need to be sure you won’t need the cash in the short term. The interest paid is equivalent to 4.3% and 4.7% respectively.

If you’re over 65 and meet certain criteria, you’re not liable to pay any DIRT on your savings interest. Also, if you’re a person with certain disabilities, you don’t have to pay DIRT tax either. The Revenue.ie website will provide further details on whether you have to pay or not, and how to go about getting refunds if you are paying but shouldn’t be.

0

Working your Cash Hard for a Rainy Day

Irish News of the World

Sunday May 24th, 2009

Diarmuid MacShane

Working your Cash Hard for a Rainy Day

Sometimes these days it’s hard to know whether to laugh or cry. As jobs are lost nearly every day, yet with the end of the Celtic Tiger comes cheaper shopping – prices fell by 3.5% on average in April alone.

Falling interest rates means some of us have cheaper mortgages while others are stuck paying fixed amounts every month. And falling rates are causing headaches for those of us who are trying to save a little nest egg for a rainy day.

Saving Ireland

In 2007 we were saving 3% of our disposable income, while now we’re saving over 3 times that at 10%. According to the NIB who releases those figures, “Irish households are saving by buying less”.

Do what mother says!

Growing up, we were always told that we should have a little savings in reserve in case of a rainy day. Some of us, unfortunately, may experience that rainy day sooner rather than later, and not just because our summer hasn’t started yet.

A rainy day fund should probably contain enough money to allow you cover your monthly expenses until you find a new job. To avoid having to wait to get access to your money, it should also be easily accessible in an emergency. Depending on your line of work, your rainy day fund could be anything from 4 weeks to 6 months or even more in the current job market.

Getting any Interest?

Even though keeping large amounts of money in your current account means that it’s the most accessible possible, apart from Halifax who pay 7% up to a balance of €2000, current accounts pay the worst interest of all – generally less than 1% for most banks.

But beware the small print

When picking an appropriate savings product, you should first check a couple of things. How long will the bank pay that rate for – many accounts are limited to some time in 2010? Is there a maximum or minimum balances? How often will they allow you get access to your money – is it days, weeks, months or years? Do you have to make regular minimum deposits – some let you save €1 per month, others want €100? Are there interest bonus’ or penalties  – either extra interest to leave your savings there, or penalties if you stop saving early?

Show me the regular money!

I think that the best way to build up the rainy day nest egg is to save a little amount regularly – and preferably to have the money taken straight from your account as soon as your salary is put in. That way, you don’t get the chance to spend it on something else.

Therefore, a Regular Saver account is the account to go for. If you had an SSIA, it’s almost the exact same concept, except this time there’s no free money from the government.

The best rate available at the moment is the Family Saver Account from the EBS that pays 5.1%. Next best is the Regular Saver account from the AIB that pays 5%. The worst accounts just pay 1%. If you’re saving €100 per month, that’s almost an extra €50 in your pocket (before DIRT tax).

More interesting

If you’ve got a bit of money put away already, and you want to try to earn a bit more money, you could lock away the money for a bit longer – but remember, the longer the term, the less easy to get at it in case of an emergency.

The best rate for a 6 month deposit is 4.07% with Investec. They also provide the best 1 year rate at 4.5%.

And try as we might, even when it comes to earning interest on our savings, the government will still take their chunk. For most of us, DIRT tax means they’ll take 25% of our interest as tax. This was only 20% back in November before the budgets kicked in.

More Interest, less Tax

There are ways to avoid paying this DIRT tax.

You don’t pay DIRT on the money you make on your savings with the Credit Unions. But, the money you earn from a credit union isn’t treated as interest – instead it’s considered a dividend – or income. So, instead of paying DIRT, you must declare the income and be taxed on it.

For most of us, the main way to avoid DIRT means investing with the An Post through their Savings Certificates or Savings Bonds. These are longer term savings of 3 or 5.5 years so you’d need to be sure you won’t need the cash in the short term. The interest paid is equivalent to 4.3% and 4.7% respectively.

If you’re over 65 and meet certain criteria, you’re not liable to pay any DIRT on your savings interest. Also, if you’re a person with certain disabilities, you don’t have to pay DIRT tax either. The Revenue.ie website will provide further details on whether you have to pay or not, and how to go about getting refunds if you are paying but shouldn’t be.

0

What happens when your credit card is put “at risk”?

Another article in the recent Sunday Tribune details a persons problem with AIB after their credit was apparently skimmed, and they had €3500 taken from their account.

Lets get past the fact that someone can have so much money in their account that they don’t notice €3500 being taken over a period of a couple of months, and look at some of the issues here – some of which I’ve experienced myself.

We know for a start that this AIB customer is never going to be told where his credit card was skimmed. This is because AIB and the Irish Payments Service Organisation (IPSO) will lie to him and tell him that it’s against Data Protection regulations to reveal where the card was skimmed. There are no such regualtions, and this like is only intended to protect the business or bank that allowed the card to be skimmed.

I’m in the middle of such a “discussion” with my bank at the moment. They called me recently to tell me that because my card was “compromised” it was going to be cancelled and reissued. They wouldn’t tell me where or how it was compromised or what transactions triggered their “suspicions”. After 3 months of queries, emails and letters, I have still received no information.

My arguement is that I used my credit card “somewhere” that caused the credit card companys suspicions to be aroused enough for them to cancel my credit card.

Yet, when I try to find out where it was that I used my card so that I can avoid using it in the future, they won’t give me that information.

Like most banks when it comes to “responding” to customer complaints, they have taken over 3 months of rejecting my requests for information in the hope that I’ll forget about it and move on – and saving them having to actually answer any real questions.

Which is all fine and good – they’ve probably bored me into submission on this one as well. That, or else my next step will be to send in a data request to their Data “person” where I’m allowed request all the information that they hold about me on their files.

But I know that’s not possible in this case since my credit card company actually uses a foreign company to process my credit card transactions and it is on their computer records that any information about “suspicions” that caused my credit card to be cancelled are stored. And I have no legal backing to allow me get that information.

And the best bit – none of our consumer protection organisations have any jurisdiction in this matter. And that’s despite that anyone who now banks with Ulster Bank, National Irish Bank or Halifax and have credit cards with them could find themselves in similar regulatory “no mans lands”.

1

BOI Credit Interest account – too good to be true

Yet another bank proves the maxim that “if something sounds too good to be true, then it probably is”.

Bank Of Ireland today announced their “market leading” credit interest offer for current account holders. They’re offering a whopping 10.5% from October 15th. But, but, but, but:

  • If you’re a BOI account holder, you don’t get this automatically. You have to go ask for it.
  • You only get this interest rate until Feb 28th.
  • After that the rate goes down to 4%
  • The interest is only applied to the first €1500 in the current account

It all hardly seems worth it really, does it. If you are a BOI customer, you might as well apply for it to take some money back from them, but I can’t say that’d it’d be worth changing from your own bank.

Given that AIB and Halifax have offered this temporary high-interest current account previously, it’s likely that it won’t be long before the rest do as well.

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No interest in current accounts any more

I wonder is the step announced today by First Direct today a sign of things to come. As detailed here on the Motley Fool, they will no longer be paying any interest on their current accounts. Not that they paid much in the first place, 0.10% on one account, and 2.00% on the other.

As I wrote about previously, Halifax are making a big deal about their offer of 10% on current account in credit, though they have fairly ridiculous and restrictive provisions on the account. Though, not as ridiculous and restrictive as the AIB account highlighted by the anonymous poster in response.

The AIB account requires that you lodge €1500 monthly to earn the 11% interest, but you can only have a maximum balance of €1500 during the month. So, while trying to attract you by the 11% interest, they will hold you and then only pay you 4% from January 1st 2008, while all the time forcing you to spend all your lodged money by the end of each month – assuming the regular lodgement is your salary. Stay away from this product!

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Are Halifax really that generous?

Halifax have been advertising their new current account recently – their website has the details here. They’re offering 10% interest on credit balances, a full 6% more (according to them) than is offered by AIB for example.

I was very struck though by the pretty restrictive terms on the account. You must deposit €1500 at least per month, but cannot have a balance greater than €2000, in order to get this interest.

This seems pretty ridiculous really. If you don’t meet either of these criteria, you get a whopping 0.1%.

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