Beat Holiday Card FEES

The holiday card rip-off

With Britons forking out a massive £391 million a year in fees to withdraw cash abroad, we look at the best cards to help you avoid getting ripped off during your holiday.

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British holidaymakers withdrew £14.2 billion on debit and credit cards while abroad last year — forking out £391 million in fees for the privilege, according to Sainsbury's Finance. On an individual level, these debit and credit card charges equate to £41 a year.

Furthermore, you could also be stung with a heavy fee if you use your credit card to make purchases on holiday as most lenders will load a fee of between 2.5% of 3%.

So what are your options if you want to avoid getting ripped off this year?

Top pick with Halifax

By waiving fees on both spending and cash withdrawals abroad, the Halifax Clarity Credit Card is one of the most competitive travel card options on the market at present.

What's more, this card becomes even more attractive if you have a Halifax Reward Current Account and pay in at least £1,000 a month. In this case, you will be paid £5 every month you spend more than £300 on your credit card.

Although you should always aim to clear a credit balance in full each month, the card carries a relatively low 12.9% APR if this is not possible.

No commission on purchases

If you would like a credit card primarily for spending on holiday, the Post Office Credit Card charges 0% commission on purchases.

However, this card is not such an attractive option if you need to withdraw cash with a fee of 2.5% and an eye-watering 24.1% interest rate.

In addition, you could avoid a cash advance fee on your travel money if you use the card to get your currency from the Post Office. However, it would be wise to double check the Post Office actually offers a competitive exchange rate before committing yourself to anything.

If you're going on holiday soon

With the Nationwide Credit Card (15.9% APR Representative) you could benefit from unlimited commission-free purchases abroad until 31 July.

Although there may be little point applying for this offer at this point in time, existing customers going abroad in the very near future should remember to use their Nationwide card.

Once the offer has expired, the card becomes a little more complicated as the value of your commission-free purchases abroad is determined by how much you spend in the UK (this is calculated at a ratio of five-to-one).

Imagine you spent £1,000 on the card in the UK, you would be entitled to £200 worth of commission-free purchases for your next trip.

Although this card comes with a 17-month balance transfer period, borrowers with a significant credit card debt may not wish to spend on their card, which would perversely prevent you for 'earning' the commission-free spending.

[Useful: Apply for a top travel card]

Travel insurance and no commission… with a catch

In addition to fee-free cash withdrawals and purchases, the Sainsbury's Gold Credit Card offers worldwide family travel insurance and does not charge you to withdraw money or make a purchase abroad. However, you will need to pay a £5 monthly fee which equates to £60 a year.

If you have a large family and travel extensively, the insurance package has a great deal to offer — providing worldwide cover for two adults under 65 and up to six children.

Despite the numerous plus points, it would be prudent to ensure you would use all the benefits before committing yourself to the monthly fee.

Avoid a debit card disaster

Like credit cards, many debit cards also impose rip-off fees and charges for overseas usage. In fact, research from Defaqto has found the average debit card will charge a fee of £3.06 for £100 of spending abroad and £3.96 on £100 of cash withdrawals.

If you want to escape debit card fees, Norwich & Peterborough Building Society's Gold Current Account offers free usage abroad. Alternatively, existing Santander customers with the Zero Account will not pay any fees on foreign spending or purchases.

If you don't want a new debit or credit card

If you don't want to switch your bank or credit card provider, you could consider a prepaid credit card that will only allow you to spend the amount you have already paid onto the card.

Unlike conventional credit cards, prepaid products do not require you to have your credit checked which could make them suitable for those with a less-than-perfect financial history.

Remember it would be wise to shop around for the best prepaid card and Sainsbury's research found that two thirds of these cards impose a charge if you want to withdraw your money abroad. At present, FairFX and Caxton FX provide market-leading prepaid cards for use overseas.

[Useful: Compare deals on travel-friendly credit cards]

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Store cards 'more risky than credit cards', consumers warned

Many UK consumers are still getting themselves into bade debt through failing to treat borrowing on store cards sufficiently seriously, it has been claimed.

Just this month, the insolvency trade body R3 reported that two in three insolvency practitioners across the UK have had to help out people who have signed up for store credit cards without having any real understanding of the terms and conditions of such products.

And, according to the Consumer Credit Counselling Service (CCCS), many people don't even treat store cards as 'real money', meaning that they often fall into adverse debt conditions in the long-run.

Tom Howard, a spokesman for the CCCS said: "Store cards are a very real form of debt and, when mismanaged, can get you into as much as, if not more trouble as credit from high street lenders.

"Consumers need to be aware of what they are committing themselves to."

In particular, consumers need to weigh up any potential benefits with the possible risks they face should they default on repayments, he added.

The latest figures published by Credit Action reveal that total UK personal debt stood at £1,460 billion at the end of 2009.

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Repossession Risk: 'Hotspots' List Revealed

Some 65 "repossession hotspots" have been identified by housing charity Shelter as unemployment levels rise and more homeowners find themselves in negative equity.

Corby in the East Midlands was found to have the highest rate of at-risk homeowners with some 7.56 per 1,000 - nine times higher than the lowest rate in West Dorset of 0.83.

The Northamptonshire town has the highest proportion of homeowners who have been issued with a possession order for their home over the last 12 months, according to the research.

It is closely followed by Barking and Dagenham and Newham in London; Knowsley, Merseyside and Thurrock, Essex.

A possession order is an advanced stage of the repossession process which means a homeowner is at serious risk of losing their home.

The study by the housing and homelessness charity identified 65 of 324 local authorities as repossession hotspots.

Shelter warns that the figures reflect a need for homeowners across the country to prepare for higher mortgage repayments when interest rates rise as expected later this year.

A recent report by the Financial Services Authority said banks are masking the true scale of the threat, with experts predicting repossessions will hit 45,000 next year.

The findings of the charity's report correspond with these areas having higher and increasing rates of unemployment.

The average rate of unemployment in the local authorities with the highest rates stood at 9.6%, compared to 5.3% in those with the least.

And unemployment has risen, on average, by 3.3% over the last three years in the most at risk areas, compared to a 1.4% increase in the lowest, Shelter said.

The study also identified clusters of local authorities - Tyneside, Kent coastal towns (Thurrock, Medway, Swale) and The Wash (South Holland, Fenland, Peterborough) - among those in the highest risk group.

It also highlighted a red "ribbon" of repossessions across northern England from the Mersey in the west to the Humber estuary in the east.

The results are based on analysis of the latest Ministry of Justice figures on the rates of claims leading to possession orders per 1,000 households for each local authority, published in May 2011.

Campbell Robb, chief executive of Shelter, said: "This research paints a frightening picture of repossession hotspots across the country where homeowners are literally on the brink of losing the roof over their head.

"We know only too well that the combined pressures of high inflation, increased living costs and stagnant wages are really taking a toll on people.

"All it takes is one thing like job loss to tip people over the edge and into the spiral of debt and repossession and ultimately homelessness."

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Why a few white lies could cost you a fortune

Many of us are tempted to bend the truth a little in order to secure cheaper insurance premiums. But it's a dangerous - and potentially expensive - game to play.

Ever wondered what would happen if you told a few white lies when you applied for car insurance? After all, does it really matter who the main driver is? And does that speeding conviction from a few years back really make any difference?

You’re a good driver so surely a few little fibs to save yourself a few quid is ok in the grand scheme of things?

The truth is it does matter, to insurance companies at least. If you lie on your application for insurance you could find your policy is invalid when it comes to making a claim. In the worst case scenarios you could be prosecuted for fraud or blacklisted by insurance companies.

Fronting

The most tempting method to get cheaper car insurance is for a parent to insure a vehicle in their name as the main driver, with their son or daughter down as an occasional driver, when in fact the child is the main user. This little trick is commonly known as “fronting”.
A survey by the Association of British Insurers earlier this year found that more than half of motorists surveyed said they would not rule out doing this, despite the fact that it is fraud, could invalidate their insurance and lead to a criminal conviction.

Families tempted to “front” should be aware that insurance companies are clamping down on fronting – and have various ways of catching you out. So you’ve been warned…
For more on fronting, check out This lie could cost you thousands.

A dodgy past

Lying about your past is tempting when it comes to car insurance. Previous claims and driving offences will bump up your premium.

In some cases omitting to mention past claims will be detected when you take out the policy. If they’re not, chances are you will be found out if you have to claim again.

Insurers now have very sophisticated software, introduced to combat organised fraud, which analyses claims for patterns. All the insurance companies share the claims data so you’re likely to be caught if you lie or omit the truth about your driving history.

The same goes for motoring convictions. In some cases minor convictions won’t make a massive difference to your premium anyway so it’s best to own up.

Other lies

Lying about your address is another common fib drivers tell their insurers. It’s commonly used by young people living in high-risk inner city area but insuring their car at their parents’ address, normally a nice safe village in the country.

But if you have an accident miles away from where you say you live, claims investigators will probably look into where you - and your car – spend most of your time.


The same goes for where you park your car at night. The safest options from an insurance point of view are a garage or driveway, as opposed to on a public road. However you’ll be quickly exposed by your insurance company if you claim to park overnight in a garage - but it turns out you don’t have one.

Will you get found out?

In many cases if you lie to your insurer and don’t ever have to make a claim then you might never get found out. But is it worth the risk?

Insurers, the police, the DVLA and other bodies in the car insurance industry are increasingly sharing data in order to clamp down on those committing insurance fraud.

And don’t assume that once your application for insurance has been accepted, and you’ve been sent the policy, you’re in the clear.

Generally if you need to make a claim the insurer will do further checks. If it finds out you lied on your application form then it’s perfectly within its rights to reject your claim and cancel your policy.

As well as affecting any money you’d receive towards repairs or medical treatment, this could mean any other driver you injure or whose car you damage will pursue you through other channels to get compensation.

Serious consequences

Depending on the severity of the lie, the insurance company could prosecute you for fraud – which could land you with a prison sentence in the most extreme cases.

Once you’ve been convicted for fraud you’re likely to find you’re blacklisted by pretty much all major insurers in the future. You’ll either find it impossible to get cover or pay well over the odds for it.

Insurance fraud isn’t a victimless crime either; it costs every honest driver more money. The Insurance Fraud Bureau estimates that undetected general insurance claims fraud costs £1.9bn a year, with £350 million coming from fraudulent car insurance claims.This adds an average of £44 to the average customer’s insurance bill.

So, think again. Is that white lie you tell your insurer really as harmless as you think?

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Capital One to buy ING's online banking unit

Capital One said Thursday it would buy ING Direct, the online banking unit of ING, in a $9 billion deal that would transform it into the fifth-largest US bank in terms of deposits.

"Capital One will acquire ING Direct from ING Groep (Amsterdam: INGA.AS - news) in a stock and cash transaction valued at $9.0 billion," the US bank said in a statement announcing its deal with Amsterdam-based ING.

"Upon closing, Capital One will become the fifth largest depository institution and the leading direct bank in the United States."

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Just Launched! New Orange CASH Mastercard

what is it?

In a nutshell, the Orange Cash prepaid MasterCard® is a card that can be loaded with cash and used just like a credit or debit card, online and in the shops. It’s just like having cash in your pocket but better, with rewards as you spend and added peace of mind.


a prepaid card that’s designed for you

Shopping online has never been easier. You’ll get all the benefits of having a card with Orange Cash. So now you can shop ‘til you drop online and on the high street without having to carry a wallet full of cash. Just like that. Easy.

peace of mind in your pocket

You might not need a credit card, or you might already have one but want something a bit more convenient that puts you, and nobody else, in control of your money. The great thing about Orange Cash is you can only spend the money you’ve put on the card, so there’s less chance of spending more than you bargained for when you’re out and about.

a card for everyone

You don’t need a bank account to get an Orange Cash card, so you can keep your day-to-day spending money and your bank account separate.

You don’t even need to be an Orange customer to apply for Orange Cash.

War of the supermarket banks

As Britons become more and more disillusioned with the big banks, supermarkets and high street retailers are increasing their selections of money products – but which is best?



Can you get a good deal on your finances at the same place you do your grocery shop? To find out, we've rated four supermarket banks to see how they fare.

0% credit card deals

Tesco: When it comes to 0% credit cards, Tesco has one of the top deals with the Clubcard Credit Card which offers 15 months on new purchases and nine months on balance transfers.

Furthermore, card holders can earn one Clubcard reward point for every four pounds spent on the card — even outside the supermarket.

Sainsbury's: If you want a card that carries 0% deals on both balance transfers and new spending, Sainsbury's offers 12 months on each which allows you to avoid interest on both new credit card spending and existing debt. Thereafter, the APR Representative is 16.9% or 15.9% for those with a Nectar Card.

Marks & Spencer: If you're looking for a card with a 0% period on new spending, M&S offers 15 months interest free — vying with Tesco for top spot on the best-buy tables.

While M&S does not offer a balance transfer period, the Tesco card comes with nine months interest free. However, M&S does offer a lower representative APR — 15.9% versus 16.9%.

The Co-operative: Although ethical bank Co-op does not offer conventional 0% deals, its Platinum Fixed Rate credit card charges 9.9% APR representative for five years. Long-term low rate cards could suit borrowers who do not believe they could pay off a debt within an introductory 0% period.

WINNER: Despite strong propositions from Sainsbury's and M&S, we would award to the top spot to Tesco. In fact, the Clubcard Credit Card is one of our favourite deals currently on the market.

Loans

Tesco: Despite a top credit card offer, the supermarket is not a market-leader for personal loans — offering 7.4% APR Representative on amounts between £7,500 and £14,999 compared with the best rate of 6.7% from Alliance & Leicester.

Sainsbury's: Within the personal loan market, Sainsbury's is one of the major players for amounts between £7,500 and £15,000. At the moment, it is offering 6.8% to those with a Nectar card. Bear in mind, it is relatively easy to obtain a Nectar card if you want to advantage of this deal.

Marks & Spencer: Marks & Spencer also offers competitive personal loan rates — currently 6.9% APR Representative if you borrow between £7,500 and £15,000. Although there are lower rates on the market, anything below 7% is nevertheless competitive.

The Co-operative: If you're looking to borrow between £7,500 and £14,950, the APR Representative is 9.9% which is far higher than any of the other options discussed.

In line with its ethical stance, Co-op promises the money you borrow will not come from profits associated with human rights abuses or unnecessary pollution.

WINNER: In our view, Sainsbury's deserves first place in this category. Despite the stipulation that you need to be a Nectar customer, this is easily overcome if you want to borrow at this competitive rate.

Rewards

Tesco: Tesco Clubcard points are one of the most well-known examples of reward and loyalty schemes.

At present, the store is running its double points promotion allowing you to earn two points for every pound spent. Doing a quick calculation, spending £50 in store or online per week would equal rewards worth £52 a year.

These points can then be redeemed against Tesco shopping or you could potentially triple their value (to £156) with Tesco Rewards. Under this scheme, you get a more favourable return on your points when you exchange them in certain restaurants, theme parks or get discounts on foreign holidays.

Sainsbury's: Like a number of other supermarkets, Sainsbury's shoppers can earn rewards for their shopping in the form of Nectar points.

Spending £50 a week at Sainsbury's (roughly £200 a month) would bag you £22.50 worth of points which could then be redeemed at retailers such as Sainsbury's, Argos and Vue Cinemas.

Marks & Spencer: Those with a credit card from M&S could earn rewards for their spending. If you spend £50 a week at M&S, you could earn £26 of vouchers a year to spend at the store. Furthermore, you earn rewards for shopping at other retailers other than M&S but spending £50 a week would bag you a measly £13 a year.

The Co-operative: Becoming a member of the Co-op entitles you to a share of the business' profits according to how much you spend and how well the company performs.

You can either choose to take your rewards as money or voucher — alternatively you could make a donation to local communities.

WINNER: According to our calculations, Tesco has the highest rewards potential. However, the best option for you probably depends on your spending habits so it might be worth checking out points calculators on the supermarkets' websites when choosing a reward scheme.

Insurance

In addition to banking services, the four retailers also offer a range of insurance products — each including home car and pet.

WINNER: Because your insurance quote will depend on factors specific to you, it is difficult to assign a winner in this category. If you are shopping around for a new policy, it's worth checking a range of quotes to make sure you get the best deal.

FINAL VERDICT

Coming top in both rewards and 0% deals, Tesco takes the crown of best supermarket bank. In addition the retail giant is planning to launch a range of mortgages later this year — the details of which remain to be revealed.

Nevertheless, there are competitive deals from both M&S and Sainsbury's while the Co-op deserves points for its ethical credentials.

Remember, interest returns and returns on rewards schemes vary depending on your circumstances so do your homework before applying for a new financial product from the supermarket or anywhere else for that matter.





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Fininvest's Guide To Stopping Your Phone Being Hacked

News of the World journalists were able to hack into so many people's voicemail because most phone users have never changed their voicemail password.

Few people are aware that they can listen to their mobile voicemail from a landline - simply by entering a password. And if they haven't changed that, it's likely that it will be 0000 or 1234 - meaning it's easy to guess and get into your voicemail.

So follow these simple guidelines for how you can change your password and make it much harder for anyone to break into your voicemail.

IMPORTANT POINTS
Don't choose an obvious password, like 0000, 1234 or even your birthday. Ideally, you will choose four random digits, completely unrelated to you, so no one will be able to guess it.

It will still be possible to break into your voicemail using a computer to crack the passcode, but this will make it far more secure.

Vodafone

Dial 121 to enter your voicemail, then press 1 for the main menu, 4 for mailbox settings and 2 for security settings. Vodafone do not have a default password and will automatically send a randomly-generated code to your mobile if you access your voicemail from another phone.

Orange

Hold down 1 to access your voicemail. Press 3 for settings, and 3 again to set a new password - you won't be able to access your voicemail from another phone without doing so. It also won't let you select anything too easy to guess - so 2222 or 5678 will not be permitted.

O2

Get to your voicemail by dialling 901. Dial 4 for voicemail settings, then follow the prompts to choose a new pin.

T-Mobile

Hold down 1 to access your voicemail, select 'personal options' from the menu, then select 'To change mailbox features' and follow the prompts. You won't be able to access T-Mobile voicemail from another phone until you have set your own pin.

3

Dial 123 to access your voicemail. Select 4 to change your mail settings, then 2 to manage your login options, then 1 to change your passcode.

Virgin Mobile

On Virgin, the way you change your pin number varies by handset, so hold down 1 to access voicemail, then follow the instructions.

Tesco Mobile

Call 905 to access your voicemail, then press *. Choose option 4 and follow the prompts to change your passcode. As Tesco Mobile services are provided by O2, the default passcode is 8705.

iPhone

Tap on Settings, then choose Phone. Press the wide button near the bottom saying 'Change voicemail password'. Enter your new password, then re-enter it and tap Done.

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Why paying in pennies may land you a fine!

Whatever you do, don’t hoard your cash and pay your bills like this...

“If you look after the pennies, the dollars will look after themselves”; the words of American industrialist J. Paul Getty and advice we could all occasionally benefit from heeding. Unless your name happens to be Jason West that is.

Yes, this disgruntled Utah man had obviously been listening to Getty’s proverb a little too intently when he stormed into his local clinic to reluctantly pay a $25 medical bill. And unfortunately for West, his pugnacious penny payment landed him in something of a pickle with the police...

‘Do you take cash?’

Mr West had disputed the $25 charge issued by Basin Clinic, Utah as he claimed he had settled it months ago. So when he turned up at the clinic in person and still didn’t manage to get the bill dropped, he lost his rag.

West politely enquired as to whether the clinic took cash, which – unfortunately for this particular receptionist – they did. Presumably delighted with the answer, the disgruntled patient then proceeded to dump 2,500 pennies onto the counter, telling the cashier that he was more than happy to wait around while the change was counted.

The clinic obviously didn’t see the funny side of West’s antics as they quickly called the police to report the penny-pushing patient, claiming that he had been throwing coins at staff. The police confirmed that pennies were strewn about the clinic floor and desk and decided to charge West with ‘disorderly conduct’. If he is found guilty West will face a fine of $140 – or 14,000 pennies.

West had something of a simple reply to the clinic's accusation when questioned by a local paper, “that’s just the nature of pennies... they’re round”, he said.

Penny payment protocols

The clinic confirmed that it would have been happy to accept West’s portly payment, if only he hadn’t transferred it to the teller in such an aggressive fashion. But they would have been well within their rights to reject the 2,500 pennies.

While American law states that US coins or currency (including Federal Reserve notes and national bank notes) are legal tender and hence have to be accepted for payments of debts, dues, charges and taxes, an individual or organisation can still put reasonable conditions on the manner in which they will accept the payment. As long as they do not contravene state law, that is. So in theory the clinic almost certainly could have told West to gather up his pennies and pull out a bill or two.

Internationally, American coinage law is fairly unclear, as most countries set out specific regulations for settling bills in coins. The Eurozone limits coin payments to a maximum of 50 pieces while Canadian law states that payment in 1c (cent) pieces must not exceed 25c. Australia places their 1c limit at 25c and while New Zealand no longer has any 1c or 2c pieces, there is a $5 threshold for payments using 10c, 20c and 50c silver coins.

Here in the UK, the limit for paying in 1p or 2p coins is 20p, while 5p and 10p pieces are legal tender up to £5 and 20p and 50p pieces are acceptable for payments up to £10. Gold sovereigns are also legal tender with a face value of £1. But in reality – due to the high value of gold – they are usually bought and sold as bullion.

In England and Wales £5, £10, £20 and £50 notes are all legal tender for payment up to any amount. However they are not legal tender in Scotland or Northern Ireland.

Legal tender

This discrepancy between paying in notes across the UK arises because of the narrow and largely unknown technical definition of legal tender in the UK. Officially, legal tender law only really affects court cases involving non-payment, as a debtor cannot successfully be sued if payment is offered in legal tender.

This has no impact on ordinary transactions, which can take place in any form – whether notes, coins (legal tender) or even stamps – so long as both parties agree.
As a result, a debtor in Scotland or Northern Ireland could have their payment legally rejected if they offered it to the court in notes rather than coins. Though practically, I can’t imagine this ever happening!

But being turned down at the till with a handful of metal isn’t the only reason why you shouldn’t hoard your savings in coins...

Your cash is eroding

Earlier this week the Office for National Statistics announced that the Consumer Prices Index measure of inflation stayed at 4.5% throughout May. This indicates a continued rise in prices at more than double the target rate of 2% set out by the Bank of England. As a result of these jumping prices the actual spending power of any physical coins or notes you are holding onto is eroding every day. But there is a way to fight back against this erosion.

By stashing your cash away into a savings account, you can earn interest on your nest-egg and offset the impact of rising prices. Here’s a rundown of some of the best deals around at the moment...

Santander

Alternatively, if you get hold of a cash ISA for your savings, you won’t even pay tax on the interest you receive. And why should you, when as we reported earlier this month every £1 you earn at work before lunch goes straight to the taxman?

For a full list of all the top accounts for your cash head over to our savings centre or ISA centre now.

Are you a hoarder?

What do you do with your spare pennies? Are you a hoarder?

Let us know in the comment box below.

More: Compare savings accounts and ISAs What we can learn from the people of Richmond

Why now is a good time for a bond

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The secret reason banks reject you

Even if you have a perfect credit record, banks will turn you down for credit for this reason....

Up until a couple of years ago, I had no credit rating. I got through university without getting a credit card, my mobile had been in my mother's name (sadly I was still the one stumping up for the bill every month). I was essentially a non-entity, credit wise.

And that's part of the reason I was turned down for my first credit card. I had no credit history or record, so HSBC had no way of judging whether I was an appropriate person to lend to.

However, it has now emerged that it's not just people that have never had credit that are disappearing in the eyes of the credit rating firms — and therefore the lenders. It could be any of us.

Disappearing debts

According to reports, between 40 million and 50 million financial accounts — credit cards, mortgages, loans, current accounts — that are still being used are nowhere to be found on credit reports.

And the reason they are missing from credit reports is simply that they were taken out before the year 2000. This is significant because from 2000 onwards, legislation required lenders and providers to revamp their terms and conditions, to include customer approval for sharing their details with other organisations.

Those approvals were not generally included in customer contracts before the year 2000, and that's why the banks and building societies have been unable to share those details with the credit rating firms.

Say goodbye to getting any credit

This is hugely significant to anyone who took out a credit agreement prior to the turn of the century, for a number of reasons. Firstly, let's say you bought your home in 1999 on a 10-year fixed mortgage. By now you will be safely on the standard variable rate, which in many cases is nice and cheap thanks to record low Bank of England base rate.

However, if you choose to remortgage to a new deal to ensure you take advantage of lower rates, you may come into serious difficulty as the new lender will likely struggle to find any record of your original mortgage on your credit report — and therefore will be unable to ascertain just how good you are at repaying such a sizeable debt.

It doesn't even have to be anything as significant as a mortgage — if you have been with the same current account provider for more than a decade and want to move elsewhere, you may struggle to do so because of this. Credit cards may also be tantalisingly out of reach, despite you effectively meeting all of the provider's criteria.

How to fix your invisible credit records!

The first thing you should do is check your credit report. You can actually get a free trial to see your credit report from the three main providers, Experian, Equifax and Callcredit.

Get on there and see exactly what the banks see each time you apply for credit. If you see any obvious credit history that is missing, most likely because of when you took it out, then it's a good idea to give the lender a call.

They will need your explicit permission before they are able to share the information with the rating firms, so make sure they are completely clear that you want those details shared.

Just how quickly that information appears on your credit record will obviously vary depending on the provider involved.

Once the trial comes to an end, obviously you will then be charged a monthly subscription for the service, so once the necessary changes have been made you may want to cancel the subscription. However, I've been a member of Credit Expert for a couple of years, as I like to keep on top of any changes that crop up from time to time on my record.

Look out for any mistakes

Of course, it's not just missing credit history that you should be keeping an eye out for when you check your record — chances are there may be an error or two in there as well which will be undermining your chances of getting credit.

One factor that regularly causes borrowers to come a cropper is the electoral roll. One of the first things bank check when you apply for credit is your registered address on the electoral roll, so make sure that information is correct.

Other things to look out for are accounts or cards that have now been closed, as well as linking you to other people (former partners for example) which will have an impact on your rating.

Finally, if there is something in your credit report which you think doesn't accurately reflect your position — perhaps there is an explanation for a missed payment for example — then you have the option of adding a Notice of Correction, of up to 200 words, to state your case.



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Public sector pension age to rise to 66

The Government has confirmed it is to adopt a number of Hutton’s pension suggestions. And the unions aren’t happy.

Danny Alexander, the chief secretary to the Treasury, has confirmed that the retirement age for public sector workers will increase to 66.

This is in line with the planned increase in the state retirement age, and is just one of a number of the recommendations made by Lord Hutton earlier this year which the Government will be adopting.

Working longer, for worse pensions!

Lord Hutton, a former pensions minister under the Labour Government, published his report back in March, which contained a number of controversial suggestions to help alleviate the current pensions crisis which the Government faces.

Here were the main suggestions Hutton came up with:

Existing final salary schemes should be replaced by new schemes where the pension entitlement is linked to career average earnings.

Linking normal pension age in public service pension schemes to the State Pension age.
Members of the ‘uniformed services’ (armed forces, police, firefighters) currently have a normal pension age of less than 60. This should be raised to 60.

Public service pension schemes should have a ‘clear cost ceiling’ – the proportion of pensionable pay that taxpayers will contribute to employees’ pensions.

Introducing more independent oversight and stronger governance of pension schemes.
Overhauling legal framework to make pensions simpler.

And while many industry experts supported those suggestions, unions representing public sector employees were predictably outraged.

Unjustifiable

In a speech inevitably leaked long before it was due to be given, Alexander said it was “unjustifiable” to expect private sector workers to work longer and pay more, so that private sector workers could enjoy an earlier retirement, on decent pensions.

And while you won’t find too many private sector workers who would disagree with that assertion, the timing of the speech is interesting, given negotiations are still ongoing between the Government and the unions. The unions accused Alexander of a ‘breach of trust’ by going public with details before they had been put to the unions.

Let’s take a look at some of those details which Alexander has announced.

A jump from 60 to 66

The headline change will be linking the retirement age of public sector workers to that of private sector workers. Currently, public sector workers get to retire at 60, while private sector workers are set to see their retirement age move to 66 by 2020. So public sector workers should prepare for a pretty hefty jump in the time they will need to work before collecting their pensions.

Another big change will be the increase in contribution levels. I outlined current contribution levels in the Public sector to work longer for worse pensions, but the Government wants to see the average public sector employee hand over around 3.2% extra by 2014.

Of course, exactly how much extra you’ll need to pay will vary depending on your salary. Those at the top end of the scale will need to pay as much as 5% more than they currently do, a significant increase, while those on the most modest wages will be unaffected.

Indeed, around 750,000 employees will not have to pay a penny more than they currently do (those who currently earn £15,000 or less), while a further 500,000 workers will see their additional contributions capped at 1.5% (those earning £18,000 or less).

A question of fairness

That last point is an important one. Whenever discussions of public sector workers and their ‘perks’ come up, there is all too often a focus on those employees at the top end of the scale, enjoying very healthy salaries and pensions to boot.

However, as you can see, there are around 1.25m workers on very modest salaries of less than £18,000 and it would be wrong to assume that the pensions they eventually enjoy will allow them to live a life of luxury in retirement.

A striking change

The next stage will almost certainly be striking action by the members of various public sector unions. For example, the National Union of Teachers has already voted overwhelmingly in favour of industrial action, with a strike scheduled for 30 June. A whopping 92% of members voted to strike.

This will not be the last strike we see. Indeed, with the changes likely to be implemented relatively slowly, there is a decent chance that we will see protracted strike action for years to come.

Get planning!

So whether you are a public sector or private sector worker, it is clear that relying on the state or anyone else to pay for your retirement is an unwise course of action – it’s down to you to follow the example of the Malaysians and take responsibility for your own retirement planning.
Just how much you need to retire in comfort is up for debate, something we looked at in It doesn't cost much to retire well. That said, too many of us miss out on the pension income we should be enjoying – to find out more, check out The £3.2bn pension boost.

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Why now is a good time for a bond

You can get a decent rate on your savings by locking them up for a year.

If you are looking around for a good place to put your savings, you will know that there are thousands of different options, all with universally poor interest rates. Gone are the heady days of the 7% interest rate, and rates hovering around the 3% mark seem here to stay.

Even if you are likely to get a pretty poor return, it is still worthwhile understanding all the options open to you and scouting around for a respectable deal.

What kind of account is for you?

In the past, when the rates of a fixed rate savings account or bond were significantly higher than their instant access counterparts, it was definitely worth locking your money away and reaping the rewards. But can it still be worth it with today’s lower rates?

Instant Access: A typical instant access account today will give you around a 3% return on your money, as we explained in The best place to put your savings. They offer greater flexibility, allowing you to withdraw and deposit money at will, with no penalties. If you are the kind of person who keeps an active eye on savings and is happy to go through the process of changing an account to get a better rate at the drop of a hat, then this could be the option for you.

Fixed Rate: If you have less time to devote to financial dallying, and just want to put your savings somewhere safe, then you might be better off finding a fixed rate account that suits you.

The longer you are willing to lock money away for, the better the rate. Today, in order to earn anything significantly over the 3% mark, you would have to commit to four or five-year terms.

With Scottish Widow Bank's Five-Year Fixed Term Bond you can get a rate of 4.25%. If you go for a four-year fixed term, such as that offered by the Lloyds TSB eBond, you will earn 3.95%

There is uncertainty about what interest rates will do over the next year or so, but opinion seems to be leaning in favour of rates increasing, and you will be unable to take advantage of these increases if your money is locked away. However, the Monetary Policy Committee of the Bank of England has just confirmed that UK interest rates will remain at the record low of 0.5% for the time being, so these predicted increases are not coming anytime soon.

Compromise with a one-year bond

If you fancy dabbling with a fixed rate account, but don’t want to commit yourself for too long, you might want to think about investing in a one-year bond.

The bond involves locking your money away for a period of one year, during which time your interest earnings will be unaffected by the vagaries of fluctuating base rates of interest. Typical one-year bond rates are over the 3% mark, with the Tesco Bank Fixed Rate Saver offering 3.40% and the Post Office Online Bond Issue 4 offering 3.35%, which are both higher than the top instant access rates at the moment, even if not by much.

The pros

It’s not all plain sailing with the one-year bond, and it’s important to be informed about the good and bad points of any financial product.
Rate of interest is not influenced by the Bank of England base rate. The rate stays fixed until the bond expires.

The safety of your money is guaranteed up to £85,000 under the Financial Services Compensation Scheme.

They are a simple financial product, just pay in and forget about it until the bond is about to expire. If you dislike chopping and changing, and all the paperwork that entails, then this could be for you.

The cons

You have no access to your money for the term of the bond – which could pose a problem if you suddenly need emergency access to your cash.

If interest rates rise significantly then the bond cold become uncompetitive. For example, if you go for the Tesco Bank Fixed Rate Saver 1 year bond, paying a rate of 3.40%, and the official Bank of England base rate was to rise 1% - 2% over the next year, then you could find yourself missing out.

Financial Planning

Despite experts predicting that interest rates will rise, no one can say for sure if and when this will happen, or if any rise will be significant enough to get excited about. If you decide to go for a one-year bond, hedge your bets by using it as part of an overall savings plan. You might like to counteract any risk by putting a maximum of 50% of your savings in a fixed rate bond, and spreading the rest elsewhere.

This gives you flexibility and allows you to relax whatever happens to the base rate!

To help you make up your mind, check out the table below of some of the best one-year bonds in the market today.

Lloyds TSB

NATWEST

RBS

Santander

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Earn £60 a year from an empty current account

Even if you finish the month with no cash in your bank account, you can still get a great return.

We all want to get a decent return on our cash, whether that's the money we set aside in savings or whether it's the cash we keep in our current accounts. And it's become the case that there are a handful of current accounts which actually offer a better return on your money than dedicated savings accounts, a near-farcical situation.

However, with one brilliant current account, you can get a great return, even if the account is empty for most of the time.

The Halifax Reward current account

My wife and I took out the Halifax Reward current account jointly when we bought our house, to cover the main bills, and it's been a fantastic — and very clever — account.

Despite the fact that the account states that it pays interest of 0%, it actually offers a great return, whether you have money in there or not!

Here's how it works. Each month that you pay in £1,000, you'll benefit from a payment of £5 from Halifax. And you'll get that payment, irrespective of your balance at the end of the month. So long as you pay in £1,000, it doesn't matter if your closing balance is £1,000 or £0, you'll still get the money from Halifax!

In fact, you'll get the money even if you end up overdrawn, though that's not a smart move with this account, as you'll be charged £1 for every day you're overdrawn.

The overdraft scandal

£60 a year for nothing!

So over a year, that works out as £60, even if your current account is empty most of the time, an extraordinary result.

What's more, by having this current account, you'll benefit from more attractive deals on other financial products from Halifax. For example, if you go for the Halifax All in One credit card, ordinarily you would enjoy 10 months of 0% interest on both balance transfers and purchases (hence the All in One name). However, if you have the Reward current account, you'll get an extra two months free from interest on purchases, making it one of the best cards around!

Similarly, if you go for Halifax's marvellous Direct Reward ISA, the tax-free rate of return you'll enjoy on your cash will jump from 2.8% to 3%. You'll also enjoy an extra 0.2% on your savings in the Web Saver Extra account (taking it to 2.70% currently).

And when it comes to mortgages, you'll enjoy a rate 0.2% lower than those available to non-current account holders.

That's a hell of a return, just for paying £1,000 a month into your current account!

Open a new bank account now

Going for an upgrade

In fact, there's even an upgraded version of the Reward account to consider, the Halifax Ultimate Reward Account.

As with the basic Reward account, each month in which you pay in £1,000, you'll receive £5 from Halifax, irrespective of your closing balance.

However, with the Ultimate Reward account you'll also enjoy a fee-free £300 overdraft, worldwide multi-trip travel insurance, AA breakdown cover and accident management, mobile phone insurance, home emergency cover, travel accident cover, identity theft assistance and card protection for all of your debit and credit cards.

As with any packaged current account, there will be a fee to consider, in this case £12.50 a month. So if you reckon you'd benefit from all of those extras, it may work out as the best account for you. However, personally I'm not a big fan of packaged current accounts, and would rather go for the basic Reward account and then sort out whatever insurance I needed separately.

Top cash ISAs this year

How it compares

The top rate of interest currently available from any current account is 5%, which you'll enjoy if you go for the Santander Preferred In-Credit Rate account. However, that rate will only be paid up to a balance of £2,500 (while you'll also have to deal with the customer service levels, which are generally slated by lovemoney.com readers).

After a year you should be looking at about £100 in interest (for basic tax-rate payers, anyway) if you maintain the balance at £2,500 for the full year. That's great if you're in a position to have that much cash in your current account, but with the economy as tough as it is at the moment, many of us are not in such a comfortable position.

If instead you maintain a balance of only around £1,000 over the year, you'll be looking at an after tax return of about £40, falling short of the return from the Halifax Reward Account.

The other current account paying a decent rate of interest is the Lloyds TSB Classic with Vantage which pays 4%. However, that's only payable on sums of between £5,000 and £7,000. So for those of us who don't have a huge stash of cash to keep in our current accounts, it doesn't rival the Halifax Reward account.

In fact, unless you are the sort of person who ends the month with a bank balance in credit to the tune of thousands of pounds, I don't think you can get a better return anywhere else than from the Halifax Reward account.

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It doesn't cost much to retire well

The pensions industry would have you save so much money that you have a higher income in retirement than your final salary. But that's not necessary!

Scottish Widows is the latest pension provider to tell us how terribly short we are from achieving our retirement goals.

Apparently, we think we need £24,300 per year (in today's prices) in retirement to live comfortably. Scottish Widows does nothing to discourage this belief but, if that is the case, most of us are going to have a very disappointing retirement indeed.

I can tell you now, the vast majority of us won't have anything like that when we retire. Most people in their 50s are now earning £22,000 or less, according to Office of National Statistics data. Yet on average we get around 30% of our final incomes when we retire, reports the Organisation for Economic Co-operation and Development. That's a long way off the 110% we think we need.

Hence, £24,000 is an incredible expectation.

The good news is we're wrong

The good news is that our estimates of what we need to live comfortably in retirement are likely to prove far too pessimistic. Several readers have written to me about how they live happily and comfortably on between £8,000 and £11,000 per year.

That certainly won't apply to most people, but it instantly demonstrates that we don't all need £24,000. Most of us will probably need between £11,000 and £18,000. Yes, some people with high bills or expensive tastes might need much more, but most of us can live, not just sufficiently, but comfortably on far less.

Costs in retirement are considerably lower

The main reason for this is that we can reduce our costs dramatically when we stop working. By the time you retire you have, I hope, paid off your mortgage and debts. That should certainly be your goal. You have also stopped commuting, and finished buying sandwiches and coffee on the way to work every day.

Most of us will at this stage no longer have to support our children in any meaningful way. We will eat more home cooking, and eat less overall. We'll go out drinking and entertaining less. The largest part of our wanderlust might already have been sated in our youth but, if not, we can rent out our homes and go travelling on the proceeds.

Yes, we might buy more tea bags and newspapers, and more time at home with our weakened bladders may mean we flush the toilet more. Also, if we think we'll be particularly healthy and active that may cost extra, yet on the whole we can expect our costs to be far lower than they were in our 30s and 40s. What's more, as the retirement years go by, we'll spend less time on the pistes and more with our feet up and a good book. That helps counter the effects of rising prices on our retirement income.

One big thing to consider is the cost of long-term care. A large minority of us go into care, and it's not cheap. How you choose to go about preparing for the possibility that you will become unable to look after yourself is a personal decision, but one worth researching and thinking about.

Unrealistic expectations

Not only do we think we need £24,000 to retire comfortably, but on average we want to retire at 62, says Scottish Widows. Very few people will manage both of those goals – and most of us won't achieve even one of them.

Anyone retiring at 68 can expect to live another 15 years. 60 years ago, we were lucky to live half as long after our retirement, even though we retired earlier. This means our retirement pot has to stretch out for a much greater time period.

We should therefore set our expectations for working longer. That way, if we manage to retire earlier, we'll be pleasantly surprised. If we don't, at least we can console ourselves that we expected this, and that we might still enjoy many more years with our feet up than our grandparents did.

Read more on this in Watch out if you want to retire at 65.

How much do we need?

And now to the important question: if most of us don't need £24,000 to live comfortably, how much do we need?

Pensioners receive more benefits and pay less taxes, which helps stretch their money further. We might even get the first £7,000 or so of annual income from the state pension (in today's prices), although governments will likely fiddle with that by the time many of us retire.

This is a great start, but we can't rely on the state and will need to save more. Since we are all individual with very different needs and wants, we must do our best to estimate the retirement pot we need ourselves, and then estimate how much we should save to get that pot. I have helped you do this in my guide, which you can find in Good news about your pension.

Finally, don't leave thinking about this until it's too late. £50 invested now for retirement might become £200 in real terms in 30 years. (Plus inflation on top, making the saved amount nominally hundreds of pounds more – although that won't mean you'll be able to buy more.)

If you wait 20 years to save that £50, it may just become, say, £80 ten years later.

Starting early makes a massive difference, even when you're talking small amounts.

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Every £1 you earn before lunch goes to the taxman

Every penny earned before 1pm goes to HMRC, so it’s vital to ensure your savings avoid the taxman’s clutches.

What have you achieved this morning? According to some new research, all you’ve actually managed to do is meet your tax obligations!

Nothing to show for it

According to some calculations by Fidelity International, your morning’s work is all to the benefit of the taxman. The firm looked at how much of our daily earnings find their way into the taxman’s coffers, using VAT, National Insurance and Income Tax. And remarkably it found that for basic rate taxpayers working 9am to 5pm, every penny they earn before 1pm goes directly to HM Revenue & Customs.

It’s even worse for higher rate taxpayers, who have to labour through until 1.45pm before they see any return on their efforts.

That’s a pretty depressing thought. So it’s understandable that you would want to keep your afternoon’s wages as far away from the taxman as possible. So if you’re saving some (as you really should) then the best place for that cash is an ISA.

Increasing returns

The lovely thing about an ISA is that the interest you earn on your savings is absolutely tax-free. So your money works a lot harder in one of these accounts! What’s more the annual limit of how much you can save in an ISA increased at the start of this new tax year to £10,680, of which a maximum of £5,340 can be saved in a cash ISA.

That means you can enjoy even more cash, tax-free! And what’s more recent weeks have seen a succession of enticing new ISAs launched.

Let’s take a look at the newest deals:

One year ISAs

First up, we have the one-year fixed rate ISA from Santander, paying 2% on sums from £500, and 3% on sums of £8,500 or more. The fact that the rate is fixed will be reassuring for some as it means that you know exactly what return you’ll be getting over the next 12 months.

However, while you can open the account in person or online, you can only manage it by post, which is hardly the most convenient method in 2011.

A better account comes from Norwich & Peterborough Building Society, again offering a fixed rate, this time paying 3.05%.

So how do these accounts compare with the current best one-year ISAs?

FirstSave

NATWEST

ROYAL BANK OF SCOTLAND

As you can see, it is possible to enjoy a rate of a whopping 5% on a one-year ISA. However, there are a lot of hoops to jump through with the Nottingham BS Starter ISA. You can only open it in branch and you won’t be able to make any withdrawals. It’s not really an option for that many of us.

What’s more, the latest ISAs are not exactly breathing down the necks of the market-leading accounts.

What about longer-term ISAs?

Two-year ISAs

Another new ISA from Santander is the two-year deal, paying a fixed rate of 3.70%. Again the account can be opened with a minimum of £500.

Meanwhile, Leeds Building Society has launched its own two-year fixed rate ISA, which also pays 3.70%! The account offers access to 25% of the funds contained within the ISA at any time without notice or penalty.

And as the table below demonstrates, these new accounts are both eye-catching deals over this time period.

Santander
FirstSave

RBS

Natwest

A long term option

ISAs come in far longer term forms as well, and last week saw a new five-year ISA launched by Newcastle Building Society.

The account pays a rate of 4.20%, a big jump on the rates available over shorter terms. Of course the problem with going with such a long- term product is that in a year or two years’ time, that rate may not look anywhere near as attractive, but your cash is trapped in the account.

The inflation equation

The problem, of course, is the high level of inflation the UK is currently experiencing. It's making it much harder for savers to earn a decent return on their cash.

With the Consumer Prices Index measure of inflation back up to 4.5% in April, that means that savers have a tough job finding accounts that offer an inflation-beating return. And with inflation unlikely to fall by any meaningful amount in the immediate future, savers will continue to have to take a ‘damage limitation’ approach, or try to find alternative ways of getting a return on their cash.

More: Compare market-leading savings accounts Get cashback with your current


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