DTUK2910

9Money MattersNovember 29-December 5, 2010United Kingdom Edition EverClear™ a triumph in clarity For details of Carl Zeiss and our wide range of other dental products contact: See what you are missing... Carl Zeiss EyeMag Smart 2.5x loupes Carl Zeiss GTX Carl Zeiss EyeMag Pro prismatic loupes Carl Zeiss OPMI® Pico Nuview Ltd, Vine House, Selsley Road, North Woodchester, Gloucestershire GL5 5NN Tel: 01453 872266 Fax: 01453 872288 E-mail: info@nuview-ltd.com Web: www.voroscopes.co.uk •Floorstand, ceiling or wall mounted •Photoport for digital camera •Five step magnification •Superlux 180 Xenon daylight illumination V2 LED Illumination O scar Wilde once fa- mously remarked, when a colossal fee for an operation was mentioned, that he would have to die beyond his means. Even before the recession, the statistical evidence that many of us were sustaining our lifestyles on the back of our credit cards was overwhelming. As hard times continue, and with infla- tion returning, if you find you cannot clear the balance on your plastic friend at the end of every month, it’s time to take a long, hard look at the deals on offer across the credit card market. In spite of a Bank Base Rate of only 0.5 per cent, credit card interest rates are averaging an astonishing 18 per cent, the highest level since 1998. Dr. Alt- man, a former Downing Street pension’s adviser, is calling for an investigation into the indus- try and has suggested appointing a regulator to protect the public from exploitation. Recent Gov- ernment proposals do suggest it is considering taking action, but the companies themselves justi- fy the figures by referring to the increasing number of customers defaulting on their liabilities, it- self a reflection of the recession- induced rise in unemployment. Although as individuals we cannot control macro econom- ics, we are able to take respon- sibility for own circumstances. The first step is to attempt to re- duce the rate being charged by your current card provider. The market is awash with card issu- ers, and in the competitive pur- suit of new business introductory rates are often much more fa- vourable than those for existing card holders. For the cost of a phone call, you may be able to switch to this lower rate – typically about half of what you may be paying now. It’s well worth the effort; the dif- ference between 18 per cent and nine per cent on an outstand- ing balance of £5,000 is £450, or roughly £9 a week! If this direct approach is un- successful (the company may feel you are a high risk custom- er, depending on your payment record or pattern of card usage, or it may simply not be company policy), then you need to vote with your feet. A by no means exhaustive check of the market quickly re- vealed no fewer than 85 zero per cent balance transfer offers with a wide disparity in terms and conditions. You need to decide which offer dovetails best with your own finances. Whatever the banks may say about supporting society, their first obligation is to make a prof- it and 0 per cent loans are clear- ly untenable in the longer term. But this does not mean you can- not exploit the situation to your own maximum benefit. Of the 85 offers I found, only two did not charge a transfer fee, while the 0 per cent inter- est ‘honeymoon’ period var- ied between one an 15 months, with some stating a definite end date. In most cases the fee was between two and four per cent of the balance transferred, with the longer interest free periods attracting the higher fees. Of course, if the transfer fee is tak- en into account and spread over the relevant period, 0 per cent ef- fectively ceases to be 0 per cent, whatever the ad- vertisements may say! You should also take note of the rate which k i c k s in after the 0 per cent period, which will be higher the longer the interest free period lasts. However, if you are confi- dent you can clear the outstand- ing balance within the 0 per cent period, and especially if there is no transfer fee, this is the ideal deal for you. Naturally not everyone is in this happy position, but there are alternatives on offer. Some companies are offer- ing specific transfer rates for the life of the balance, and these are worth considering if you know it is likely to be years before you will be back in credit. Compara- ble with an orthodox personal loan, balances can be repaid at any time without penalty if your circumstances change. Again, terms and conditions vary widely, (with rates from 0 to a massive 35 per cent!), and in some cases fees are applied. Flexibility is a key advantage of these arrangements, and over the longer term they may well prove competitive for some types of borrowers. Zero per cent on purchases for the first few months is always tempting, and makes sense if you can clear the balance at the end of that time, but the eventual rate on such a deal is likely to be significantly higher than aver- age. The credit card ‘tart’ who changes provider every nine- months in pursuit of 0 per cent deals often finds it’s more expen- sive when fees are taken into ac- count, and whenever you switch check on the ultimate rate be- fore you decide. Sticking with one company with a lower rate for the life of the balance is often the best policy. Most vital of all, (apart from reading the small print!), is to make at least the minimum monthly payment, and do talk to the card provider if you’re strug- gling. Defaults are not in any- body’s best ‘interests!’ DT Fantastic plastic? ‘Although as individuals we cannot control macro economics, we are able to take responsibility for own circumstances. Richard Lishman discusses some of the options available to manage your credit cards About the author Richard T Lish- man of money- 4dentists, which are a specialist firm of Independent Fi- nancial Advisers who help dentists across the UK man- age their money and achieve their financial and life- style goals. For more information call 0845 345 5060 or email info@money- 4dentists.com