gmb45
12th July, 2009, 04:50 AM
By Martin Lewis
* HUSTLE ONE: They lower your credit card minimum repayments.
It's sheer genius. Card firms appear generous by telling you they're dropping the monthly minimum. Actually, they're making a fortune.
Barclaycard has just cut the minimum repayment for some customers from 2.25 per cent to 1.5 per cent of the outstanding balance.
Doesn't sound much, but on ?5,000 debt at 15.9 per cent APR it would add ?16,000 to interest costs and take 67 MORE YEARS to repay!
Do the calculation for your card at Minimum Repayments: DANGER! Don't get locked into debt.... (http://www.minimumrepaymentcalculator.com)
YOUR COUNTER-MOVE: The deviousness is because minimums are set as a percentage, barely higher than the monthly interest, leaving the actual debt untouched.
Instead, repay the highest affordable fixed amount. For example, a ?3,000 typical debt at two per cent minimum repayments takes 41 years to clear, costing ?6,300 interest.
Yet take the first month's ?60 repayment and keep to that every month and the debt's gone after just seven years, costing only ?2,100 interest.
Check
* HUSTLE TWO: They calculate your mortgage interest annually.
If mortgage interest is calculated annually, you pay more because it takes longer before each monthly repayment counts towards reducing your debt.
For instance, to match the repayments of a mortgage at six per cent worked out daily, an annually-calculated mortgage would have to be at 5.85 per cent.
COUNTER-MOVE: Check how it's calculated and factor that in when you're deciding on your mortgage.
* HUSTLE THREE: The way they sell you foreign currency.
All credit and some Visa debit cards (including Abbey, A&L, Barclays, Co-Op, LloydsTSB) levy a two per cent "cash-advance" fee if they are used to buy foreign currency.
COUNTER-MOVE: Use a different debit card or use cash to pay for the currency. Visit travelmoneymax.com comparison tool for the best rates.
* HUSTLE FOUR: Credit cards where you ALWAYS pay interest.
Repay credit card in full and you won't pay interest, right? WRONG. Some do - for instance Lloyds TSB's Advance card charges interest for every day you're in debt. COUNTER-MOVE: Double-check this in the card's summary info box. If it lists giving "40-56 days interest-free on purchases", that's time allowed to pay in full without charge. If it doesn't, watch out.
* HUSTLE FIVE: Credit cards nearly ALWAYS charge interest for cash withdrawals.
They do this even if you repay in full. Worse, it's usually at a higher rate (20 per cent plus) with withdrawal fees of about two quid on top.
COUNTER-MOVE: Simple. NEVER withdraw cash on credit cards. If you feel you've no choice, you've got money problems. Seek help at moneysavingexpert.com/debthelp.
* HUSTLE SIX: Banks hide savings interest.
Finding the interest your account pays often means ploughing through a pamphlet or link to scores of similar-named accounts. How come statements can show the savings sum but not the interest rate earned? It's confusion marketing, enabling them to drop your high rate and launch similar-named top rate new accounts so you think yours still pays well.
COUNTER-MOVE: Record the exact account name (Saver3 or Saver4, say) and when it drops, ditch to a better payer. That'll teach 'em.
* HUSTLE SEVEN: Hidden exchange rate charges when you spend abroad.
Most credit and debit cards add a hidden three per cent load to your exchange rate - meaning that if you buy something costing ?100 worth of dollars, you'll pay ?103 - but they don't break this out on statements.
COUNTER-MOVE: Get a Santander Zero credit card which doesn't add a load or charge an ATM fee. Next best is the Post Office card - yet always repay in full to avoid interest and ONLY use it when overseas.
Hellish
* HUSTLE EIGHT: Debit card penalties when spending abroad.
As well as adding a loading, Halifax, NatWest, Lloyds, Abbey and RBS DEBIT cards add fees of ?1 to ?1.50 EVERY time you use them abroad.
COUNTER-MOVE: Don't use these hellish cards abroad. Use any other card, even a credit card (repaid in full). If not, get foreign currency out.
* HUSTLE NINE: Bank Charges.
Go even one pence beyond your authorised overdraft limit and BANG you'll be walloped with up to ?35-a-time fees. I've been campaigning that these are unlawful charges for years, and the final House of Lords test-case decision on that is due in September.
COUNTER-MOVE: The best way to beat the charges is avoidance and to keep track of what's in your account, and never bust your limit.
As for reclaiming old charges, put claims in as soon as possible. Free letters at Money Saving Expert: Consumer Revenge - Credit Cards, Shopping, Bank Charges, Cheap Flights and more (http://www.moneysavingexpert.com) /bankcharges.
* HUSTLE ONE: They lower your credit card minimum repayments.
It's sheer genius. Card firms appear generous by telling you they're dropping the monthly minimum. Actually, they're making a fortune.
Barclaycard has just cut the minimum repayment for some customers from 2.25 per cent to 1.5 per cent of the outstanding balance.
Doesn't sound much, but on ?5,000 debt at 15.9 per cent APR it would add ?16,000 to interest costs and take 67 MORE YEARS to repay!
Do the calculation for your card at Minimum Repayments: DANGER! Don't get locked into debt.... (http://www.minimumrepaymentcalculator.com)
YOUR COUNTER-MOVE: The deviousness is because minimums are set as a percentage, barely higher than the monthly interest, leaving the actual debt untouched.
Instead, repay the highest affordable fixed amount. For example, a ?3,000 typical debt at two per cent minimum repayments takes 41 years to clear, costing ?6,300 interest.
Yet take the first month's ?60 repayment and keep to that every month and the debt's gone after just seven years, costing only ?2,100 interest.
Check
* HUSTLE TWO: They calculate your mortgage interest annually.
If mortgage interest is calculated annually, you pay more because it takes longer before each monthly repayment counts towards reducing your debt.
For instance, to match the repayments of a mortgage at six per cent worked out daily, an annually-calculated mortgage would have to be at 5.85 per cent.
COUNTER-MOVE: Check how it's calculated and factor that in when you're deciding on your mortgage.
* HUSTLE THREE: The way they sell you foreign currency.
All credit and some Visa debit cards (including Abbey, A&L, Barclays, Co-Op, LloydsTSB) levy a two per cent "cash-advance" fee if they are used to buy foreign currency.
COUNTER-MOVE: Use a different debit card or use cash to pay for the currency. Visit travelmoneymax.com comparison tool for the best rates.
* HUSTLE FOUR: Credit cards where you ALWAYS pay interest.
Repay credit card in full and you won't pay interest, right? WRONG. Some do - for instance Lloyds TSB's Advance card charges interest for every day you're in debt. COUNTER-MOVE: Double-check this in the card's summary info box. If it lists giving "40-56 days interest-free on purchases", that's time allowed to pay in full without charge. If it doesn't, watch out.
* HUSTLE FIVE: Credit cards nearly ALWAYS charge interest for cash withdrawals.
They do this even if you repay in full. Worse, it's usually at a higher rate (20 per cent plus) with withdrawal fees of about two quid on top.
COUNTER-MOVE: Simple. NEVER withdraw cash on credit cards. If you feel you've no choice, you've got money problems. Seek help at moneysavingexpert.com/debthelp.
* HUSTLE SIX: Banks hide savings interest.
Finding the interest your account pays often means ploughing through a pamphlet or link to scores of similar-named accounts. How come statements can show the savings sum but not the interest rate earned? It's confusion marketing, enabling them to drop your high rate and launch similar-named top rate new accounts so you think yours still pays well.
COUNTER-MOVE: Record the exact account name (Saver3 or Saver4, say) and when it drops, ditch to a better payer. That'll teach 'em.
* HUSTLE SEVEN: Hidden exchange rate charges when you spend abroad.
Most credit and debit cards add a hidden three per cent load to your exchange rate - meaning that if you buy something costing ?100 worth of dollars, you'll pay ?103 - but they don't break this out on statements.
COUNTER-MOVE: Get a Santander Zero credit card which doesn't add a load or charge an ATM fee. Next best is the Post Office card - yet always repay in full to avoid interest and ONLY use it when overseas.
Hellish
* HUSTLE EIGHT: Debit card penalties when spending abroad.
As well as adding a loading, Halifax, NatWest, Lloyds, Abbey and RBS DEBIT cards add fees of ?1 to ?1.50 EVERY time you use them abroad.
COUNTER-MOVE: Don't use these hellish cards abroad. Use any other card, even a credit card (repaid in full). If not, get foreign currency out.
* HUSTLE NINE: Bank Charges.
Go even one pence beyond your authorised overdraft limit and BANG you'll be walloped with up to ?35-a-time fees. I've been campaigning that these are unlawful charges for years, and the final House of Lords test-case decision on that is due in September.
COUNTER-MOVE: The best way to beat the charges is avoidance and to keep track of what's in your account, and never bust your limit.
As for reclaiming old charges, put claims in as soon as possible. Free letters at Money Saving Expert: Consumer Revenge - Credit Cards, Shopping, Bank Charges, Cheap Flights and more (http://www.moneysavingexpert.com) /bankcharges.