Money Insider: Annual credit card statements on the way
Saturday 07 April 2012
As well as receiving their usual monthly account statement, the UK's 31 million credit card holders willsoon start to see a new type of credit card statement dropping through their letterbox for the first time.
The new annual statement, which has been developed by The UK Cards Association in partnership with the Department for Business, Innovation and Skills, is aimed to help customers see at a glance how they have used their credit card over the previous 12 months, including a full breakdown of how much they've spent, how much they've withdrawn in cash and any fees and costs incurred.
Some credit card companies have already started sending out the new statements – most card customers will receive their first annual statement on the anniversary of when their account was opened.
Consumer groups have been calling for this greater level of transparency and the provision of information to enable customers to shop around and choose a card that works for them at the lowest cost, and now they've finally got what they asked for.
I think this is a positive move as it gives people a clear view of how they've each managed their plastic over the past year. By clearly setting out costs and charges this industry initiative will help customers get a better deal either by being smarter about how they use their current card, or by changing to another account that's more suitable for their needs.
The statement shows exactly how the card has been used during the year – broken down by point-of-sale spending, cash advances, balance transfers, and the applicable interest fees and charges for each of these types of transaction.
Information will also be provided on charges for foreign transactions, one of the areas that may come as a bit of an eye-opener for those who frequently use their card overseas.
With some cards including Post Office, Saga, Metro Bank and Halifax Clarity not charging fees for foreign purchase transactions, customers may be tempted to switch plastic or perhaps apply for a separate card purely for using abroad.
Hopefully when people see in black and white how much they're paying out each year for the privilege of using their plastic, they'll look to reduce the amount they pay by changing their spending and/or repayment habits as well as seeking out a cheaper deal.
If you've got a decent credit record, there are still plenty of cards offering 0 per cent promotional rates on purchases or balance transfers, so it makes perfect financial sense to switch and take advantage of these deals and keep your costs in check.
When your annual card statement arrives, take a few minutes to look through the numbers, seeing how much interest you've paid over the course of the last year, as opposed to the usual monthly figure, it may be compelling enough to make you consider ditching your plastic for a more cost effective alternative.
Large mortgage fees don't always mean a bad deal
For years now mortgage lenders have priced their products by using a combination of an interest rate and a product fee. Whilst this is a pain when it comes to finding the cheapest home loan for your circumstances, don't automatically dismiss products with a larger fee, as they are not always a bad deal.
For example, Coventry Building Society launched a new range of buy-to-let mortgages, with one priced at 3.75 per cent and a fee of £2,249 and another at 4.25 per cent and a much lower £999 fee. Both these mortgage rates are fixed for two years and available for loans of up to 65 per cent value of the property. For anyone borrowing £120,000 or less, the 4.25 per cent rate and £999 fee works out to be the cheapest deal over two years, but the more you borrow over this amount the better value the lower rate and higher fee option becomes.
If you're borrowing £200,000 the high fee mortgage works out £750 cheaper and at £300,000 you're better off to the tune of £1,750 over the term of the two-year fixed rate.
The array of mortgage price and fee variations doesn't make life easy, but if you make use of the services of an independent mortgage broker, they will be able to crunch the numbers for you.
Andrew Hagger – Moneynet.co.uk
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