Money Talk: Don't grab at the first handout

This is a windfall year for millions of savers, borrowers and insurance policyholders, with five building societies already planning to dole out hundreds of pounds of free shares or cash. Growing numbers of insurers are following suit and some of the handouts will be in the form of bonuses on policies.

Last week saw a new bonanza and a potential improvement to an existing one.

The new handout, of at least pounds 250 cash, is on offer to tens of thousands of doctors and dentists holding Medical Sickness Society insurance policies - if they approve a takeover by Wesleyan Assurance.

The potential improvement is for a million-plus policyholders of Scottish Amicable. ScotAm had already offered its policyholders special bonuses worth pounds 75 a head and the promise of more goodies to come. Last week Abbey National pitched in with an offer of pounds 400 a head in shares or cash in its bid to take over the insurer.

Whether or not the Abbey gets ScotAm (and, for now, policyholders need do nothing), the bid raises a general point about handouts: don't assume you should grab the first windfall offered. There may be better alternatives, which can even include no windfall at all. However confusing they may seem, these alternative offers are generally good things and should mean more money.

Charity shops are good homes for last year's wardrobe but their candles may not be as wise a way of supporting a worthy cause as you thought (see story on page 22). If you want a more efficient way of giving to the needy, there are several financial wheezes worth considering.

Charity credit cards typically earn the charity pounds 5 when you take one out and 20p for every pounds 100 you spend on the card. And none of this has to cost you a penny. Many have no annual fee and the charity still gets the money from the card issuer even if you pay off your bill every month. Contact your chosen charity to see if it has a card: Bank of Scotland and the Co-op are two big issuers.

With payroll giving, also called Give As You Earn, money comes directly out of your salary at source. The charity gets the amount you choose plus the tax you would otherwise have paid. Ask your employer if it offers a scheme.

Alternatively, you can set up a covenant from your (after-tax) income to pay a set amount of money a year for, normally, four or more years. The charity can reclaim basic rate tax on the money you give, while you can get back the difference between basic and higher-rate tax - currently 16 per cent. The same tax rules apply to Gift Aid, which is for one-off gifts of at least pounds 250.