Forget that lime-green coat, bag a banking bargain instead

The new year is flush with deals on credit cards and mortgages. David Prosser checks out some sales offers
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Have you checked out the new year sales yet? Not the meagre savings on offer from High Street retailers, but the far more valuable deals from banks and building societies.

HSBC came up with the idea of holding a financial version of the new year sales in 2005. Having successfully repeated the initiative last year, it launched the Green Sale on Tuesday, offering cheap deals on mortgages and credit cards, plus some improved savings rates. The bank is also making donations to environmental charities for each new account opened.

Many of HSBC's rivals have also decided to try new year offers. Some of the deals are specifically marketed as sales, while others are being pitched as special offers, but they amount to the same thing.

At HSBC, the highlight is the bank's five-year fixed-rate mortgage, available at a bargain price of 5.17 per cent with the normal £499 booking fee waived.

Barclays is offering an annual interest rate of 12.5 per cent to current account customers who open a Regular Saver account before 28 February, a deal that tops the best buy tables by some way. The bank's mortgage arm, Woolwich, has also unveiled a range of home loans.

Lloyds TSB also has a special offer. Its new fixed-rate mortgage costs just 1.99 per cent in the first 12 months and the rate then increases to 5.99 per cent a year until 2012.

It's not just the biggest banks that have launched these deals. Leeds Building Society, for example, this week announced a "New Year Sale" offering £1,000 off the fees it normally charges for arranging its mortgages.

The question for customers is whether it's worth shopping in the sales. After all, it's one thing bagging a bargain in a clothes retailers but another thing making a decision about hundreds of thousands of pounds because a mortgage, say, is on offer at a special price.

Analysts point out that the banks aren't being quite as generous as first it might appear. Stuart Glendinning, managing director of MoneySupermarket, the price comparison service, says the larger banks often find January and February very painful. People make sorting out their finances a New Year resolution, he says, particularly once Christmas and January sales bills begin arriving. January and February are the two months in which people are most likely to switch savings, banking and mortgage provider and it's the biggest banks that lose out.

"These sales are designed to help banks keep their customers," Glendinning says. "You'll notice they're keen to get you into branches to talk about the products on offer, rather than having you shop around on the internet."

Melanie Bien, associate director of mortgage adviser Savills Private Finance, warns that many of the deals are not as valuable as they seem - at the very least, there are better alternatives available.

HSBC's fixed rate, she says, is not the cheapest five-year deal - Portman Building Society offers 4.99 per cent, for example. As for Lloyds, Bien points out that the overall cost for five years works out at an average of 5.19 per cent a year, more expensive than the HSBC offer. Plus there's a £999 fee to pay. Even Leeds Building Society's offer is not so good she says - it only applies on one mortgage and there is lots of smallprint.

"January is an excellent time of year to take a look at your mortgage and see whether you can find a better deal," Bien says. "But mortgage 'sales' often cover up a less than attractive deal and you may eventually regret buying the product just as much as that garish lime-green coat."

Nick Gardner, of mortgage adviser Chase de Vere, agrees, though he points out that HSBC's decision to waive its arrangement fee will make its five-year fixed deal very good value for borrowers who don't have very large mortgages - say £200,000 or more. HSBC's credit card offer is no interest to pay until April 2008 on balance transfers. Plus there's six months at 0 per cent on new purchases.

Know your sale rights

* If you've bought goods in retailers' new year sales, it's important you know your rights if you subsequently decide an impulse buy was a mistake.

* Even if you have a receipt, a retailer is under no obligation to refund your cash. Plus, at many retailers, the cash refund you'll get will be the current price of the good, not what you paid for it.

* It's still worth arguing your case, however. And many retailers are much more prepared to exchange items, or offer credit notes. Also, your position is much stronger if there's something wrong with an item. If you've bought goods that turn out to be damaged or faulty, you are entitled to a replacement, repair or refund, even if it's a sale item.

* You may also have more luck with sale goods bought online, which are usually governed by the "Distance Selling" regulations. These allow you to return goods within seven days of purchase for any reason you like and get a full refund, though you may have to cover the cost of postage.

* Finally, act quickly if you want to exchange unwanted Christmas presents. Most retailers will give refunds on such gifts - though you'll need a receipt - but there are usually strict deadlines within which you must do so. Alternatively, retailers may be prepared to exchange gifts - particularly handy if you don't want to offend friends or family by asking for the receipt.

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