Money Insider: Savings promises that are not just marketing fluff
Saturday 03 December 2011
Wherever you look in the financial services industry you'll find examples of catchy straplines, mission statements as well as customer charters and promises.
The problem with such commitments is that they are often little more than marketing fluff, not measureable and pretty soon forgotten about.
Once the big TV launch has run its course and the posters get dusty and dog-eared it seems that some providers pay little more than lip service to their one time "essential messages".
Back in November 2010 when the Nationwide Building Society launched its seven Savings Promises, there was a generally positive reaction but no real indication of how much difference it would make to the man on the street.
Twelve months on, there is plenty of evidence from the UK's biggest building society that the promises are working – both for Nationwide's reputation and the customer's savings balances.
The standout statistic from the seven promises is that £1.6m in additional interest has been paid to customers transferring an ISA from a rival bank or building society.
This is because the interest is paid from the time the signed Nationwide BS ISA application is received, rather than waiting days and often weeks for the balance to be transferred from the previous account. This highlights just how much UK savers are losing at the hands of other ISA providers. If the Nationwide portion of the ISA transfer market has produced a saving of this magnitude, the overall loss of interest due to delays caused by slow and outdated processes is likely to be in excess of £10m per year.
While Halifax adopts a similar approach under its own ISA promise, it's high time all banks and building societies were forced to fall in line and make this practice the norm, not the exception.
The Nationwide promises should be the minimum standards that all providers aspire to as it shows a genuine and measureable commitment to customers rather than the all-too- common hollow and meaningless marketing spin.
Four steps to keep your Christmas costs in check
With family budgets stretched to the limit, many people will reach for their plastic to help cope with the cost of Christmas.
While credit cards and overdrafts can be a great way to manage your money when you're faced with extra expense, if you've got little prospect of paying off your Christmas spending come January, it'll be a miserable way to kick off 2012.
Draw up a budget
Before heading to the shops on your present-buying spree, take a few minutes and write down what you can realistically afford.
Make a list of how much you're going to spend and stick to it. It's far too easy to get carried away if you don't keep a running total.
A little thought and planning now may sound a bit scrooge-like, but at least you won't be faced with a post- Christmas financial headache.
Avoid expensive card charges
It's tempting to put everything on your plastic, but if you're only able to make minimum payments come the new year, you'll regret it when faced with interest charges that you can ill afford.
For example, if you run up £1,000 on a store card charging 29.9 per cent APR and only pay the minimum payment, over the next 12 months, you'll pay £160 in interest. If that extra cost was added to the original ticket prices in the shops I'm sure you'd have thought twice about making those purchases.
Watch your bank balance
Your debit card can take a pounding in the run up to Christmas, so it's vital to keep tabs on your spending and your account balance.
If you go into unauthorised overdraft, the charges can soon pile up, for example if you're more than £25 over your limit with Lloyds TSB you'll be charged fees of £10 per day (max £80 per month). The safest option is to give your bank a quick call now and ask for a temporary limit increase to see you through the festive period.
Plan now for next Christmas
It's too late to do anything about this year, but consider opening a separate savings account and start putting some money aside for Christmas 2012.
You'll have a good idea what your total outlay is for presents, food and extra nights out, just divide this amount by 12 and set up a monthly standing order to come out of your bank account the day after you get paid.
It may sound a bit regimented, but follow it through, and this time next year you won't need to rely on expensive credit and can sit back and enjoy Christmas without fretting about the January credit card statement.
Andrew Hagger – Moneynet.co.uk
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
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