Barclaycard 0% Interest Rate Scam

I have just been caught out by a Barclaycard 0% interest rate scam. The amount involved so far is

Interest On My Barclaycard Account

quite small. Just £2.71 on my June statement. But regardless of the small size, the interest charge is extremely annoying. I religiously pay off my credit card balances by the due date, so any interest charge is an aberration in my book.

The Barclaycard 0% Balance Transfer

On 7th May I took up a 0% balance transfer offer. In my case for £850. The balance transfer fee was 3.9%, amounting to £33.15. However, the offer appeared to represent good value as the interest on the balance was 0% until 1st February 2016 - effectively an APR of 2% over 21 months. So far so good.

The problem comes when I go to pay my May Barclaycard statement. The balance amounted to a total of £1,019.26. That is £883.15 of 0% balance transfer plus £136.11 of purchases. I decide to pay the £136.11, plus the £33.15 in balance transfer fees. In addition I paid a further £20.38 by direct debit. All payments being received by Barclaycard before the due date.

In essence, I had cleared my purchases, cleared the balance transfer fee and paid £20.38 towards the 0% interest free balance.

My June Credit Card Statement

Today, I received my June statement. To my surprise it shows an interest charge. Only £2.71. But this £2.71 relates to a charge of 1.313% against some balance of mine. For the accountants and mathematicians amongst you 1.313% monthly interest amounts to 17% annually. £2.71 divided by 1.313% interest equals £206.40. The non 0% element of the statement was only £169.26, even if I take the balance transfer fee into account. How had Barclaycard arrived at £2.71 interest? As I had more than cleared the balance of interest bearing charges before the due date I immediately contacted Barclaycard. Getting through by phone was very difficult. So I messaged them requesting from them an explanation as to why I had been charged interest. This is what I received from Barclaycard's customer services:

 In reply to your enquiry, I would like to state that the on your recent statement we applied interest charges on the purchase balance and I can confirm that if you use your Barclaycard for purchases or cash withdrawals ? you'll be charged interest up to the point you make your payment, even if you pay off those purchases at the next statement.

Avoiding Interest on a 0% Interest Free Barclaycard Balance Transfer

Apart from anger at the glibness of Barclaycard's message the penny dropped. The 0% interest free balance transfer is a scam. In essence, once you accept the 0% balance transfer, everything else on your Barclaycard will be charged interest from the transaction date. Even if you confine yourself to purchases and you clear your complete balance of new purchases each month. As you can see from my statement above, my monthly expenditure is greater than the balance transfer. So in order to gain 2% APR interest on £850 I would be paying 17% APR on £1,866.70 of purchases plus £2.71 of interest. A rough calculation gives a monthly interest charge of £24.55, even if I pay off my complete balance of new purchases and the previous month's interest. This far outweighs any benefit from having the original £850 interest free balance transfer. 

Based on Barclaycard's rules the only way to avoid interest charges on purchases, and interest charges on the previous month's interest charge, is to pay your statement on date of issue and then pay Barclaycard for each of your new purchases on the day you make them. Alternatively, you could maintain a permanent credit balance greater than your expenditure. That way you will not have an over night outstanding balance. But effectively you are using your credit card as a debit card. I have suggested this to Barclaycard and I am awaiting their views.

In conclusion. In my opinion Barclaycard's 0% interest balance is effectively a scam. It will cost you far more than you will ever save. And joins the growing list of financial products that any sensible consumer should avoid.

The Pound Euro rate Finally Hits 1.24

The UK pound finally went through the 1.24 Euro barrier today.

The £ Up to 1.241 Euros - A gain on almost 5.6% in 12 months

The latest UK employment data, that showed unemployment falling to 6.6% in May, took the £ over the 1.24 level. I predicted the increase in the £'s value last week, in response to Mario Draghi's actions to stimulate the Eurozone economy.

This makes travelling across most of Europe much cheaper than a year ago. The Euro area inflation rate is less than 1%. Meaning, in real terms, actual sterling costs for an average purchase will be almost 5% lower.
On a personal basis, this is extremely good news. I have arranged to pay for my holiday accommodation in the South of France in Euros.

Car Fleet Management - Lease or Buy?

Motor vehicles - Should you lease or buy?

For many people the choice of car finance is growing. The major car manufacturers are offering attractive low deposit and low interest rate deals. These deals are for private motorists. Private motorists generally get a choice of cash purchase, with large discount, hire purchase where they buy a car on credit, a PCP or personal contract plan, where they buy and finance the car's depreciation or a personal lease, where they effectively rent the car over a long period. But what if you are a business car user or vehicle fleet manager?

Corporate fleet buyers have traditionally chosen between buying or leasing. Buying, as it implies, is simply acquiring the full title to the asset, then disposing of it at an optimum period in the vehicles life. Leasing means acquiring use of the vehicle, whilst the title is held elsewhere. Depending on the finance and tax regime operating at the time, companies tend to switch between the two options. The finance regime includes availability of cash flow or credit, the level of interest and the way the asset (i.e. the vehicle) is treated for depreciation and taxation.

However, there are other aspects of leasing such as fleet management that may encourage corporate fleet managers to take the leasing option. Amongst the fleet management solutions provided are the following:

• Vehicle breakdown
• Vehicle maintenance and servicing
• Vehicle tracking
• Licence management
• Insurance management
• Accident management
• Tyre management
• Fuel cards
• Vehicle disposal

Motor vehicles - And who manages?

Utilising a fleet leasing company that provides a comprehensive range of vehicle management services relieves the client company of many of the trivial headaches associated with opearting a vehicle fleet. Ultimately the job of a company is to deliver satisfaction to its chosen customers. Not to take on additional and non-value-adding administrative functions. Outsourcing vehicle fleet management, along with the financing and disposal task allows companies to focus on their core business.

Ski Chalet Sell-Off Prompted by French Taxes



A UK-Owned and Managed Chalet in Morzine

 Over the weekend the Sunday Times covered the story of rising French taxes and their impact on the British holiday home market in France. The increased taxes take the form of a new 15.5% social tax on rental incomes and capital gains which is on top of the existing 20% tax on rental income and 19% tax on capital gains. In addition there is a new sales tax, equivalent to our stamp duty, levied at 6% on properties with a sale value of more than €250,000. Most UK-owned holiday homes are either gites in rural areas or ski chalets in the Alps and Pyrenees.

The article covered the one particular ski chalet owner, Alexandra Beeley, under the heading "Time to sell my chalet". Ms. Beeley had bought her chalet in 2009 for €750,000 and it is now worth €800,000. Given the chalet has increased in value Ms. Beeley would be hit by the new taxes.

All in all the article suggests that property taxes could amount to as much as 40.5% of the final selling price (19%+15.5%+6%).

The socialist government of Francois Hollande appears to have viewed the British holiday home owner as a lucrative and popular source of additional taxation. According to the newspaper the new taxes will hit hundreds of thousands of UK citizens who utilise French properties as part holiday home and part small business. Worse it seems, our own HMRC will still get in on the act. As any residual capital gains are liable to 18% UK capital gains tax. Incredibly the 15.5% social tax is not taken into account in any HMRC calculation, so in effect incurring double taxation.

Although the new taxes may bring in revenue in the short term, like Hollande's other socialist policies, it is likely to backfire in the long term. From experience I know some parts of rural France rely heavily on the inward investment of British property investors and the revenue from British holidaymakers. Discouraging British investors will see the jobs created by property conversions dry up. Many ski chalets and gites are the product of these renovation projects.

In recent years a number of smaller British owner companies have set-up specialist catered chalet businesses in France. The ski industry in France is in a precarious state. Costs are rising and the fall in value of the £ versus the € means extras such as ski-passes, ski-school and food and drink are increasingly expensive for the valuable British tourist. Business owners are not going to invest if taxes squeeze all of their potential gains. If British chalet owners follow the lead of Alexandra Beeley, there could be a major exodus of British chalet owners from the Alps and Pyrenees.

NatWest Bank Still Failing Customers

I don't bank with Natwest. However, someone who works alongside me does. This is her view of the events surrounding the problems with the Natwest banking computer system.

I have been a customer of Natwest for more than 18 years and like many other establishments I have mostly found their customer service to be average at best overall.

However, the recent debacle involving a system error that caused millions of people to be unable to access their cash effected me directly and like most other customers I am also asking myself 'where should I move my money?'. The embarrassment of having my card declined at a restaurant recently (due to no fault of my own) was overwhelming - thankfully my friend doesn't bank with them and could therefore pay the bill for me. Of course, my instant reaction was to call the bank and find out why, despite the fact I didn't meet the criteria of those effected, I was unable to pay for my meal. I was told that all accounts were in the process of being reset and as a result my account currently has a zero balance.

Luckily I am not out of pocket, with my bills already paid and no more direct debits on the horizon, but for those who did have payments bounce I feel even more angry.

Right now all we can do is hope that when they say 'It will be resolved in the morning' it really will be resolved in the morning.

Quickbooks Pro 2012 Staples Update

Staples issued a further Tweet at around 11:11. Still offering Quickbooks Pro 2012 at £99. Guess what? On clicking on theTwitter link at 11:13 I found the product was still out of stock! Do the people run their social media actually speak to their commercial department? The image below was taken from the Staples website at 11:13.

Quickbooks Pro 2012 - Out of Stock

P.S.
Possibly due to my pressure, Staples have released an extra 40 copies. These are available via phone on 0844 546 6666, whilst stocks last. I've just bought one.

Staples in Quickbooks Promotional Scam

The Staples Quickbooks Pro 2012 Promotion

Are Staples the stationery suppliers a bunch of scammers? This morning I received a promotional email from Staples timed at 6:02. The promotion offered a one-day only sale on Quickbooks Pro 2012. The offer price was £99.95.

The problem is that at 8:45am I opened the email and tried to buy the Quickbooks Pro 2012 package. The Staples website informed me that the offer at sold out. This less than 3 hours after issuing the email - and before many businesses in the UK had actually opened.

I immediately contacted Staples via email only to be told by customer services that the promotion had indeed sold out!

The out of stock had obviously not been communicated to the Staples online marketing people. The Quickbooks offer shot on the left was taken at 10:00am, whilst the promotion was still live on the Staples website. I suspect that the whole promotion has been entered into knowing that the stock was insufficient. Whether such a promotion is illegal, I'm not sure. But it does seem very odd to target a promotion at businesses that sells out before most of them are open and before they are able to action any response.

The Quickbooks promotion image can be expanded. It states in small print that the offer is available whilst stocks last. But as mentioned the image was taken at 10:00 - 1 hour and 15 minutes after I had tried to buy the product and the Staples website stated they had no more stock. Whether legal action can be taken against Staples is a matter for the advertising authorities. However, this cheap tactic just diminishes the status of Staples as a credible small business supplier.

P.S. Staples even had the cheek to issue a Tweet promoting the offer at around 9:45. This is at least one hour after the stock of Quickbooks Pro 2012 had run out. The tweet was till up, without correction, at 10:45.

Staples Tweet of the Quickbooks Pro 2012 Offer - at 9:45

P.P.S. There is now a thread about the Staples Quickbooks Pro 2012 offer on UK Business Forum. Apparently Amazon have the same Quickbooks offer but the product is in stock.

Fitness First Going Bust?

Is Fitness First effectively about to go bust? It seems the UK's leading gym operator cannot pay its bills and is to enter into a Company Voluntary Agreement or CVA. According to the Daily Telegraph at least 750 Fitness First jobs are at risk of closure as the company is attempting to reduce the rent it pays on 81 or its UK fitness clubs. The CVA is being handled by KPMG. A CVA is a highly controversial technique used to drive down the costs of companies in financial difficulty. It is clear from the figures quoted in the Telegraph article that Fitness First intends to pay no more than 28p in the pound due to the creditors involved.

I am a former member of Fitness First Ashford. I left following a dispute. I have since seen a letter that confirms my suspicion that the Ashford club is targeted for closure. The landlord of Fitness First Ashford's car park has been clamping down on parking. Time allowed for parking has recently been reduced to 2 hours. Given the obvious risks involved in membership payments not being honoured if the club was to suddenly close, perhaps members of Fitness First Ashford should consider their position.

Zoopla is a joke

When it comes to property valuations, Zoopla is a joke. I written this post because Zoopla values my house at just 58% of identical houses in the same street as mine. I own a 2,900 square feet 5-bedroom detached house standing on a 1/4 acre plot, 38 minutes by train from central London. Zoopla insist on valuing the house at £360,000 despite valuing my neighbour's identical house at £616,000.

The amateurs that have created Zoopla use an algorithm that relies entirely on prices recorded by the Land Registry. As we know this data is often inaccurate. In my particular case the Land Registry data ignores the fact that when I purchased my house in February 1997, I traded in my previous property, another 5-bedroom house. The Land Registry records the net transaction value and fails to accommodate the value of the traded-in house.

The real problem with Zoopla's under-valuation is that I suspect it is used by many out of area estate agents who job for mortgage lenders. In my particular case the under-valuation could have quite an impact on any remortage I undertake. Does anyone know how to shake the Zoopla people into recording a more accurate property value? Should I attempt to get Zoopla to see sense or just start a campaign to undermine their credibility as a serious property website?

PPI Losses Hit Lloyds Bank Bonuses

Lloyds Banking Group, the owns of Lloyds TSB and Halifax Bank of Scotland has stripped its directors of £2 million of bonuses due to the banks losses on payment protection insurance or PPI. The losses have been incurred after Lloyds posted a £3.2 billion provision in their accounts for the costs of mis-selling payment protection insurance. In the case of Lloyds boss Eric Daniels, the bonus loss is worth £580,000.

Payment protection insurance was a big money spinner for the arrangers of loans and mortgages. However, many of the policies were shown to be useless as they were sold to people with non-qualifying occupations such as the self-employed. The problem for the banks was that they had incentivised their sales staff with commission rates. The larger the loan, the higher the commission. This made mortgage payment protection insurance (MPPI) particularly attractive.

Egg Credit Card Dispute

I have fallen out with Egg. This is not unusual. I fall out with most providers of financial services from banks to insurance companies. I fall out whenever I believe that I am being treated unfairly. This time it is Egg. Egg would like to charge me £16 for a late payment fee. Egg feels that they are justified. In essence I sympathise with them. The problem is that the dispute will cost them my permanent custom. I will move my credit card needs elsewhere. Secondly, Egg is now owned by Barclaycard. So as a result of my ire I intend close both my Egg and Barclaycard accounts. I have been with Barclaycard for 35 years.

When Egg was bought by Prudential, they paid approximately £500 per account holder. To quote Compare the Meerkat, the maths is simples. My loss of custom is perhaps worth £1,000.

Economic Recovery Still Delayed

The economic recovery is still some way from demonstrating it is fully on the road to recovery. Last week's budget may have had a mix of good and bad news but data from many market categories indicates that growth is a long way off.

We are involved in a number of markets. And can track short term variations in demand. Our observations showed that Autumn 2010 started poorly when a flood of bad news from the Conservative party conference depressed business and consumer markets. This news centred on the the so-called better off having to share the pain of paying for the deficit. Essentially anybody earning £42,000 was designated as rich. Effectively, families with a single wage earner on £42,000 were being asked to pay more so that the army of public sector workers and client state benefit claimants could carry on receiving their over generous transfer payments. The budget seems to have replicated the depressive impacts on many markets.

Bads news from a whole series of markets now seems the norm. With profit warnings and senior director dismissal being a regular feature of the newsflow.

I await some good news.  

Nike Losing in the Sports Brand War?

Welsh Rugby Player Jamie Roberts Wearing Under Armour

Nike, the giant American sports brand has issued a profits warning and the shares have shed 5%. This begs a question as to whether Nike is losing its position in the sports brand war. The company blames the rise in commodity prices. In my opinion Nike may well be losing some of its allure. Their sports icons such as golfer Tiger Woods and tennis player Roger Federer are losing their global standing. Meanwhile, new, more technical brands such as Under Armour are gaining ground in the more profitable sports accessories markets. Nike has focused its sponsorship activity on key personalities, such as Woods, with the inherent risks this brings. Meanwhile Under Armour has spent its money on teams such as football club Tottenham Hotspur and the Wales rugby team.

Nike's sports brand positioning has been unchallenged over the past two decades facing down Adidas, Puma and Reebok. The new environment is more challenging and I suspect that this latest downturn in the companies financial performance may be more than a blip.

UK Families Are Highest Taxed in OECD

A new report shows that UK families with one employed parent are the most highly taxed in the OECD. A family earning £33,745 will pay 39% more tax than the average for 33 other OECD countries.

The report has provoked charities, as well as economists, into attacking the UK governments ant-family stance. In essence, Britain is punishing middle income families in order to fund a benefits system that encourages workless families to remain dependent on state handouts.

As we know, price inflation is now rising faster than incomes. In addition taxation in the form of higher VAT and national insurance is hitting family incomes even harder.

Fuel bills, fares to work, basic food stuffs, rent or mortgages, council tax and water rates have to be paid. Families have to look to make ends meet so discretionary spending has to be cut and savings have to be made. One area that is now under scrutiny is money spent on things such as family holidays and and another is children's parties. In recent years these items of expenditure are no longer considered luxuries. In each case families will be looking for value for money.

The UK government should take a look at other systems of family taxation. The gap between working families and those where everyone is dependent on the state has shrunk. In many cases families gain very little from gainful employment. This trend needs to be reversed.

High Vehicle Costs and Petrol Allowances

The HMRC allows 40p per mile for travel costs when using a car for business purposes. The rate of 40p per mile was set in 2002 when a litre of unleaded cost an average of 77.9p. Today the average cost of a litre is around £1.30, representing a rise of 68%. The rise in vehicle costs without a commensurate rise in travel allowances means the role of vehicle tracking systems becomes ever more crucial. Every additional and unnecessary mile driven adds unnecessary costs.

I use my own car for business trips. Tomorrow I am to make a business trip of around 264 miles. My mileage allowance will be £105.60. Back in 2002, at 33 miles per gallon my petrol costs would have been £28.29, leaving £77.31 to cover both the variable costs and a contribution towards the shared fixed costs of car ownersip. Tomorrow my petrol costs will be £47.22, leaving just £58.38 towards other costs. Even if all other costs had stayed the same since 2002, I am left with a 24.5% shortfall. I am probably, therefore subsidising my employer.

A quic estimate of the true costs of the trip - based on its share of my annual mileage - indicates a fairer mileage contribution would be nearer 65p per mile. I drive about 9,000 business miles per year and further 4,000 miles on private mileage. At current mileage rates and petrol costs it would appear that I am subsidising my business to the tune of £2,250 per annum. The daft thing is, if my business was to compensate me for these increased costs I would need to pay tax on them as a benefit. If the HMRC fails to raise mileage rates I foresee increase demands to bring back company vehicles.

VAT Rise - Retail Prices Up by 5 to 8%

UK VAT rose from 17.5% to 20% today. This means a whole range of goods and services will go up in price. The UK Government has introduced the tax rise in an attempt to raise £13 billion and close some of the £160 billion annual deficit it inherited from Labour.

The Daily Telegraph points out that many retailers will increase their prices by far more than the 2.1% net increase the tax rise should bring. It reports that many retailers will round up prices rather than round them down. It quotes examples of mobile phone tariffs going up by 10 and 20%. It also quotes the examples of Fitness first that has put up monthly subscriptions by 25% in some cases. I have personal experience of the Fitness First rise where a I received a letter informain me of 30%. I raised the matter with my local gym and have downgraded my membership in order to retain the old price.

Sterling Strongest Currency Tip for 2011

Barcap, the securities trading arm of Barclays Bank, has tipped the UK currency to to be the world's strongest in 2011. The pound has fallen 20% since the Banking crisis began in September 2008. Specific forecast rates of $1.82 and euro 1.28 is given for the end of 2011. Sterling closed at $1.58 today. This implies a rise of 15% against the Dollar and 7% against the Euro. Barclays is also bullish about the UK stockmarket, forecasting a rise of 18% in the FTSE.

Banks Should Be Broken Up - Mervyn King

Mervyn King, the Governer of the Bank of England, has advanced the argument that banks should be broken up. The message came in a speech made in New York. In a section of his speech that specifically referred to the relationship between investment banking and retail banking King said that the only way to guaranee the assets of depositors was to separate them from more risky assets.

Over recent years traditional high street banks have increasingly involved themselves in investment. Whilst short-term profits may be earned from speculative deals, the activity also exposes banks to risking their whole deposit base. Halifax Bank of Scotalnd and Royal Bank of Scotland were both on the verge of collapse due to their exposure to investment banking. Only the UK government's need to protect retail depositors saved the two major banks from collapse.

Payday loans for quick money – but pay back promptly!

Research by watchdog Consumer Focus says that 1.2 million people are taking payday loans every year collectively borrowing more that £1million. That is almost four times the number of people from four years ago. As the number of people struggling to make ends meet on a monthly basis is growing, payday loans are increasingly a short term solution for people finding it hard to secure finance. And surprisingly, this kind of borrowing may be a better solution than paying your bank or a credit card company for expensive unauthorised overdrafts. As long as you comply with one rule – pay back promptly at the next payday!

Loans on offer are typically from £50 - £1,000 depending on provider. They are available online, quick to apply for and you could have the money in your account within an hour. Charges for these types of loans range on average from £13 to £18 interest for every £100 borrowed. However, if the loans are rolled over, the debts will increase sharply as interest charges rise.

The most unscrupulous companies are charging interest rates of more than 2,500% a year. As a result, the watchdog is urging the industry to bring in more protection for vulnerable borrowers. Outlawing payday loans could leave some borrowers vulnerable to illegal loan sharks. Instead sensible safeguards would stop borrowers becoming dependent on this kind of high cost credit and prevent even more stringent controls being needed in the future.

Sarah Brooks, head of financial services at Consumer Focus, commented: “Payday loans are a valid form of credit and it’s much better for people to take one out rather than go to a loan shark. But we do think there needs to be a limit on the number of loans people take out and how many loans they are able to roll over,” she explained. Maybe banks could also develop a valuable service and benefits all around by providing an alternative short-term credit to suit the needs of cash-strapped consumers?

Click the post title to listen to a BBC radio interview of Sarah Brooks on the subject of payday loans.

Has Osborne Cut Enough from Public Spending?

I have just read Jeff Randall's contribution to tomorrow's Daily Telegraph. After reading the article, that points out that Osborne's cuts in spending will only get public expenditure back to 2006-7 levels. And that is not until 2014.

What is shocking about the whole issue is the belief by much of the population - especially those outside of the south and midlands of England - that they are somehow entitled to take money whether they deserve it or not. On last night's TV I watched a woman from Swansea moan about the fact she had lost the child benefit of a daughter who had left school. Why she posited should she not carry on getting this benefit. Her rationale, and that of the TV narrator, appeared to be that she lived in Wales. And that because of the local economy, they were somehow entitled to money, whether earned it or not.

Even Jeremy Paxman joined in. Constantly complaining to Treasury Secretary Danny Alexander about the poorest 10% of the population, almost all of whom live entirely on benefit and have therefore enjoyed inflation-linked rises in tax free income over the past three years, whilst almost everyone in employment has seen their real incomes diminish in value.

Yes it's time to cut. But I do not believe Osborne has gone far enough in cutting the waste that is central to much of the public sector.