This piece first appeared in Saga Magazine in August 2012
The text here may not be identical to the published text  

Money News August

End of free banking, war loan worth selling, £100 fine for dental slipups,
True cost of dialling 08

The end of free banking?
The man expected to be the top banking regulator has said that he doesn’t like free current account banking and may act to end it when he takes up his job next year.

Andrew Bailey’s job used to be signing banknotes – his name will on any tenner you pick up. But from next spring he is expected to head a new financial regulator which will make sure banks are clear and competitive in their pricing. And he thinks ‘free’ banking is neither clear nor fair. In May he told a Business Forum

“the reform of retail banking in this country cannot move ahead unless we tackle the issue of free in-credit banking, and have a much better sense of what we are paying for and how we are paying.”

Of course, people who keep their accounts in credit can run a current account for nothing. Although the banks make money by lending our money out to other banks and charge those who go overdrawn heavily – making more than £8 billion in 2006. But for most of us who stay in credit all the valuable services the bank gives us do seem to be free. They keep our money safe, take in pensions and wages, pay out standing orders and direct debits, give us an almost instant online money transfer system, and let us get our cash 24 hours a day through 36,000 cash machines.

All that costs money. And Andrew Bailey may make the banks charge us a fair price for it “in the public interest…to encourage greater competition”. It will not be a popular move.

Andrew Bailey’s speech www.bankofengland.co.uk/publications/Documents/speeches/2012/speech574.pdf

War loan comes into its own
To help pay for World War One the Government invited those with money to invest in Government bonds. They were promised interest of 5% a year, though that was cut to 3.5% in 1932. Unlike most Government bonds War Loan had no date when the Government would repay the capital. And for years the 3.5% taxable interest seemed rubbish compared to the rates you could get in a savings account. But now with all interest rates very low, the guaranteed 3.5% a year forever from War Loan seems a very good deal. So much so that the value of these bonds has soared and you can now sell them for round about their face value – £100 for each £100 of War Loan. A year ago you would have been lucky to get £75 per £100. So it may be a good time to rummage round in those old papers you inherited to see if there are any 3½% War Loan certificates among them.

You can sell War Loan through Computershare but there is a minimum £12.50 charge and the price varies from day to day www.dmo.gov.uk/index.aspx?page=Gilts/FAQ

Fines for ‘free’ NHS care
Dental treatment is free to people in certain categories. They include unemployed people on one sort of jobseeker’s allowance. And if you did not know there are two sorts you are not alone! One depends on your National Insurance contributions and lasts for six months. The other is related to your income. It normally kicks in once the contributions based JSA runs out but it can start earlier if your income is low and you have dependants. Needless to say people – and dental surgeries – get them mixed up. But if you claim for free treatment on the wrong sort of JSA you can be charged for the treatment and fined £100.

A similar trap awaits those over 60 on pension credit. There are two sorts of pension credit – the guarantee credit which makes your income up to a certain level and the savings credit for those on slightly higher incomes. If you get guarantee credit then dental treatment should be free. But if you only get the savings credit and not the guarantee credit then it is not free. And there is a £100 fine and your treatment fees in full if you get it wrong.

The Department of Health says 8300 people were fined £100 last year and more than 5000 of those were fined another £50 for not paying the penalty on time.

Even ‘free’ eye tests can bring £100 fine down on you if you have too many – you are allowed just one every two years unless you have a medical need for more. In Scotland you are allowed one a year.

What premium rate calls really cost and how to avoid them.
If you want to get help from a financial firm, like a bank or building society, or from a Government department like HM Revenue & Customs or the Department for Work and Pensions you will normally be asked to ring a number beginning with 084 or 087. These numbers normally cost more to call than normal numbers which begin with 01, 02, or 03. The reason for that is because the firm you are calling will get about 2p a minute from the call you make. The cost can be particularly high from a mobile phone – anything from 12.5p to 41p a minute. But even from a landline the cost can range from 1.5p to 13p a minute. In addition there may be a small set up charge which will be added to the cost. Even 0800 numbers are not normally free on mobiles.

You can avoid these charges if you look up these high cost numbers on a website called www.saynoto0870.com. It lists alternative 01 or 02 numbers for the higher rate calls. Another tip when calling your bank or credit card provider is to look on the back of the card for a number to be used from abroad – normally beginning +44(0). Replace this with a 0 and dial the number as normal. If the firm does not allow your call as you are making it from the UK then simply dial 141 first before the 0 which will hide where you are calling from.

Finally if any firm asks you to call a number beginning 09 never dial it. You will pay up to £1.65 a minute from a landline and £2.55 from a mobile. They are usually scams.

More information:  www.ofcom.org.uk search for ‘number crunching’. And www.fairtelecoms.org.uk


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