I'm not sure if it’s just my taste in adverts, but there is something about that Halifax advert (Ice Ice Baby) that seems to have a negative effect on me. Is it the poor, contrived beginning, or the fact it really tails off in the middle or that the end is just best not talked about?
Perhaps. Or maybe it’s the fact that it’s a front to another big advertiser (Lloyds banking group) which owns it. Could be? It is only when I then look at the fact that I, along with other tax payers have paid for 43% of the group that is distorting my mind with traumatising advertisements that I really get on the trail.
And that’s where it lands right at the front of Ice Ice Baby's door in the form of one of the worst offenders of opaque high interest rates. Don’t get me wrong, the actress is a good looking girl, she is appealing, with a lovely smile and seems content with her life, but that’s probably because she isn't lumbered with a credit card from Halifax. As for the little gnomes with the big noses, I am unsure who they are being aimed at.
Anyhow, Vince Cable is right on their tail!
The BBC programme Panorama has uncovered a range of appalling interest rates being paid by unsuspecting customers.
It appears some banks are being charged interest rates of up to 3,650%. Read that again.
As is the case with most financial transactions, it is not the financially savvy that need care and attention, it is those who are most vulnerable.
Through this column in the last few weeks I have seen people whose entire disposable income per month pays the minimum payment to their credit card bill. They will never move forward. Every year they have a 25.9% interest credit added to their bill which is simply unacceptable. The only future they have is debt and they have been trapped there by design. Banks have been guilty of lending as much as they can to those who can JUST afford it.
As long as the customer can pay their way they are perfect, as the returns with base rate at 0.5% are astronomical for them when they are charging 25.9%.
But it is also the lack or transparency that concerns me most. SG Hambros, showed in the Panorama programme, there was a huge gap between what banks were saying they were charging and what they actually were charging.
Rates of 19% were being advertised for overdrafts but the actual rates charged were closer to 32%, and if it's an unauthorised overdraft, it catapults into an amazing 167%.
It often comes down to that big thick thing which arrives on your doorstep from the bank explaining another new charging structure. It's as appealing to read as it is to eat, so most people use it for kindling. Fair enough. I am one of those.
But, like many, we do it because we think it will never happen to us.
Take Halifax, remember the happy pretty girl. Ice Ice. Ice cool indeed. A Â£10 overdraft incurred a Â£1 per day flat fee. Bargain. I make that 3650% per year interest. It's no wonder they can afford advertisement campaigns galore.
In their defence, a Halifax spokeswoman has said that customers want a clear charging structure and that Â£1 a day represents a 'simple set of daily fees'. Good call, in much the same way as a simple solution to lowering your debt might be to pop into your bank, threaten to hit your manager with a stick of rhubarb and tell them you don’t owe them anything.
RBS in the meantime (owned by tax payers) admit that more than 100 of their staff had bonuses last year in excess of Â£1m.
Interestingly banks have set aside Â£5,000,000,000 this year for a bonus pool and its coming straight out of our pockets.
Ice cool Â£5bn baby.
If you have a query regarding managing your debt call Peter on 0845 230 9876, e-mail email@example.com
Peter McGahan is an Independent Financial Adviser and the Managing Director of Worldwide Financial Planning Ltd who are authorised and regulated by the Financial Services Authority. 'The FSA does not regulate Credit Cards, Will Writing and some forms of mortgage and Inheritance Tax Planning.'
Information given is for general guidance only, and specific advice should be taken before acting on any suggestions made.
The above represents the personal opinions of Peter McGahan.
All information is based on our understanding of current tax practices, which are subject to change.
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