Your money questions answered

We recently asked you to get in touch with your everyday banking questions. We had a great response with queries covering everything from credit cards and savings to holiday money.

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Here’s a selection of the questions you sent in with answers from our resident banking expert, Kevin Mountford.

Robert asks:
A company called Re-Give are offering 5% fixed for a one-year bond. This organisation claims to be mutual. Should I be aware of a scam? I have spoken to them and they seem to be respectable.

Kevin Mountford:
The key thing to note about Re-Give is that, although it is registered with the FSA, it is not covered by the Financial Services Compensation Scheme, so you have no protection in the event of the company going bust. Therefore, think carefully before you invest any money with them because you would get nothing back if the company did go under.

Jennifer asks:
On July 3 I applied online for a Nationwide credit card. To date I’ve not heard anything from them either by post or on line. I subscribe to Experian and would have thought I should have received an alert from them that my credit rating was being checked. I do not have any other account with Nationwide and wonder if this could be the reason. If so, why have they not conveyed this information to me? I look forward to your comments.

Kevin Mountford:
Generally when you apply for a credit card online, you will receive an acknowledgement of your application immediately, and in some cases you may receive approval at that point as well. If you haven’t received any acknowledgement then it is possible that your application may not have gone through properly. However, the account opening process can take up to 10 working days, and any credit search on your file may not appear immediately. I suggest you call Nationwide to find out if they have your application.


Liz asks:
Can you please advise me regarding my bank account with Barclays? I am currently paying £25 a month for a Premier Account but I now don't think that it is worth paying this for the benefits it gives. I am concerned that the bank will try to dissuade me from changing this. I am a 70-year-old widow and would greatly appreciate your thoughts about this. Thank you.

Kevin Mountford:
I think you have a Barclays Premier Life Current Account, costing £25 a month. This account is no longer available to new customers so I would suggest you look for an alternative as £25 per month is a lot to pay for a current account, especially if you don't think that the benefits on offer are worthwhile.

I suggest that you look for an alternative account, and perhaps one that doesn't charge a monthly fee, especially if you have no need for benefits such as travel insurance, car breakdown cover or mobile phone insurance. If you do use one of the benefits on offer, it may be cheaper to buy a standalone policy which covers your requirements. You may also already have other insurances in place which duplicate the benefits offered through this account, so you could be paying twice for similar products.

Barclays should switch you to a more suitable account for your circumstances if you request it. If they refuse or make the process harder than it should be, you are within your rights to complain. If you are intimidated by Barclays' staff, may I suggest you take a friend or relative with you to help you through the process?  Alternatively, you can open an account with another bank and use their dedicated switching service so all your regular payments will be moved to the new provider.

Susan asks:
My 19-year-old granddaughter works full time and would like a credit card with a limit of £750 to £1,000. She banks with Nationwide and to date they have refused. What do you recommend?

Kevin Mountford:
One of the reasons why your granddaughter may not have qualified for a credit card with Nationwide could be because she doesn’t have much of a credit history. Banks and building societies have tightened up their eligibility criteria over the past few years and one of the things they look for is evidence of how people have managed credit in the past. Therefore, even though your granddaughter works full time, at 19 she probably hasn’t had much access to credit before and won’t have had the opportunity to demonstrate that she can manage credit responsibly (or not).

There could also be other factors affecting her credit rating. Here is a link to an article which looks at steps you can take to improve your credit score.

One area where your granddaughter needs to be careful is applying for other credit cards that she won’t actually qualify for. This is because numerous credit applications within a short period of time could harm her credit score.

There are a number of cards that are specifically designed for those who have never had a credit card before, or who are trying to rebuild their credit score because they’ve had problems in the past.

The rates of interest on these cards are higher than average, so it is important that your granddaughter tries to pay her balance off in full each month. She should also be aware that she may be offered a lower credit limit than the £750-£1,000 she is hoping for. With a credit builder card you are usually offered a low limit to start with (typically between £250 and £500), then you can ask for the limit to be increased once the provider has seen that you can manage the credit facility responsibly.

MoneySupermarket has a tool called Smart Search that allows customers to find a card that is the most suitable for their circumstances.

Your granddaughter will need to provide some information and our tool will show the cards that she is most likely to be accepted for.

Given that she has already been turned down for one card, this could be a good thing to try next. Smart Search can be found here.

John asks:
I live in Spain and do not have residence in the UK although I can use my daughter’s UK address. I have banked with Barclays in the UK for over fifty years. My question is can I open another account with a UK bank without having a UK address of my own?

Kevin Mountford:

Generally to open a bank account in the UK, you need to be a UK resident and provide documentary evidence to substantiate your application, so using your daughter’s address probably won't work. You may be able to open a second account with Barclays as an existing customer as the requirement for proving who you are is less stringent. However, depending on what you will use the account for, you may want to speak to a bank such as Lloyds TSB. It has an expatriate service for people living in Spain, so might be able to help you.

Diane asks:
I have a Santander ZERO credit card. Can I use this in USA to pay for things or draw out cash? Also is it better to get our dollars here in the UK or wait until we get there?

Kevin Mountford:
The Santander Zero credit card would be suitable for purchases abroad as it has no charges, but you shouldn’t use it for ATM withdrawals.

You won’t be charged an ATM withdrawal fee but you will be charged interest from the day the withdrawal is made so even if you clear your balance in full each month, you won’t be able to avoid interest. What’s more, the interest rate charged for cash withdrawals is higher than that on purchases.

A good alternative to a credit or debit card when you’re going abroad is a prepaid card. It works a bit like a pay-as-you-go credit card. You load money onto the card (this can usually be done online) and can then use it until it is all spent, or you top it up again. 

When you load a dollar prepaid card it is exchanged immediately so you will know exactly how much money you have to spend while away. If you opt for a card that can be used globally, your sterling won’t be exchanged until the time you use the card so you will get the exchange rate on that day.

Prepaid cards have the added advantage of only allowing you to spend what is on the card. However, don’t use them for check-in at hotels as the pre-approval process will prevent you from accessing some of the funds on the card.

Our advice is to carry a mixture of cash, a prepaid card and credit cards to give you different options while away. Pre-ordering cash online and collecting at the airport or having it delivered to your home is cheaper than leaving it to the last minute as you will get a better rate of exchange.

I hope that helps and you have a good trip to the US!

John asks:
In view of the LIBOR scandal and the possibility of massive legal claims if Barclays goes bust as a result, would my savings still be covered by the £85,000 per person guarantee?

Kevin Mountford:
Barclays has been in the headlines a lot recently. However, despite the fall in its share price and the fact some people have lost trust in the bank it is highly unlikely that it will go bust. That said, if it did, up to £85,000 of your savings (£170,000 if it is in joint names) will be totally protected under the terms of the Financial Services Compensation Scheme.

Thank you for all of your questions. Look out for our next readers’ questions session, when you’ll have your chance to ask about motor insurance – always a lively area of debate! Keep an eye out in the next couple of weeks …

Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct. We’re free, independent and compare all UK loans and credit cards, as well as offering exclusive deals you can’t get anywhere else. Contact MoneySupermarket.com at Moneysupermarket House, St David’s Park, Ewloe, Flintshire, CH5 3UZ. © Moneysupermarket.com Ltd 2011.

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