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Family Finance: Questions of cash.


YOU were spot on in predicting the Bank of England's cut in interest rates, so you can imagine how we felt when we found that although the base rate reduction was 0.25% cent, my husband and I will only see a 0.10 % fall in the interest charged on our Nationwide mortgage. Why the difference?

Mrs D.M., Wirral

A CUT as small as the 0.10% reduction in Nationwide's standard variable rate is very disappointing. I do not know the size of your mortgage, but if it is pounds 100,000, for example, your monthly repayments will fall by about pounds 6.

Why has Nationwide not passed on the full cut? The obvious answer is that building societies live on the margin between the interest they pay to savers and the interest they charge borrowers. The wider the gap, the bigger their profits.

On the brighter side, despite the measly cut, you are still paying about half a per cent less than if you were with some other major lenders including Abbey and Halifax.

However, the real solution is to switch to a tracker mortgage

I HAVE a Standard Life 33-year endowment policy which matures in February 2006. As Standard Life plans to demutualise at some point next year, will I qualify for any payout, or what do I have to do to safeguard this?

I.H., Menai Bridge FULL details of Standard Life's plans will not be available for some months yet. However, based on previous switches from member-owned status, such as moves by Alliance & Leicester and Bradford & Bingley, only people who were members when demutualisation was announced, and who are still members on a qualifying date next year, will receive a windfall.

As things stand, Standard Life plans to put its demutualisation scheme to a vote of shareholders next April. If they vote yes, the company will issue free shares to policyholders and float on the stock market, probably in June or July. By then though, your policy will have matured and paid out and you will no longer be a member. Unless the company surprises everyone by rewarding past policyholders, which is unlikely, I am afraid you will simply miss out. MY credit card company is withdrawing its cashback scheme, so can you say which card issuers still offer cashback?

K.B., Hunts Cross MORGAN STANLEY (0800 028 0838) offers 2% cashback if you spend pounds 2,000 a year on your card, with a further 1% cashback on anything above this.

Yorkshire Building Society (0800 028 0183) pays 1% cashback on annual spending to pounds 2,000, plus 0.50% on anything more. Several card issuers, including Alliance & Leicester, Capital One and Smile, all offer 0.50% cashback. WE have a with profits bond with Royal & Sun Alliance, though the bond has now been taken over by Resolution Life. This year's profit has not been good, but we cannot withdraw without penalty until February 2006. Would it be best to stay or move?

Mrs I.S., Wrexham RESOLUTION Life is one of the recent crop of companies which has bought up the poorly performing with profits businesses of a number of life companies.

These new businesses are basically managers, taking a percentage to keep with profits bonds and policies ticking over until they mature. They are not offering new policies so have no interest in trying to perform well to attract customers.

Quit as soon as you can do so without penalties. I HAVE been told that I am likely to be made redundant when my employer finishes work on a current contract . I will be entitled to about pounds 25,000 in redundancy money. How much tax will I pay on this, and if I can time my redundancy, is there any point in the tax year when it would be better or worse?

K.L., Llandudno REDUNDANCY payments up to pounds 30,000 are exempt from income tax, so you won't pay a penny.

If your redundancy money happens to go above pounds 30,000, any surplus is taxed at your normal income tax rate - 22% for most people
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Title Annotation:Features
Publication:Daily Post (Liverpool, England)
Date:Aug 22, 2005
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