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The Good, The Bad and the Ugly (Mar 07)

There have been plenty of changes to fees and rates across a range of personal finance products during the last few weeks and here’s our round up of the monthly news for savers, investors and borrowers alike…

The good news:

• Cash ISAs - For those of you who make full use of your annual £3,000 Cash ISA allowance, you’ll be pleased with Gordon Brown’s decision to allow you to save £3,600 per annum from 2008.
• Savings - Barclays has laid down the gauntlet with the launch of its ‘tax beater’ Cash ISA paying a table topping 6.5% AER for the first year. This includes a 1% bonus for a full 12 months and a low minimum opening balance requirement of £1.

The bad news:

• Mortgage fees - Moneyfacts’ mortgage research reveals that at least eight lenders have reduced their fixed rates by between 015% and 0.40% in the last fourteen days. However, lenders are charging inflated lending fees to pay for these low rates of interest, so the message is to weigh up the total cost of the mortgage - a fee of £1,499 on a two year fixed rate mortgage will cost you an extra £60 per month on your mortgage.
• Stamp duty - Many of us feel Gordon Brown wasted an ideal opportunity to come to the aid of the first time buyer, by failing to increase the current £125,000 threshold for stamp duty. With rising house prices, there are few opportunities for people to find a property below this price to save having to pay Gordon Brown at least £1,250 when they buy their first place.
• Credit cards - credit card providers are continuing to increase the cost of using your plastic, in an effort to recoup the lost revenue from having to cut their penalty fees. We have seen a number of lenders increase cash withdrawal fees and hike interest charges for cash transactions - Lloyds TSB has raised its cash rate to 27.9% per annum.

The ugly news:

• Let’s hope we don’t see a similar reaction when the OFT reports on current account penalty fees, but I fear that there is a real possibility that it could prove to be the catalyst that threatens the end of free banking in the UK.
• I wonder if the OFT really knew or appreciated the consequences of their default fee capping actions, as now we have the situation where many more borrowers are being hit by higher rates and fees, whilst those who abuse their credit facilities are let off more lightly.