Money Guide Ireland

Open an Tesco Credit Card account before the 24th of September 2007 and we you will get a €40 Tesco Gift Card.
Also – Tesco are offering 0% APR on balance transfers for the first 6 months, and a low standard rate of 14.9% APR for purchases.
Also – you get Clubcard points on ALL purchases – made anywhere.
Do your Online Shopping at Tesco too…

Ulster Bank have an introductory offer for new credit card customers
You get 0% APR on balance transfers & purchases for 9 months from the date that the account isopened
After that the Standard APR is 18.3% for purchases
No annual fee.
This matches the offer from First Active.

Inflation grew at an annual rate of 4.9% in June, down from 5% in May, according to new figures from the Central Statistics Office.

However, when the cost of mortgage repayments are excluded, the harmonised index of consumer prices, the common measure of inflation across Europe, shows prices are running ahead by 2.8%. This is 1% higher than the eurozone average.

June’s inflation figures show that the cost of mortgage interest has risen by 46% since June 2006, while there was also a notable increase in the gas and electricity prices.

The CSO report shows electricity prices are up 12.6% on last year and gas prices have increased by 20.5%.
Doctors’ fees have increased 4.9% since June 2006; dentist services are 3.3% higher and hospital fees are 4.4% ahead.
Health insurance costs have increased by 9.6%.

Transport costs, excluding fuel, are also substantially higher than a year ago. Air fares, perhaps reflecting extra charges for baggage and online check-in, are 2.7% more expensive, rail fares are up 6.7% and bus fares are 2.9% higher. Taxi fares are 12.4% higher.

Hotel accommodation price have risen by 3.6% in the past 12 months, eating in restaurants is 4.4% more expensive and drinking beer and wine in a licensed premises has risen by 4.1% and 4% respectively.

Food prices have risen by 2.5% since last year, though there were some categories of declining prices, including lamb, bacon, cheese and butter.

You can get financial advice from advisors who work in financial services firms like banks and insurance companies, who generally advise on and sell their own products; and intermediaries, such as investment or mortgage brokers, who advise on and sell products from a number of financial services firms.

All financial advisors must be authorised by the Financial Regulator in Ireland . They have to meet certain standards and must have the skills and knowledge necessary to provide advice. The financial regulator monitors advisors to make sure they continue to meet these standards and that they act in your best interests when giving you financial advice.
The number of financial services firms an advisor deals with affects the level of independence and choice your advisor can offer you for the type of product you want. The more firms an advisor deals with, the more they can shop around and find the most suitable product for you.An advisor may be authorised to offer you advice on products from: one financial services firm (a tied agent); OR a number of financial services firms (a multi-agency intermediary); OR all financial services firms in the market (an authorised advisor).For example, banks and building societies are often tied agents when giving advice on life assurance, pensions and investment products. They usually What is authorised status?The authorised status of a financial advisor tells you the type and range of financial advice they are allowedto offer and whether they deal with one or more financial services firms. Call the financial regulator on 1890 200 469 for information on the authorised status of a financial advisor or to get a list of authorised financial advisors in your area..

Income Protection and Critical Illness Cover

How long would your money last if you were unable to work because of sickness? The sobering fact is that the average family has enough savings to see them through just 18 days,
With interest rates rising, household finances are becoming stretched and many families would struggle if they lost their main income.

In a recent survey for Bank of Ireland – When asked how they would cope financially if either one became seriously ill and could not return to work 36% of parents did not know how they would cope. Nearly two-thirds of parents with children under 18 years, said they would cash in any savings & investments if this happened, while just 3% said they would get a loan or borrow money from friends and family. However with the average SSIA savings lump sum at just eur14,000 the family savings may not be enough to support a family during these difficult years.

There is always the Social Welfare system to fall back on – that is why we pay PRSI. Nobody would be destitute – but income could be significantly lower. A typical family with two adults and 2 children would qualify for € 18,360 – tax free – plus medical cards – not insignificant but would it be enough to live on?

Another option would be to move to a smaller house – generating capital from any equity and reducing mortgage payments. But moving home could have a significant impact for any family with children. For example the children may have to move schools and leave their friends, while parents may lose the support of family and friends that lived locally.
The option of the healthy parent doing two jobs is also not ideal, as they will want to spend some time with their ill partner and children, and perform some of the necessary household duties.

There are a number of insurance products designed to help in such circumstances. The most popular is critical illness insurance, which pays a lump sum if the policyholder is diagnosed with one of a number of serious illnesses. In theory, this should pay off any outstanding mortgage if the breadwinner is forced to give up work because of cancer or a heart attack.

Sample Cost – for Life Assurance & Critical illness cover eur 49.85 per month
(Based on eur100,000 dual life cover and eur50,000 dual Critical illness insurance for a couple both aged 30, both non-smoking, over a term of 25 years, with Bank of Ireland Life)

Another option is income protection insurance – it can provide more comprehensive cover than ctitical illness cover. Crucially, it provides a regular income, rather than just a one-off lump payment and will pay out for a far wider range of illnesses.

The most common reasons for people to be signed off sick are stress, depression – and back pain. Neither of these would trigger a pay-out from a critical illness policy but would be covered by an income protection plan.

Income protection insurance also ensures that policyholders receive a regular monthly income for as long as they are signed off sick, for serious conditions this payment will continue until they reach retirement age.
In contrast, most Accident and Sickness plans only pay out for a maximum of two years and some for only 12 months.
Anyone taking out an income protection policy insures a proportion of their income – typically the maximum allowed is 50 per cent of your current salary. However this benefit is paid tax-free, so in net terms the amount of benefit paid is roughly equivalent to 75 per cent of a person’s take home pay.

Policyholders can also claim more than once on an income protection policy. For example, if you are off for months with a back complaint, the policy will pay out. Provided you keep paying the premiums when you go back to work, you will still be covered and you can claim for the same condition again.

The cost of an income protection policy depends on a variety of factors, including a person’s age, occupation, salary and health.Anyone considering an income protection policy needs to ensure they have “own occupation” cover. This ensures that the policy pays out if you are unable to do your own job. Some cheaper policies offer “any occupation” cover which means they will only pay out if you are too ill to undertake any type of paid work.

It is also important to look at the deferral period. Standard income protection policies will pay out after the policyholder has been off work for three months: this is because most employment contracts will provide sick pay during this period. But if you are self-employed and don’t have sufficient savings to fall back on, you should take out a policy that has no deferral period. This will of course be more expensive than a standard policy.If you are lucky enough to have a longer period covered by sick pay – for example a civil service job – you can reduce your premiums by going for a policy with an extended deferral period. Some policies will also deduct any state benefits received from the payout.

Sample cost – Income Protection
As an example, the following is a quote for a non smoking male aged 35 next birthday, a 30 year term, based on a 13 week deferred period claiming a benefit of €2,200 per month.

He will pay *€38.59 after tax relief at 41 % per month for an income of €2,200 per month!

*Tax has been deducted on the above premium at the higher rate of tax. Tax relief must be arranged by claimant directly.

When looking to protect your family’s finances it is important to weigh up the pros and cons of the various policies available. Critical Illness cover or Income protection won’t be ideal for everyone but families should consider them.

An overdraft is an additional amount of money that is drawn down from a current account when it is in debit. Overdrafts are generally a short-term facility used to temporarily increase your cashflow.

The Bank of Ireland overdraft rate is 13% – when charges are included it brings the APR to 15.1pc.
The Allied Irish Bank overdraft rate is is 12.75pc. The APR, which is calculated by reference to an overdraft limit of €2,000 and which includes the facility fee, is 14.77pc.
Halifax, National Irish Bank and Permanent TSB charge lower rates on overdrafts than the big two.
Banks also have surcharges for unagreed overdrafts – these can be an extra 9pc.

BOI and AIB also charge in the region of €25 to put an overdraft facility in place and the same again to renew the facility. National Irish Bank, Permanent TSB, Ulster Bank and Halifax have no facility fees.

Overdrafts are best avoided as they are an expensive way of borrowing money.
If you go go overdrawn without a formal agreement – you will pay high interest rates, plus additional fees.
Instead of an overdraft,it would be cheaper to consider a personal loan. There is good value in personal loans at the moment. Halifax, Tesco and First Active all have rates under 7pc APR for loans.

A survey looking into the future of Ireland’s personal wealth has found that 65% of people with access to the internet do not use online banking. Coupled with the fact that less than half (43%) have access to the internet on a daily basis, online banking is used by as little as 14% of adults in Ireland.

The independent survey was carried out by Amárach Consulting on behalf of Halifax.

Online banking is used more by the younger generation where take-up is higher (40% of 25-34 year-olds who have internet access use online banking).

The availability of broadband is seen as critical to the development of online banking. According to the OECD**, Ireland currently has relatively low broadband penetration – 12.5 per 100 inhabitants; against the OECD average of 16.9, the UK at 21.6 and Denmark (the highest) at 31.9 per 100 inhabitants. However, this is changing fast with OECD citing Ireland as having the fifth fastest growth in broadband penetration in the World.

Other Facts from the survey

The highest penetration of online banking users is in the 35-44 age bracket – 44% of this age group who have internet access.

The majority of online banking users (62%) use it either once a week or 2-3 times a month.

47% of people bank online to save time, 42% enjoy the convenience and 30% because it is hassle free.

Most common transactions online are the more routine transactions – check balance (78%), pay bills (58%), pay credit card (45%) and transfer money (38%).

Only 11% of people think that online banking will replace bank branches.

The financial regulator did a price survey in Dec 2006 – comapring life insurance quotes. Obviously your individual circumstances will determine your quote – but the survey gives you an adea of which insurers have the lowest premiums.

Comparing term life insurance cover of 200000 for 30 years:
For a 26 year old male non smoker – Eagle Star had the lowest monthly premium at 16.05 – follwed by Caledonian Life at 16.55 and Ark Life (AIB) at 17.19 a month.
Eagle star did well overall with the lowest quote also for a male smoker aged 26 – of 26.85 with Caledonian Life in second place again.
For a 38 yar old smoker and cover of 300000 over 25 years :
Ark Life (From AIB) were just the cheapest at 87.41 a month followed by Eagle Star at 87.70.
Other companies included in the survey were:
Friends First
Irish Life
New Ireland
Canada Life
Hibernian