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Don't fall for first impressions
Looking for a new computer or maybe the latest flat screen plasma TV? Or maybe it's a new suite of furniture that tickles your fancy? If it is and you don't have the ready cash to pay for it you should be very careful before taking up any of the "attractive" credit offers from retailers. These credit offers normally come with a brightly written tag saying something like: "Own this for just €9 per week". It might sound very good and very affordable but it's probably very expensive as well.
Take the example of one electrical retailer's credit offer. For an item valued at €1,000, the monthly repayments would be €30.40 over four years. This works out at a whopping 21.8% APR. APR stands for "annualised percentage rate" and is an industry standard applied so that consumers can accurately compare one credit offer to another.
These days most credit cards will have an APR of much lower than 20%. This means that you could actually buy this particular item on your credit card – normally seen as the most expensive credit around – pay it back over four years and it would still be cheaper!
The news gets worse still when you look at what the total repayments on the loan would be – a fairly amazing €1,459.02. This means that you're almost paying half as much again for the item by the time you've finished paying for it. Even one of the better offers available from such retailers works out as inordinately expensive. This particular offer has an APR of 16.9%, and €1,000 paid back over four years would cost €28.20 per month, or a total of €1,353.60. Still very costly and around the same cost as many credit cards.
However, if you do a little bit of shopping around among the banks, finance houses, and your credit union, you'll get a much better deal – and you won't be tied to any particular retailer when choosing your new TV or computer.
For example, you can get a €1,000 loan from one of the leading banks at a rate of around 9% APR. This will work out of monthly repayments of just €25.41 over four years, or a total repayment of €1,219.68. An awful lot cheaper than the retailer alternatives.
And you can get cheaper still. Your credit union can offer rates as low as 6.7% APR – and lower still on larger loans. For a €1,000 loan over four years, this works out at €23.72 per month, or a total repayment of just €1,138.56. This is a difference of €320.64 on the first retailer offer mentioned earlier. Given these major differences, you should always shop around before signing on the dotted line for any credit agreement – regardless of how attractive it may appear at first sight.
Each Each loan is for €1,000 over 48 months
| Monthly repayment | Total cost of credit | |
|---|---|---|
| Retailer offer 1 | €30.40 | €459.02 |
| Retailer offer 2 | €28.20 | €353.60 |
| Bank | €25.41 | €219.68 |
| Credit Union | €23.72 | €138.56 |
Banish the Myths - (St. Patrick's Credit Union (ESB Staff) Ltd.)
Alot of our members unfortunately still have the mistaken belief that the amount of loan that they can apply for is restricted to 3 times their shares – incorrect, and has not the case for over 10 years now. The main factor in the loan approval process is the member's ability to meet the relevant loan payments, i.e. repayment capacity. Other factors that are considered are credit history, employment status, period of loan, purpose of loan, etc. The amount in shares is immaterial and irrelevant.
Another myth that needs to be banished is the one that you have to clear your current loan balance before you are eligible to apply for another loan – incorrect, you can apply for another loan/top-up loan before your current loan balance is cleared.
A more recent myth that also needs to be banished is where Tesco is advertising that it currently has the cheapest personal loan rate in Ireland at 7.5% p.a – incorrect, as St. Patrick's Credit Union at 6.5% p.a. is the cheapest; and on a typical loan of €8,000 over 4 years the Credit Union is cheaper by €132.48.
The answer to your first question is yes, they do qualify for the new Early Childcare Supplement. This was introduced in the last budget as a means of assisting parents of young children with the rising costs of childcare. It is being introduced in April and is worth €1,000 per year, per child under six years. According to the Department of Social and Family Affairs, it will take the form of a direct, nontaxable payment of €250 in respect of each eligible child. Payments will be made each quarter. The first Early Childcare Supplement payment, covering the second quarter of 2006 should be made in mid-2006. If there is any delay in this first payment, the payments will be backdated to April 1st.
In answer to your second question, there will be no necessity for a separate claim once your children are already in receipt of child benefit. However, new parents should get a copy of Form CB1 from the Child Benefit Section of the Department of Social and Family Affairs within six months of the birth of the child to apply for child benefit payments. The Early Childcare Supplement will be paid automatically once this has been processed.
Energy Saving/Safety tips
- Save on your waterheating costs by fitting an 80mm thick lagging jacket for about €15. You will recover the cost of the lagging jacket in less than one year.
- Insulate your attic – attic insulation will keep the heat in your home for longer and pay for itself in 2-3 years.
- Walk or cycle instead of driving – it costs nothing and is good for you.
