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Personal Finance
Barry McCall advises on how you can manage your short-term debts and St. Patrick's Credit Union explains how to use its online loan application process
Controlling your short-term debt
There is no doubt that credit cards are very useful. They are the most secure way of spending while abroad on holidays, they carry no transaction fees and they also allow you to make purchases on the internet. In addition, if you pay off what you owe in full each month, they offer interest free credit.
A fantastic deal, you might think. And it is for those of us with the iron will and self discipline to only spend what we can pay off at the end of the month. Interestingly, the main banks say that about 50% of us do fall into this category. For the rest of us short term debt has become something of a fact of life with credit card debts built up over Christmas or summer holiday periods being difficult to pay off in full. This can be very expensive.
Take for example a person who has built up €3,000 in credit card debt at an APR (Annual Percentage Rate) of around 18%. If they are only making just a small monthly payment off the sum owed the cost of this credit could be around €450 annually.
Personal loans are generally available at much lower interest rates than your average credit card and the market is quite competitive for borrowers at the moment. If that person with €3,000 in credit card debt were to take out a personal loan at 9.4% to pay off the full amount it would cost €95.37 per month over three years to repay. This comes out at €3,433.32 over the full three years - or a total cost of credit of €433, less than the interest bill on the credit card might cost over just one year.
Even if it is not a case of someone having run up a reasonably large credit card debt, there may well be a good case for shopping around for a personal loan. For example, a personal loan taken out some years ago might be at a much higher rate than that available today. Paying off the remainder of this loan by taking out another at a lower rate could generate significant savings.
For example, the cost of a €5,000 loan over three years at 9.4% APR would be €158.95 per month while the cost of the same loan at 12.7% APR would be €166.05 per month. Over the lifetime of the loan this is a difference of €255.60. Quite a significant saving.
Of course, these rates are variable and may go up or down during the term of the loan. But you always have to be aware that short term debt is the most expensive form. If you are considering doing fairly major works around the house like an extension or an attic conversion you should really look into releasing equity in your home to benefit from much lower mortgage interest rates. If you have some whacking credit card or other short term debts built up you could release a little more equity and get rid of these at the same time.
St. Patricks Credit Union - Online loan application
Members of st. Patrick's Credit Union can now apply for loans through the online facility available on the website www.stpatrickscu.ie. This online facility is in the Members' Area and can be accessed by using your member secure PIN. The advantages in applying online are that it eliminates the need to locate and post a paper application form. It also speeds up the application process, resulting in members receiving their loan cheques sooner.
The online application has the same details and questions to be completed as the paper application forms and can be filled in and submitted to the Credit Union within a couple of minutes.
If a member has a Credit Union Agent in their workplace (see list of Agents on the website under Choose a Section in the About Us page) it is possible to receive he loan cheque the day after the online application has been submitted. The member must agree that all the necessary documentation and cheque be forwarded to their Agent. This is a fantastic service unequalled by any Bank or Building Society.
So, if you need a loan, start pressing those buttons now and get the application process started. Don't forget that loan applications are judged on the repayment capacity of the individual member not on the amount of shares. Current loan balances do not have to be cleared before a member can apply for another loan.
Don't forget that the current lending rate in St. Patrick's Credit Union is only 6.5% which is the lowest rate offered by any financial institution in Ireland for personal loans.
A person normally domiciled or resident in Ireland is liable to Irish income tax and capital gains tax in respect of their worldwide investments - regardless of where they are located. This means that you have to declare your ownership of any overseas properties to the Revenue Commissioners and include income from the property and any capital gains made as a result of its disposal in your annual tax return. In addition, you may be liable to a withholding tax in the UK on rental income there. However, because we have a double taxation treaty with the UK this tax can be deducted from tax liability here. The same applies to capital gains tax whenever you dispose of the property.
We want to hear from you! Please send in your financial questions marked "Ask Barry", to EM, ESB Corporate Affairs, 27 Lr. Fitzwilliam St., Dublin 2.
The Credit Union's dividend rate is determined by the amount of surplus funds generated at the end of the financial year i.e. from 1st October to 30th September - therefore it is not possible to say in advance what the dividend will be; and will only be known in October. The proposed dividend rate is approved at the AGM in November and the actual dividend is credit to each member's account the following week. The dividend for the last two years was 3.5%.
We want to hear from you! Please send in your financial questions marked "Ask the Credit Union", to EM, ESB Corporate Affairs, 27 Lr. Fitzwilliam St., Dublin 2.
