Which is best? – A 0% loan over 12 months or a loan over 5 years at 5%?
The answer is that it depends. It depends on your circumstances. If you can afford to repay the loan over 12 months then the zero percent interest is probably a great deal but if you can’t afford the repayments then the longer term and more expensive deal would most likely be more appropriate for you.
Being unable to make the payments on a ‘cheap’ loan could be far more damaging than lower repayments that you can afford on a more expensive loan. Failing to make repayments will cause all sorts of additional problems from late payment penalty fees through to lowering of your credit score and possibly increase interest rates on other unassociated loans. Failing to make repayments is about the worst thing you can do with a loan and will cause you all sorts of grief. If you can possibly avoid it just don’t do it and don’t be tempted into a position where it might arise.
Look at your personal situation and do the math before you take out any loan. What is right for you may be different from what is right for your friends who tell you about the great deal they just got. Study your situation, your finances and your longer term prospects before taking out more debt and if possible reduce your spending and pay off your debt that much quicker.

Money Magic: Seven Simple Steps to True Financial Freedom (Quick Reads)

The Bank of England has reduced the official Bank Interest Rate by 0.25% from 5.5% down to 5.25%

This will be helpful for anyone struggling with their debts if the interest rates follow suit. Credit cards in particular can be very slow to respond if indeed they do follow interest rate changes. Mortgages usually change to match the changes in Bank Rate but they do not always.

It is generally expected that there will be another one or two further interest rates later in the year but with inflation threatening the Bank of England may not feel able to reduce the rate easily. As always, time will tell.

Money Magic: Seven Simple Steps to True Financial Freedom (Quick Reads)

In a world where company management invariably puts a positive spin on any bad news they have to release it was refreshing to read of the chief executive of Ryanair, Michael O’leary being bluntly honest. He told us that he expects things to get tough over the next year or so. He expects profits to be reduced at Ryanair by up to 50% because of the high price of fuel and reduced consumer demand. This follows a drop in profits of 27% in the last quarter from October to December 2007

The cheap flights available from airlines such as Ryanair have been a significant factor in the growth of air travel over recent years and it has become commonplace to fly to Prague, Amsterdam or Spain for stag nights and short breaks and it raises the question of whether the sudden growth in cheap air travel was just a bubble and if, as fuel supplies run down and prices rise, the growth in air travel be justified or maintained.

The remarkable growth in air travel has been used to project large numbers of people travelling in the future and been used to justify the need for additional runways at UK airports. Those figures may be looking less certain now.

However else it can be interpreted it is clearly yet another sign of a slowdown in consumer spending as the credit squeeze bites.

Money Magic: Seven Simple Steps to True Financial Freedom (Quick Reads)