For several years now, anyone who was prepared to make the effort, and had a good credit rating, was able to transfer debts between credit cards and get 0% interest on their transfers. Many people did so.

The Credit Card suppliers clearly hoped people would stay with them once the zero interest period was over. No doubt a lot did but lot’s more didn’t. Hence the phrase Rate Tart appeared as part of our language meaning people that go from one good deal to another to another.

It couldn’t last and it seems that it is now coming to an end. Last year transfer fees started to become more common and now they are almost a standard. If the fee is 2% then it is still worth doing if you are talking of saving perhaps, 1.25% or more per month but the zero interest periods are shorter now, typically 6 months whereas a year ago you could get up to 12 months quite easily.

Should we be concerned? No, perhaps we should even applaud it. It was never fair and for every one of those rate tarts getting free interest there were lots of other people paying higher interest than they might otherwise have done and paying excessive charges for delayed payments or going over-limits. With all offers of this sort where a company appears to be giving something away for nothing, somebody has to pay. You can be sure it won’t be the company themselves.

Plenty of people would have got caught out by the interest free credit cards charging interest for purchases and any repayments made usually cleared the interest-free part of the debt first. So it wasn’t always as good a deal as it first appeared.

Can it ever be fair that, generally, poorer people subsidise those who are more financially astute and secure? “There is no such thing as a free lunch. A saying worth keeping in mind whenever you are looking at any sort of deal. If something appears cheap then there must be another way it is being paid for. It may be that you as an individual can take advantage as the rate tarts did but ultimately, someone has to pay.

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

Just happened to see on MSN money a question from a parent…

Q: My wife and I both have good credit scores (708 and 734) and are considering putting our 7-year-old son on a credit-card account as an authorized user so that he can start establishing his credit profile now. My question is, am I allowed to put him, at age 7, on the account as an authorized user? If not, how soon can I start establishing credit for him?

Can you believe this? Why would anyone consider giving a 7 year old a credit card? I can imagine the bill for the sweetie shop.

I guess they are just thinking of getting him a credit rating rather than giving him a card to use but I still find it astonishing. What sort of world do we live in when someone feels this might be a good thing to do?
Here’s the link if you need to read the answer. MSN MoneyÃ’Â

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

There’s a report on the BBC website today about the FSA’s update on MEAFs, (Mortgage Exit Administration Fees).

It includes a great quote, “Fifteen years ago Alliance & Leicester – Mr De Wever’s lender – charged an exit fee of Ò£7.50. Today the fee is Ò£295″

I’m not sure exactly what the inflation rate has been since then but it is a big jump and I am sure a great deal more than inflation. No doubt the Alliance & Leicester will argue that it is fair and reasonable but if that is the case then presumably they were subsidising the cost back in 1991.

What I really want to know is what happened to all the benefits of scale and efficiency. Computers are far more powerful, capable and reliable than they were back then. Most paperwork is standardised, computerised and automatic. I just wonder what Alliance & Leicester have been doing while the rest of the world has moved into the technological age.

I can just visualise an old clerk in a dusty basement. Removing the cobwebs from himself, he gets up from his chair walks to a dusty shelf where he picks up a file, blows the dust from it and then places it in the out tray on his desk. Another days work done and another Ò£295 earned for the A & L.

So good to know that old fashioned service has not gone out of fashion.

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