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Why David Cameron writing for MoneySavingExpert is not ‘bonkers’, ‘biased’ or ‘showing your true colours’

Why David Cameron writing for MoneySavingExpert is not  “bonkers”, “biased” or “showing your true colours

Why David Cameron writing for MoneySavingExpert is not “bonkers”, “biased” or “showing your true colours

According to some on Twitter today I’ve been "duped". That’s because David Cameron has written a guest piece for the site called ‘We will give pensioners security and dignity’. He asked if he could do it and we said, "why not?" After all, part of what is about is providing a forum for people to engage in the big discussions and debates on consumer finance policy. 

Yet predictably there was the classic backlash. Here’s just a selection of some of the (nicer) anti-comments. I’ve picked the twitter ones as they’re shorter. Of course there were many who were supportive and found it interesting too…

  • @newviv: "@MartinSLewis I don’t approve of @David_Cameron using your website as a political platform."
  • @mheave: "@MartinSLewis @David_Cameron shame on you Martin. This man is vile, pernicious and plain evil to those struggling you try to help #irony."
  • @BillyWits: "Political spinning. You’ve been used Martin, the [obscenity deleted] has used you as you are perceived as trusted."
  • @harriet1dog: "I thought your site was meant to be impartial not a party political broadcast, is it Nigel Farage next week?"
  • @exnhsnurse1: "DC blog is party political broadcast. You are being used because you are a trusted source of financial advice."
  • @meljhenderson: "I can’t believe you’ve let him use this great website as a political platform. #disgraceful"
  • @mathewtedwards: "I think this is a BIG mistake! My constructive criticism would be to politely tell @David_Cameron you have reconsidered."

Yet many people when I responded were unaware of the wider context, some hadn’t actually read the blog, just responded to the fact Cameron was writing. This isn’t new, it isn’t biased, we have regularly offered oppportunities for senior politicians of all parties to write guest pieces for the site. (The only reason Ed Milliband hasn’t appeared is because we asked his team for a piece on energy and he didn’t seem keen; we have also asked for his comments on this issue today.)  

Here’s a list of just some of our past guest bloggers below. We’re also open to more guest pieces from senior politicians of all major parties (and it’d be nice to some get from SNP or Plaid Cymru too), as well as regulators and policymakers.

So, we haven’t been duped, what we have done, like many national newspapers also do, is provided a forum for important individuals who can change policy to try and justify their position, explain what they are planning to do and provided, within our own forum, a place for people to discuss it and give feedback about those issues. 

I consider that to be an important part of engagement with the political process within our MoneySaving community, which has 15 million monthly users. 

We are incredibly careful not to indicate in any way what our position is on these subjects. These are for the politicians to engage in. I think it is a perfectly decent way to behave – after all most national newspapers which do it tend to be biased towards an agenda. 

Our site’s stance is strictly apolitical. We do it as a form of engagement. We have even in the past done the MSE Leaders debate, where we asked all the parties for their views on key matters to consumers. 

So for those having a go, I think perhaps you needed to have done your research first.

It seems an ISA is nicer than a NISA – so we’re going to call them ISAs

It seems an ISA is nicer than a NISA – so we're going to call them ISAs

It seems an ISA is nicer than a NISA – so we're going to call them ISAs

Last March in the Budget, the Chancellor announced ISAs were to become new ISAs, or NISAs. The main changes were a bigger £15,000 limit, the ability for all of it to be cash savings (so more than doubling the tax-free savings cash limit in effect) and the ability to convert old shares ISAs into cash ISAs.

The new language of this was to call it a cash NISA – partly I suspect so the government could claim create for creating something new. When this started in July, we accordingly changed the name of our guides and started using the new language, as did many (N)ISA providers.

Yet the name hasn’t caught on, it’s confused many people and HMRC tells us "ISA is the correct term to use in line with HMT Regulations and HMRC Guidelines. NISA is purely a marketing/product/publicity term."

So from now, I’ve decided is going to revert back to calling it the good old ISA (see the newly renamed Top cash ISAs and Top cash ISA transfer guides) and we suspect gradually over the next year to see everyone else who called it a NISA to retrench too.

The real reason why companies offer ‘a month’s free trial’

The real reason why companies offer ‘a month’s free trial’

The real reason why companies offer ‘a month’s free trial’

These days a very common method to build a customer base for service industries, whether it’s Netflix, credit monitoring services or even Graze food boxes, is the ‘month’s free subscription’.  

The obvious reason why companies do this is the apathy dividend – in other words, the hope that they’ll gain as people simply forget to cancel for a month or two. But this is a short-term contributor to profits as there’s actually a more powerful psychology at play here, which I suspect is a bigger win – let’s call it the ‘inertia dividend’.

We human beings are naturally pre-disposed to not liking to lose something that we have. Many people wouldn’t sign up for a movie service that they don’t really need if they had to pay for it, but would for a free month’s trial. They go in with a view to cancelling it when it ends, but at that point they become accustomed to it and now getting rid of it means a loss – and we don’t like loss.

The lust for such things doesn’t bounce back like elastic. We tend to feel the loss of a service far more potently than the joy at its gain in the first place.

An easy example is a salary rise (or cut in mortgage rate). At first you feel happy at the increased disposable income, yet soon that cash is normalised and we’re used to it. Take it away after we’ve adjusted to the new amount and the pain is high.

Just think of the number of people with gym memberships who don’t use them. The idea of losing the opportunity to go to the gym even though they rarely attend keeps them paying month after month. 

This is a dangerous sub-philosophy when it comes to MoneySaving. We have to be clinical and recognise our own biases. It’s important to try and revert your mindset back to where you were when you got it. Ask yourself: "If I didn’t have it, would I pay for it?" If the answer is no then be clinical and ditch it.

After all, if you’re paying for it by the month and you can cancel if you don’t use it, stop using it and then you can choose to sign up again.

I’d love to hear your experiences as to whether you feel you’re tough enough and hard enough to avoid this temptation or whether you’ve been caught by firms’ ‘inertia dividend’ and how much it has cost you.

Ad watch – NatWest’s 0%uch ad is dangerously misleading

Ad watch – NatWest's 0%uch ad is dangerously misleading

Ad watch – NatWest's 0%uch ad is dangerously misleading

The semi-publicly owned bank has funded a huge ad campaign to declare to people the danger of 0% cards. From full page newspaper ads to viral videos, it’s trying to persuade people its stance is in their favour. So I wanted to bash out a quick blog to put that to the test.

Its newspaper ad screams out at you…

"No to 0% credit card deals because they have rates that jump up and sting you once the rates end".

It then goes on to promote its deals…

"We offer credit cards with no sting in the tail. They’re fair. They’re transparent."

And it even has a propaganda video:

So let’s compare NatWest’s self-vaunted fair offering with what the nasty, boo-hiss 0% stingy cards are offering.

What the NatWest credit cards offers

Its big deal is its NatWest Clear Rate card, a simple low rate card of 6.9% annual interest on all balance transfers and purchases. All sounds nice but as its ads are very concerned about ‘stings in the tail’, I thought I should warn you of, yes you guessed it, a couple of stings in the tail.

  • There’s a £24 annual fee. This is thankfully a rarity for mainstream non-rewards credit cards. Incorporate this into its interest rate and it’s 11.1% representative APR.
  • You may be accepted but pay a higher rate. As NatWest is campaigning for transparency, let’s be very clear. The fact this is a ‘representative’ APR means it, like almost every card, only needs to give 51% of accepted customers the advertised rate. The rest can be charged more.

There are better stable rate cards than NatWest’s

NatWest’s offering isn’t an awful deal, there are far worse on the market. Yet there are certainly far better cards with similar non-0% deals.

As a straight comparison my top pick, similar, stable rate card is the MBNA Low Rate which is 6.6% representative APR – so lower than NatWest – and crucially no annual fee. Overall that’s a big saving.

How does NatWest compare to those 0%uch cards?

Of course, what NatWest’s campaign is all about is bad mouthing 0% deals that sting you by bolting up the rate at the end of the deal. So let’s see how it actually compares. Three housekeeping notes before I do that…

  • I’m comparing it to the best cards on the market. Of course there are poor 0% cards too, but as it’s attacking the entire concept, this seems fair to me.
  • I’m assuming you don’t do the right thing and tart. The best way to use 0% cards is disloyally shift from 0% card to 0% card as soon as one deals ends. That irrefutably cuts card debt far better than any other method; and smashes NatWest. Yet to be generous, I’m going to assume people use 0% cards and don’t shift once the 0% ends.
  • This all depends on acceptance. Of course the calculations are moot if you get rejected. To see which cards you’re most likely to get use the free eligibility checker tool.
  • These are spreadsheet calculations. Interest calculations vary between card providers, so treat these as good back-of-the-envelope calculations rather than exact.

FIGHT 1: NatWest v 0% balance transfers

Let’s start with what 0%’s are famous for – debt shifting balance transfer cards. Here the big beast on the market is Barclaycard’s current offering. It allows you to shift debt at a huge 33 months 0% with a one-off fee of 2.99% followed by 18.9% representative APR afterwards. For more options and info see Top Balance Transfers.

Debt remaining on £3,000 shifted, repaying fixed £100 a month
After 1 year After 2 years After 3 years After 4 years After 5 years After 6 years After 7 years After 8 years After 9 years After 10 years
Barclaycard £1,890 £690 - - - - - - - -
NatWest £1,994 £919 - - - - - - - -
Debt remaining on £3,000 shifted, repaying MIN REPAYMENTS
Barclaycard £2,347 £1,786 £1,412 £1,252 £1,110 £983 £872 £773 £685 £607
NatWest £2,658 £2,354 £2,085 £1,847 £1,636 £1,448 £1,282 £1,135 £1,005 £889

So here Barclaycard smashes NatWest.

  • Repaying £100 a month, Barclaycard is £229 cheaper.

    With Barclaycard, you’d clear the £3,000 in 31 months and the only cost would be the £90 transfer fee. With NatWest, it’d take 34 months and you’d pay £298 in interest and £48 in annual fees.

  • Repaying just the minimum repayments, Barclaycard’s 0% still wins.

    Barclaycard is far cheaper in the first three years (when it’s mostly at 0%) and by that point, you’’ have cleared £600+ more debt; meaning you’’e less debt to accrue interest. Of course the best practice at that point is to shift the debt again to another 0% deal (see Cheap balance transfers).

    But even if you don’t, the fact that during the 0% period so much of your cash has gone to clearing the debt not serving the interest, means that while NatWest has a lower interest rate – even if you left it hanging for 10 years, you’d still owe Barclaycard less than NatWest.

    However it’s worth noting Barclaycard does have a slightly higher minimum payment at the start, which impacts this too. If you look at the amount you’ve paid as well, then after about nine years NatWest does become a slightly better deal than Barclaycard in this.

FIGHT 2: NatWest v 0% borrowing cards (ie, new spending on the card)

If you were planning to use the card to spend on, the top new cardholder 0% deal is Tesco 19 months 0% with no fees followed by 18.9% representative APR after. More options and full help in Top 0% cards.

I went for two variants here, the first, a planned one off big purchase (£1,500) the second, regular monthly spending on the card (a very dangerous thing to do that I’d strongly caution anyone against – using credit cards to fill the gap in your income is never good).

Debt remaining on £1,500 spending repaying fixed £75 a month
After 1 year After 2 years After 3 years After 4 years After 5 years After 6 years After 7 years After 8 years After 9 years After 10 years
Tesco card £600 0 0 0 0 0 0 0 0 0
NatWest £700 0 0 0 0 0 0 0 0 0
£100 spending a month, making only minimum repayments
Tesco card debt left £900 £1,840 £2,756 £3,567 £4,287 £4,924 £5,490 £5,991 £6,435 £6,828
Tesco amount paid £300 £689 £1,381 £2,335 £3,515 £4,896 £6,455 £8,172 £10,028 £12,009
NatWest debt left £1,101 £2,099 £2,984 £3,768 £4,463 £5,080 £5,626 £6,110 £6,539 £6,920
NatWest amount paid £134 £477 £991 £1,661 £2,470 £3,402 £4,443 £5,581 £6,804 £8,103

The results here are split.

  • Tesco smashes NatWest for the one-off £1,500 spend.

    The Tesco card is paid off after 20 months and no interest is paid (as the 20th month is the first one you’re charged interest, but you’re clearing the balance in full so you don’t pay it). The NatWest card is paid off after 22 months. During that time you’ve paid £48 in annual fees and £98 interest, so a total of £146.

  • On £100 a month, NatWest wins in time.

    This is a relatively false scenario as you’d need a huge credit limit; but even so let’s look at it. Tesco is far cheaper in the first 19 months, but even after that NatWest’s minimum repayments are lower than Tesco so even after 10 years you’d have less debt on it.

    That’s why I’ve also added in an ‘amount paid’ row too. When that’s factored in (ie, add debt left to amount paid), NatWest starts to be cheaper after three years.

    Of course you’d be far better off to take Tesco for 19 months then shift the debt to a 0% balance transfer card and get another 0% purchase deal – and better still, not to do it. Yet this does show if you’re going to continually borrow and not pay it off and not manage the cash, NatWest can beat a 0% card.

I did also compare NatWest to the Top all-rounder cards, which give 0% on both purchases and balance transfers. The results there were roughly similar to spending cards – in other words if all the borrowing is upfront with decent repayments NatWest loses, but if you have minimum repayments and keep spending on the card, NatWest over time wins.

The summary

I think NatWest’s adverts are disingenuous and dangerous. The concept would’ve worked five years ago when 0% deals were far shorter than they are now. But certainly with 33 months 0% on balance transfers these are no longer just short-term propositions. To use an advert to mis-portray them as a dangerous product is simply wrong.

That doesn’t mean they always win, it just means there is a choice and different things suit different people. For those who just want to shift the debt, spend and then forget about it without doing anything, stable rate cards have a strong place – and that’s something I’ve always championed. Yet if you are going to do it, NatWest’s card with its annual fee, certainly isn’t the one I’d use.

Do let me know your views below…

Huge anger over HMRC wanting to raid people’s savings – but why do we already let banks do it?

Huge anger over HMRC wanting to raid people's savings – but why do we already let banks do it?

Huge anger over HMRC wanting to raid people's savings – but why do we let banks do it already?

HMRC has been accused of attempting to overturn the Magna Carta by trying to gain new powers that will allow it to take money from people’s bank accounts without a court order (see HMRC wants to raid accounts).

There’s been uproar and outrage from MPs and others on this. I share in this angst. Yet I thought it worth pointing out that while we object to the taxman doing it, we have already given banks the power to do something very similar. Under the rules of setting-off, a bank can take money from accounts to pay itself without notice, without permission and without a court order.

Now my point here isn’t that because banks can do it, we should allow HMRC to do it. It’s more that if we are going to protest around the idea that the taxman has this permission, we should also stop banks – which aren’t exactly paragons of virtue with great track records on such things.

For those unfamiliar with the rules of setting-off, it’s quite simple. If you have a debt eg a credit card or loan with the same bank where you also have savings or a current account, even if those accounts aren’t linked, the money can be taken from your savings to repay your debts. And they don’t need to notify you or seek permission in advance.

This can cause cataclysm for people’s finances. Those doing the correct strategy when in trouble (ie, focusing on priority debts) such as putting money aside to pay their mortgage can see it snaffled to pay a credit card (a lesser-priority debt), leaving them in mortgage arrears.

I’ve even heard of a woman being given money by her father to pay for her wedding just a few days before the big day to have it snaffled immediately by the bank.

For full help on your rights if you’re affected, see our Setting-off guide.

Why do we give banks so much power? Why is it a special form of creditor above even HMRC? Gas and electricity companies can’t just dip into your bank account to take your money when you owe them. Why is a bank so special?

In my view – it isn’t, and it’s about time we ended this antiquated law. If banks want to take money from your account, they should require a court order like anybody else does.

I’d welcome your thoughts below.