Fergus Muirhead answers your money questions
I'm Fergus Muirhead and I'm trying to answer any money or consumer problems you may be facing at the moment.
You can contact me by e-mail at firstname.lastname@example.org
I will deal with a selection of your e-mails every second Wednesday on lunchtime Reporting Scotland, Scotland Live and on the BBC Scotland news website.
I also have a consumer page on Twitter: http://twitter.com/consumerstuff
Q. At present I have a Direct ISA with Bank Santander. When I asked for my annual interest to be credited I was told that I was only entitled to 0.1%. Their current rate of interest, I believe, is 3% but when I pointed this out I was told that it was "bad luck" I had not asked for the new issue and that it was my responsibility to check if I was receiving the new rate. I have therefore lost in the region of £500 and, as this is part of my income, you can understand my frustration. I would be grateful if you would confirm if this is correct before I take the matter further and close my accounts with this bank. Wilma E Nimmo.
A. I'm afraid this is something that banks do all of the time. They introduce new accounts with higher rates of interest than the rate being paid to existing customers but then don't notify existing customers, their lifeblood you would think, that they could possibly be better off by moving their money to another account with the same bank. The lesson is to be vigilant and make sure that you are prepared to be proactive. Apathy is a banks best friend. They work on the basis that once they have your money you won't have the energy to take it elsewhere. Prove them wrong!
Q. I am looking for help on the best way to deal with debts I have with a few companies. I am finding things difficult to sort out with banks and some loan companies. Could you advise me the best and easy way to sort out my problems? Scott.
A. Quite often the hardest part of dealing with debt, Scott, is to admit that you have it in the first place so the fact that you have taken the time to write to me and ask for help, suggests that you have the right attitude now to deal with your problems. There is no 'easy' way to sort your problems but I have listed a few golden rules for you below that should help you.
•Don't panic or ignore the problem
•Don't borrow more money to pay off your debts.
•Work out a budget and send it to your creditors
•Get in touch with creditors straight away
•Tackle priority debts first
•Work out offers of repayment that you can afford
•Contact everyone you owe money to. If you make arrangements to pay some creditors but not others, you could run into difficulties again.
•Don't be fooled by adverts in the National Press offering to reduce your payments from £600 per month to £150. They may be able to do this but only if you agree to pay off your debt over a much longer period of time. Instead seek independent money advice from a body such as Citizens Advice or Money Advice Scotland. Both should be able to help you and neither will charge you for the privilege.
Q. Can credit card companies not be forced to pay off the cheapest debt first i.e. balance transfers, instead of racking up interest charges on purchases which are impossible to clear without clearing your whole balance? Andy Hurst.
A. The unfortunate answer is that credit card companies rarely repay your debt in the order in which you would like it to be repaid, and it is a really good question to ask since many credit card holders don't understand the order in which their debt is repaid. I have quoted below the order in which repayments are made from one credit card, but many are the same:
Interest on special offers
Other interest, fees and charges
Purchases and balance transfers
The important thing to note here is that cash advances, which carry the highest rate of interest, are the last to be repaid. As you rightly point out, many credit card companies allocate your monthly repayments against the cheapest debt first so that you carry on paying more and more interest on the more expensive debt. Once again, it's a case of looking at the small print before you take out the credit card, and avoid the cards that treat you in this way, and if you can't then at least try to find an alternative source of cash rather than taking it from your credit card.