Sourcing the cheapest options on credit cards

PERSONAL FINANCE:Your queries answered

Q

Which credit card is currently offering the best rate?

- Ms EF, Dublin

A

Comparing credit card rates can be an exercise in frustration. Providers that offer the most attractive introductory rates on balance transfers are generally not top of the list when it comes to the rate on purchases and the amount charged on cash withdrawals is different again.

According to the National Consumer Agency’s itsyourmoney.ie website, the best value in the credit card market at present on purchases is 13.6 per cent APR from AIB on its Click card.

The catch is that Click is available only to customers of AIB’s online banking service.

The disparity in charges is well-illustrated by the fact that, of the cards compared by the NCA site, AIB also offers the worst value – 22.7 per cent APR on its be MasterCard.

In terms of cash withdrawals – never a good idea on credit cards – the best you will get at the moment is 9.75 per cent from National Irish Bank on its MasterCard Platinum. At the other end of the scale, expect to pay an onerous 21.36 per cent on Bank of Ireland’s Clear and Classic cards.

Bear in mind that companies usually charge interest on purchases only from the date that payment is due on your monthly bill – if you pay your credit card bill in full and on time each month, no interest will arise. However, companies generally charge interest on cash withdrawals from the moment the money is drawn down.

Given the interest that can accrue, clearly paying off cards in full every month is the best option.

For those unable to do so, a number of providers offer interest-free periods on transferred balances which can significantly reduce the build-up of interest, if managed very carefully. These include MBNA and OneDirect (10 months) and Permanent TSB Visa and Tesco (six months).

The other option is for people to borrow elsewhere (such as credit unions charging lower interest rates) to clear credit card debt but this works only if you subsequently exercise financial discipline.

Confusion over tax relief on college “fees”

Q

Are college registration fees eligible for tax relief at 20 per cent?

- Mr JG, Email

A

No. In an exercise of having its cake and eating it, the Government does offer 20 per cent tax relief on college fees but restricts this only to tuition fees.

Given that Government has, for the moment at least, largely abolished college tuition fees at undergraduate level, this relief is irrelevant.

In a political contortion, government (not just, but including, the current one) then imposes increasingly significant college registration fees which are specifically excluded from the scope of the relief. Thus, despite broad political commitment against reintroducing fees, they are effectively charging fees to support the cost of third level while denying any relief.

The same specific exclusion applies to examination fees. It is little more than political cowardice at the expense of the taxpayer.

This column is a reader service and is not intended to replace professional advice. No personal correspondence will be entered into. Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2. E-mail: dcoyle@ irishtimes.com