Confusion on the cards for consumers

Q&A:Q I WAS very interested in your answer to Mr G McD's question just before Christmas and feel the answer is incomplete.

Up to now, I used an Ulster Bank Service Card which included Laser, Maestro and Cirrus to withdraw cash at ATMs in Ireland and in the euro zone without paying a transaction charge.

The replacement card which I received last month keeps the title Service Card and includes the VISA Debit function but does not have Maestro nor Cirrus.

The bank confirmed that if I withdraw cash from an ATM outside of Ireland I will have to pay a transaction charge which will be 2 per cent (minimum €2 and maximum €12) in the euro zone. For Visa Debit purchases in the euro zone, there is a charge of 1 per cent of the transaction value with a minimum of €0.25 and a maximum of €6. This is a regrettable development .

Mr PG, by e-mail

AULSTER BANK clearly still has some way to go to get its message across on the Visa Debit card which it is phasing in as a replacement for the more familiar Laser card. And, it has to be said, a large part of the problem seems to be of its own making.

In the first place, as you mentioned to me in a follow-up note, the bank issued a guidance brochure with the card when you initially received it. This spoke of charges – as outlined above – on cash withdrawals and purchases.

Unfortunately, it appears Ulster Bank did not make clear at this stage that the reference to such charges applied outside Ireland and the euro zone. The bank did subsequently issue a second brochure to clarify matters but, from what I hear, this served only to further muddy the waters.

As your experience also shows, contacting your branch and/or customer services has at times only added to the confusion.

Clearly the bank needs to start from scratch on its Visa Debit brochure and enhance its staff training in this area.

The situation is – I am assured by Ulster Bank – that no charges are applied by the bank either on ATM transactions or on purchases within the euro-zone. This is precisely the same as the position with the older Laser card with Cirrus or Maestro. Outside the euro-zone, charges may apply but these charges have also applied to Laser cardholders and continue to do so.

Cardholders should remember that in some places, the local ATM provider will levy a charge for dispensing cash. This used to be the norm in the UK for people using ATMs belonging to other banks than their own and is also quite common in ATMs provided in hotel lobbies and such places abroad. These charges also apply to Laser Cirrus or Maestro cardholders.

Similarly, I am told that certain retails abroad do charge customers for paying by card rather than with cash – presumably to cover the charge made of the retailer by the card company. This, too, applies regardless of whether the card in question is Visa Debit or Laser Maestro or Cirrus, I am assured.

Ulster Bank insists holders of Visa Debit will face the same terms as apply to Laser cardholders in terms of fees and charges. They also point out that the new card can be used to make purchases abroad in a way that Laser cannot.

Finally, it is worth noting in reference to the piece on companies going bust (other page) that Visa Debit payments can trigger a chargeback procedure, giving the customer added protection – a bit like credit cards. This does not apply to Laser cardholders.

QI OPENED an account with Halifax a couple of years ago. Their brochure suggested that their Visa Debit card was welcome in retail stores worldwide.

In my experience, they are not welcome in Lidl, at Irish Rail and in many other outlets in Ireland. As I do not travel abroad, I cannot give information on that side but I do think that your correspondent Mr GMcD should be warned. Lidl blame Visa; Halifax blame Lidl – could it be a question of charges?

Mr TH, Dublin

AHALIFAX WAS the first group to introduce the Visa debit card into Ireland and, unsurprisingly given the subsequent experience of Ulster Bank, it appears there were number of teething problems.

The biggest confusion appears to be certain stores and businesses not recognising the difference between the ubiquitous Visa credit card and the Visa debit card.

Lidl, for one, does not accept credit cards and there was a problem at first with staff assuming the cards were the same. Ulster Bank tells me they came across a similar issue at Lidl and took the step of sending their people into Lidl stores to clarify the situation and post information in staff areas.

I am assured that Lidl does now take the Visa Debit card (but not credit cards) as does Irish Rail. If challenged, customers should point out that the new Visa card is a debit card, as is Laser, and not a credit card.

QMyself and my wife have built a new house that we moved into recently. Is there any tax liability if our 20-year-old son stays in the old house (rent free)?

Mr JA, by e-mail

AThere are various areas of tax that could come into play with second homes (which is what this will be after you and your wife move into your new home) – income tax, capital gains tax, capital acquisitions tax and, of course, the non-principal private residence (NPPR) charge. However, in your case, the two key issues appear to be capital gains and the NPPR.

If your son is staying in the property rent free, clearly there is no rental income to tax and you make no mention of any intention to pass the property on to your son – at this stage anyway.

In relation to the NPPR, there is an exemption in the case of properties occupied by relatives who are not paying rent. This is called the “granny flat” exemption. However, the property must be within two kilometres of your new home.

You will be liable for capital gains tax (CGT) on the eventual sale of the property if you own it for more than one year after you and your wife move out – regardless of whether rent is paid. CGT will be levied on a pro-rata basis looking at the number of years (other than the last year of ownership) the house was not your main or principal private residence as a proportion of the total term of ownership.