Tuesday 16 January 2018

New Visa debit card, replacing Laser, will remove online shopping quirk

Q: I like to make purchases online as I find I can get better value on the internet.

However, I no longer have a credit card as I decided to get rid of it in an attempt to control my debts. I find that my Laser card does not always work online. What are the alternatives?

A: People have been getting rid of their credit cards in record numbers.

Last year alone, around 100,000 credit card accounts were closed as consumers ran a mile from the high interest and high charges imposed by credit card operators.

Many have decided to stick with their debit card. The beauty of this is that you can only spend money if you have it in your current account in the bank.

Most debit cards in this market are still Laser cards, but this system is peculiar to Ireland.

This means that the Laser sometimes is not accepted when you want to use an internet site from outside of Ireland to buy clothes, DVDs or purchase tickets.

Anyway, the Laser card is being phased out with most banks here now offering the Visa debit card instead. This works just the same as a Laser card -- you can only spend what you have in your bank account -- except that the Visa branding means it is accepted worldwide.

An alternative, if your bank has not yet moved over to the Visa debit card, is to get a pre-paid money card.

You can sign up for the likes of an O2 Money, 3V, Moneybookers or Payzone Money card. You load up the card with your own money in advance. It works much as a debit card in that you can make purchases online or on the telephone but you can only spend what you have loaded on to the card.

It costs up to €10 for the card but these cards can be costly to top up.

For example, it costs up to €2.50 to load up the 3V card with €100, and between 39c and €2.99 to load up the 02 Money card.

Q: We have a first-time buyer's mortgage of €170,000 with AIB. We fixed the interest rate around five months ago and are on a rate of 4.39pc.

Since we fixed, the variable rate has reduced and so we were considering exiting the fixed rate.

We contacted the bank to be told we would not be charged a breakage cost.

I have read a great deal about how some banks charge thousands of euro in breakage costs. Is the bank doing this, perhaps, because our fixed rate is worth holding on to?

We would be moving to a LTV (loan-to-value) rate of 3.04pc. Monthly savings of €150 a month would result if we moved to the LTV rate.

A: Breakage fees were all the rage in 2008 when banks had locked into "expensive money" and were essentially stuck with that money and its costs if and when customers wanted to break out.

Frank Conway of Irish Mortgage Corporation said there was a case of a homeowner in North County Dublin who was asked to pay a breakage fee of €20,000.

That was late 2008, near the peak of the credit crunch.

The European Cental Bank then started cutting its base rate, but the market cost of money would have been really high.

Since then, some of the reasons for massive breakage fees have disappeared (though not completely).

Money is cheaper than it has ever been with central bankers keeping borrowing costs at record lows.

The ECB is also on a massive drive to flood the market with cheap money, and this effort has been well received.

If AIB is not charging a "break-out" fee, then you are free to move to the LTV rate. Get it in writing, if you do not trust the bank.

However, be aware that banks generally are coming to rely more on variable rate mortgages. This is because they have more control as they can increase the rates when they need to do so.

Q: I have heard that some people are due refunds on their PRSI payments. Is this the case?

A: Tens of thousands of workers are due a refund for overpaying their PRSI (pay related social insurance).

The Department of Social Protection has confirmed that €10m has already been paid back to taxpayers, who have received an average refund of €400.

The overcharging is due to the way the health levy element of social insurance was applied in 2010.

Anyone earning less than €26,000 was not liable to pay the levy.

However, if a person earned more than €500 a week the levy was automatically deducted from their pay. This means that they are due money back.

The refund is not automatic and the Consumers' Association of Ireland is advising people to check their payslips and apply to the department if they think they might be due some money back.

The address to apply for refunds is: Department of Social Protection, PRSI Refunds Section, Oisin House, Pearse Street, Dublin 2.

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