Most credit card users don’t know what interest they pay

And younger women are more likely to use cards for unplanned buys, new research shows.

Men are more inclined to use the plastic card for day-to-day spending than their female counterparts, the research commissioned by KBC Bank shows.

Around seven out of 10 people own a credit card. Most people use it for major purchases and unexpected expenses, the survey conducted by iReach on a nationally representative sample of 500 adults shows.

But one of the more shocking findings is that 71pc of people in the 25 to 40 age bracket admitted they have no idea what interest they are being charged for using the card.

This falls for the over-40s, with almost half knowing the current rate being charged for purchases on their card.

Credit cards interest rates can be as high as 23pc for purchases, with interest rates of up to 21pc for cash withdrawals on a card.

Many people said they used their card when they were abroad on their holidays, with women more inclined to use the plastic payment method when outside the country on a break.

Director of consumer finance at KBC Bank Rob Hurley said: “Our research shows that consumers are a diverse bunch, using their credit card to cover everything from big ticket buys to routine spending and foreign travel.”

Most people clear their card debt within the month, so avoid having to pay hefty interest charges.

The research found that 60pc of card users pay off the balance on the card account each month.

Those in the 25 to 40 age bracket are more likely to keep on top of payments each month.

Others pay half of the bill each month, with 8pc paying the minimum monthly amount.

With more than one in four people, the amount they pay off depends on their cash flow that month. This was particularly evident among younger female credit card holders.

Despite security warnings, one in ten confessed to letting their credit card out of sight when handing it over in shops or restaurants. A further 9pc admitted to storing the PIN for their card in their mobile phone.

KBC has extended an offer that gives a 4pc cash reward until the end of the month for those who sign up.

Those who use their KBC credit card to pay for online or grocery items will have their cash reward paid into their KBC credit card account at the end of each month. This means a customer who spends €1,000 in a month on online or grocery purchases would have €40 credited to their account.

Irish Independent

Overseas property affected by change to inheritance law

Fiona Reddan Tue, Aug 18, 2015, 01:00

Irish owners of holiday homes in Brittany, golf properties in Qunita do Lago, or apartments in Puerto Banus are now able, for the first time, to decide to whom they wish to leave these properties under new EU succession regulations .

The regulations came into force on Monday and will apply in relation to deaths after this date.

The rules are designed to allow people to apply their own national laws to their succession assets in other EU states which have signed up to the regulations, thus avoiding so-called forced heirship rules in place in many European countries.

These impose succession principles on the owners of properties, and determine how the property may be passed on to spouses, children and other beneficiaries.

In France for example, children may be entitled to three-quarters of the estate – even if this is against the wishes of the property owner who may wish to leave the property to a non-relative. In Ireland on the other hand, provided you have a valid will, you can decide to whom you wish to leave your estate.

Irish opt-out

Along with the UK and Denmark, Ireland opted out of the new succession regulations as, according to the Department of Justice and Equality, opting in would have “interfered to an unacceptable extent with the manner in which estates are administered in this jurisdiction”.

However, Irish residents are likely to still benefit from the rules if they own a property in one of the 24 other EU member countries, including holiday home hotspots Spain, France and Portugal, as well as investment sites such as Germany.

This is because they will be able to elect for the law of their own nationality – ie Irish law – to apply in these countries, which are bound by the new regulations. While Irish people with properties in the UK and Denmark won’t be able to apply the rule, it may be less of an issue, given the similarity of UK inheritance rules.

Succession planning

Solicitor and tax consultant Aileen Keogan, who specialises in succession planning, says the new rules are good news for many people.

“It’s a welcome regulation, as it definitely clarifies matters . However, it does remain to be seen what way certain ambiguities will be interpreted by local courts,” she said, adding that “ we will have to see it in practice”.

For those with property abroad, who wish for it to be passed on after their death in accordance with Irish law, action may need to be taken now.

Kildare-based solicitor Alvaro Blasco, who advises Irish people on Spanish property transactions and says it can be a “minefield”, says the new law is beneficial, but it means you will either have to make a will, or update an existing one, clearly indicating that you want Irish law to govern your estate.

“It’s extremely important to have a Spanish will which will assign that the law that governs that will is Irish law,” he says .

However, before making any moves it may be important to get tax advice also as, if people invoke the nationality rule, they may then find themselves caught in a “tax nightmare”, notes Ms Keogan, particularly in the case of France.

For reasons such as this, she recommends that people with foreign properties reconsider their wills and tax planning in light of the new rules.

Taking out cover for the unthinkable

Besides budgeting for essential things like childcare and day-to-day school costs and maybe a bigger car, many parents willingly spend hundreds – if not thousands – on extra-curricular activities, while also putting money aside for third-level college fees.

­After all, the aspiration is for perfect, well-rounded children who can play grade-eight piano, captain the GAA or soccer team, become chess masters and qualify for the finals of the Great Irish Bake-Off before they head off to university to carve out their high-level medical or legal careers.

But are the large numbers of parents who don’t take out some form of life cover not getting their priorities right? Yes, according to those behind several recent studies commissioned by Irish Life, Royal London and Laya.

They would say that, of course, being life insurers – but what their studies have clearly shown is just how low the take-up among parents is of this type of insurance.

Irish Life revealed last June that up to 500,000 parents of children under age 17 have absolutely no life insurance. Royal London surveyed 1,000 people nationwide earlier this year and found that 43pc of those in the 34-54 age bracket – the demographic most likely to need this financial protection – did not have life insurance, while two-fifths (42pc) of Irish parents responding to Laya’s recent survey also did without this cover.

“The fear is not that people aren’t prioritising, but that they aren’t actually thinking about it,” he said.

Referring to the Irish Life findings, he reckons that the majority of the 500,000 parents with no life cover have not thought about it, and “that they don’t realise the financial impact it will have if they die, and how much of a struggle it can be for the family.”

He said that some middle-income earners who can afford to take out life cover may well make a deliberate decision to prioritise other discretionary spending instead, like on extra-curricular activities, holidays and school trips – which, he says, is fair enough.

“If it was a conscious decision, that’s fine and you live with the consequences if something goes wrong, but the reality of it is that people don’t actually sit down and think about ‘what if?'”

As a financial planner, part of his job is to looks at a client’s assets, liabilities, income and expenditure before he can recommend to them how to plan their finances better.

“What doesn’t surprise me is how much they’re spending on extra-curricular activities; what surprises me is how surprised they are at how much they’re spending.”

Those who do purchase life insurance are often prompted by a new arrival to the family, a change of job and subsequent loss of employer life cover or the loss of a close friend or family member.

“Not everybody acts on those things, but it will cross their mind, but there are still barriers there for people who believe that it’s ridiculously expensive when it’s actually not.”

Some firms are offering term life insurance, which is the cheapest and simplest form of life cover, at rates starting from €15 a month. Term life cover pays out a lump sum or a monthly if you die within a set period of time, say 20 years.

“The cost of term life cover has reduced dramatically over the last few years, and life cover in general has come down considerably in the last few years.”

The last life insurance comparison by the Consumer and Competition Protection Commission from early 2014 showed that the cheapest quote for dual term life cover of €250,000 over 25 years for a non-smoking couple both aged 33 would was €37 a month, while similar cover of €190,000 for a non-smoking couple both aged 45 over 15 years would have cost around €54 a month.

Last week, the cheapest online quotes from broker for the same cover for the 33-year-old couple was €31 a month, while for the 45-year-old couple, the cheapest was €46 a month – both roughly 20pc lower than two years ago.

There are a number of options within term life insurance. You could opt for level term insurance, for which the lump sum payable remains fixed. For a little more, you can get index-linked term life insurance, for which the lump sum rises in line with inflation or some other measure decided by the insurer. It also means that premiums will rise a little every year, too.

A cheaper option is decreasing term assurance. “You can buy a considerable amount of cover today that would reduce in line with your need for that cover, and make it cheaper again than a term life contract.”

This fact may well surprise some people, according to Joe Charles of Royal London: “Many Irish consumers often believe that the level of life cover should increase with age.

“However, if you look at the risk analysis, it appears that the opposite for most people should often be true.”

Indeed, many people might actually have a higher level of cover later in life, at a time in their lives when they simply don’t need it. It’s easy to see how that might happen, as older people may have more disposable income and can afford more cover.

“However, if you think about it, it’s clear that a couple in their 30s with a young family have greater expenses and dependencies – and therefore they have a more pressing need for sufficient life cover than a couple approaching retirement with adult children who are no longer dependent upon them.”

But a common theme in discussions with life insurance-phobics is that it raises issues that might be a bit too close to the bone. Laya’s survey revealed that 25pc of parents were not comfortable talking about their death with their spouse and family.

“That’s pretty understandable – who really wants to allocate much of their day contemplating their own mortality?” said Mr Charles.

“What we tend to find is that the need for life cover protection is generally accepted – but, and this is often the crux of the issue, people’s estimates of the levels of cover needed don’t always match up with what is actually required.”

In its survey, the insurer asked respondents how long they believed a life cover payout of €400,000 would last if a family had monthly bills of €3,000.

Out of the 1,000 people surveyed, 340 believed it would last less than 10 years, while 140 people believe it would actually last more than 20 years. The right answer is that it would last just under 12 years, according to the firm.

The Irish Life survey also hints at a deficit in cover among those who do already have life insurance, with just 5pc of those polled having cover above €300,000 – while the average policy is worth just €152,040.

For anyone with an average income of €36,003, this represents just a little over four years’ salary.

Some couples with families may only take out cover for just the main or sole breadwinner rather than a joint or dual life policy in order to save on the premiums, but don’t discount the monetary value of the work of a stay-at-home parent, advises Mr Charles.

“Although it may be an unpleasant thought, in the event of the stay-at-home parent’s death or serious illness, it may simply be unaffordable to someone to undertake the typical household jobs carried out by them.”

Sunday Indo Business

AIB to cut standard variable rate to 3.65pc for all customers, makes €1.2bn profit

The reduction will come into effect during October. It will save customers on a €200,000 mortgage about €325 a year.

The bank also announced a 0.25pc reduction in its loan to value mortgage rate to 3.35pc, which will also come into effect during October.

The organisation made the announcement alongside its first half results which show that the bank made a pre-tax profit of €1.2bn, an increase of €800m compared to the same period in 2014.

Profits were boosted by a €540m write back of provisions made for bad debt, which went straight to the bottom line, as well as €100m worth of gains made from disposals and other items.

Lending approvals to customers increased by 21pc year on year to €6.9bn. Net loans and the banks loan to deposit ratio were broadly unchanged compared to December 2014, with net loans of €64bn and a loan to deposit rate of 99pc.

Operating expenses, excluding exceptional costs, were down by 6pc or €38m while impaired loans decreased by €4.2bn to €18bn.

Chief executive Bernard Byrne said: “In the first half of 2015 we continued to execute our strategy to transform the group and as a result we improved our underlying performance alongside the significant net provision writebacks and other additional gains.

“We also strengthened our balance sheet and reduced risk by further significant reduction in impaired loans. We remain focused on delivering a bank with market leading capital returns and a clear and transparent risk profile.”

Chairman Richard Pym added: “These results are extremely encouraging and reflect the support of our customers, the efforts of our staff and the recovering national economy.

“The financial outcome for the half-year is significantly ahead of the expectations we had at the beginning of the year and reinforces our endeavours to see all of the €20.8bn invested in AIB by Irish taxpayers repaid.

“Whilst any decision on a future sale of AIB is entirely one for the Irish Government, the results so far this year significantly improve the prospects for a successful transaction whenever it happens.”



Irish Life continues to grow business in second quarter .

Company contributes €45m to parent company Great-West Lifeco’s profits

Irish Life continued to grow its business in the second quarter of the year, contributing €45 million to its parent company Great-West Lifeco’s profits.

That compares with €38 million in the same quarter a year earlier.

The investment and pension company said its retail Multi-Asset Portfolios investment product exceeded €1 billion in assets in its first year.

The company also said the Irish Infrastructure Fund, which was established by Irish Life Investment Managers, has also acquired the contract to operate Dublin’s convention centre for the next 20 years.

Great-West Lifeco reported total sales of of $24.5 billion in the second quarter of the year, up 52 per cent from the same period a year earlier. Its European sales rose 21 per cent on strong growth in Ireland and Germany, reaching $3.4 billion for the period.

Net earnings in its Europe business that were attributable to common shareholders in the second quarter were $289 million. The figure was up 17 per cent year on year, with 2014 showing $246 million for the same period.

Great-West said it expects to beat its targets for the acquisition of Irish Life, predicting it will realise €48 million in annualised synergies as a result, rather than the €40 million target it initially predicted.

Irish Life was bought by Great-West Lifeco in 2013, and Irish Life Group chief executive Bill Kyle said the integration with Lifeco was now complete, at an investment of €56.5 million.

“Despite the complex nature of the integration process we managed to exceed all targets and achieve our highest customer service scores during the period,” he said. “To have achieved significant business growth during this period is even more impressive.”

Thousands in line for Standard Life payout

The payment is worth close to €1,000 each for an estimated 60,000 Irish shareholders.These people ended up with shares in the Edinburgh-headquartered company when it de-mutualised, and floated on the London Stock Market in 2006.

Now the insurer has sold its Canadian division, and plans to pay €2.18bn of the proceeds of the sale back to the shareholders.A spokesman for the company said the windfall would work out at around £740 (€923) on average for the 60,000 shareholders here.That means a total of more than €55m will be coming to shareholders in this country when the special payout is made.However, it will be early next year before payments are issued.

Shareholders will have to decide how they want to take their windfall.They will have a choice of getting new bonus shares, or they can instead choose to take cash in the form of a one-off dividend.If shareholders choose the shares and decide to sell them, then they will have to pay capital gains tax on any capital appreciation, with the tax rate on this at 33pc.Taking the windfall in the form of a special dividend will expose them to income tax. If they are paying tax at the highest rate, this could mean 52pc of any gain goes to the Revenue.

Tax experts said choosing to pay capital gains tax was usually more favourable than paying income tax.They said Revenue was likely to issue tax guidance when the shareholders are due to make a decision.

Standard Life is due to post a circular on the sale of its Canadian division to its shareholders this week.Shares in Standard Life, which has a large operation based in Dublin, have doubled in value since the company “went public” in 2006.At the time there were more than 90,000 shareholders here, but around a third of those have since sold out.But it still has a huge number of retail investors in Britain and Ireland.When Standard Life floated eight years ago policyholders received an average of 640 free shares, with a further 32 shares if they kept their holding for 12 months.About half of the group’s membership was entitled to payments of between €725 and €1,450 each from the biggest mutual player in the European market. The other half were entitled to more than €1,450 each.Overall, the windfall was worth around €70m.Standard Life is selling its Canadian operation to Toronto-based Manulife for £2.2bn (€2.7bn).The deal still has to go through several processes, including a shareholder vote, but these are said to be formalities.After that, £1.75bn (€2.2bn) will get returned to shareholders. Standard Life chief executive David Nish said the deal allows the company to realise the value of the business, which has been turned around in recent years.The capital payout of £1.75bn, equivalent to 73p per share, will take the total amount of dividends and returns to shareholders since 2010 to 147p per share.

Good news for Tracker holders not so good news for savers

Most market watchers were surprised when the key eurozone lending rate came down from 0.15pc to just 0.05pc, a low unlikely to be seen again.World stock markets and the Irish exchange surged after the European Central Bank cut its interest rates to the bone.

ECB boss Mario Draghi also announced an economic rescue plan that could see up to €500bn injected into the 18 countries that use the currency.The cut announced yesterday, combined with the previous reduction in June, will mean annual savings of €240 in repayments on a €200,000 tracker mortgage.

Mr Draghi’s bid to kick-start growth across Europe comes at a time when Ireland is one of the few countries in recovery mode.

While the move is primarily aimed at revitalising economies in Germany, France and Italy, for Ireland it means:

  • Pressure on lenders to ease off on mortgage rates for new home buyers.
  • Savers are the big losers as banks continue a two-year campaign of rate cuts
  • Exporters will get a boost as the value of the euro started to fall, making goods that are sold abroad more competitive.
  • More credit is set to flow for small businesses.
  • Existing variable mortgage holders are to miss out on benefits, as banks are unlikely to pass on the rate reduction to the 200,0000 with these mortgages

The ECB’s lending rate has now come down from a high of 4.25pc in July 2008. The move will benefit 375,000 tracker mortgage holders, and comes just three months after the last reduction.

Homeowners who owe €200,000 on a mortgage will save around €10 a month from the latest reduction, which works out at €120 a year.

This is because banks have to reduce interest charged on trackers every time the ECB cuts its rate.

Lenders have been accused by Mr Burgess of making a €1bn a year in super profits from variable rates. New borrowers here are paying around €4,000 a year more in repayments than the average in the eurozone.

Now the Professional Insurance Brokers Association (PIBA) has called for a cut in variable rates.

Rachel Doyle of PIBA said:

“Banks were quick enough to raise variable rates when the ECB rate was going up. That should work both ways.”

Deadline for Vodafone Shareholders

If you are a Vodafone Shareholder you have until the 20th February to return your form which will determine whether or not you pay tax on the payment you recieve under the Companys deal with the U.S telecoms giant Verizon.

To avoid paying tax on the “Return of Value” i.e the paymenty you get under the deal – you should indicate that you wish to recieve your return of value as capital.

The share bought in Eircom in 1999 became Vodafone shares in 2001. If you still hold these  shares you most likely made a loss on your initial investment in Eircom. The Revenue Commisioners have indicated that you wont have to pay tax as a result – as long as you recive your payment as capital.

Major Changes to Retirement Planning – Budget 2014

  • Pension Levy increased from 0.6% to 0.75% for 2014 & 0.15% for 2015
  • Standard Fund Threshold(SFT) reduced from €2.3 million to €2.0 million effective from 1st January 2014
  • Planned changes in Pension for relief backdating
    • File and Pay/Pension Backdating  deadlines to be brought forward in 2014
  • DIRT & Exit Tax increased to a new single rate @ 41%
    • Change to depositss as the current DIRT rate where interest is calculated at least annually, rate was 33% increased to 41% – increase of 8%
    • Exit Tax on Investment Policies increased by 5% to 41%
  • Deposit Interest to be subject to PRSI in 2014

————————————————————————————————————— Michael Deasy Deasy Financial 10 Dublin Road, Drogheda, Co. Louth

Tel: 041 9810156 / 7 Mobile: 087 2209001 Fax: 041 9810200


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Michael Deasy Financial Solutions Ltd T/A Deasy Financial is regulated by the Central Bank of Ireland