Questions of Cash – February 2016

Posted on March 29, 2016 · Posted in The Independent

Q. I recently found some Visa dollar traveller cheques issued by Citicorp, which are about 15 years old and have a face value of $500.  I would like to cash them in.  I took them to Lloyds Bank, which has my current account, which initially accepted, countersigned and stamped them.  Three days later Lloyds called me to say that its head office had refused to accept the traveller cheques and would I please collect them.  Lloyds then told me to take them to Barclays.  However, Barclays refused to accept them as they had been stamped by Lloyds.  Lloyds refuses to take responsibility for its mistake.   I don’t have the original receipts any more.  HV, by email.

A. We spoke with Citi, which is willing to encash them, but needs to discuss with you the most practical way to arrange this.  A spokesman for Citi said: “Clients need a financial institution they can count on for the long term, so Citi is pleased to assist in covering the value of these cheques in this instance.”   You tell us that in the mean time you escalated your complaint with Lloyds. “The bank have now said they will refund on the cheques as well as compensate me for inconvenience and a goodwill gesture,” you tell us.

Q. TalkTalk has refused to provide any information about the VAT charged on our phone and internet account. First I was told I would need to subscribe to paper billing, but that gave no information and then I was repeatedly promised letters that never arrived.  I want to know if I have been overcharged.  My utility company charges 5 per cent VAT, but it seems that I am being charged 20 per cent by TalkTalk.  GP, London.

A. VAT has been charged correctly. Energy is subject to a reduced rate of VAT at 5 per cent.  Telecoms, including broadband, are subject to the full VAT rate of 20 per cent.  But TalkTalk apologies for not providing an adequate response when you requested VAT invoices.  There is a section on its website – http://help2.talktalk.co.uk/how-do-i-request-vat-invoice – which explains how to arrange both paper and VAT invoices.

Q. I am purchasing a buy-to-let apartment.  I own three other properties, which I financed with cash.  This latest property will cost me £51,000 and I have about £30,000 in cash.  I am 62, self employed and my taxable income is between £50,000 and £60,000 a year.  What is my best mortgage option for raising the other £20,000?  I can probably repay the money in full within two years.  BB, Northern Ireland.

A. Ray Bolger of John Charcol mortage brokers questions whether a mortgage is your best option.  Set-up costs can be high, most lenders will require a minimum loan of £25,000 and you need to find a mortgage that comes without early repayment charges (EPCs).  As you are buying a property in Northern Ireland, you are further restricted as several lenders will not provide loans there.  “I think you would find it cheaper to borrow on an unsecured basis, either an unsecured loan or a 0 per cent money transfer credit card deal, or perhaps a combination of the two,” he says.  “With several lenders offering unsecured loans from £7,500, up to as much as £25,000 in some cases, I think this would probably be a better option than a mortgage.  Of the credit cards which offer a money transfer, Virgin Money currently has the best deal for new customers. It offers 0 per cent for 32 months for a 1.69 per cent fee. Once the fee has been paid there are no costs for two years and eight months.  For disciplined borrowers, the best way to maximise the benefit of this card is to set-up a direct debit to pay the minimum each month and put any additional savings in an account which pays interest, with the intention of saving enough to pay off the credit card after 32 months. The effective cost of the money on this basis is under 0.7 per cent p.a.  MBNA also offers this facility, but is less competitive. Both Barclaycard and MBNA offer money transfers to some customers.  The best rate currently on offer on personal loans is 3.3 per cent, from HSBC, M&S and Zopa:  M&S provides loans between £7,500 and £15,000 for up to seven years; HSBC provides loans between £7,000 and £15,000 for up to five years; Zopa provides loans between £7,500 and £15,000 for two to five years. Zopa offers loans between £15,001 and £20,000 for four or five years at 3.6 per cent and between £20,001 and £25,000 for one to five years at 3.9 per cent. There are no early repayment charges with Zopa.  As a comparison, for a small remortgage on a buy-to-let basis meeting the key requirements, the cheapest mortgage is from Leeds Building Society at 2.4 per cent, which is a 3.59 per cent discount off its standard variable rate for two years. This is available up to 60 per cent loan to value and has a fee of only £199, a free valuation and on remortgages free legal fees. There are no early repayment charges.”