herald

Saturday 3 December 2016

Consumer Champion: Borrowing to go back to school? Run the rule over the smartest loan options

Students learning in library
Students learning in library

You're busy buying uniforms, rooting out last year's schoolbag and trying to find shoes that fit ever growing feet.

Or perhaps you're sticking your head in the sand and hoping August won't come to a crashing end in the next few weeks.

However you approach Back To School time, one thing's for sure: it won't be cheap.

This week I'm looking at money options - loans specif- ically to get you over the period, but also money tips for children and older students to help budget and plan so that finance isn't so much of a chore. Primary School

A Barnardos survey out this week shows it costs up to €400 to get a child back to primary school.

While most schools now have book-rental schemes, the costs do pile up and many families, especially if they have a number of small children, resort to loans.

Most credit unions offer reduced loans for education or if you have secured savings - that is, the amount in savings to cover the loan.

For example, Dundrum Credit Union's normal rate is 11.02pc for a loan, but a secured savings option is 6.7pc.

It means that €1,000 borrowed over one year costs €19.87 per week, with the cost of credit €33.36 overall. Do ask about special rates as they can apply to different loan types.

self-help: It's great to give young children pocket money as they learn to budget. Set rules such as save-half, spend-half, and use a piggy bank so they can see their money building up.

If you can afford it, give the same amount as their age (for example, €8 for an eight-year old), but if they spend it all there's no top-up. They'll soon learn to eke it out.

Secondary School

Digital e-books, voluntary contributions (that aren't) and expensive trainers - the teen-ager has a lot going on and their parents have an awful lot to pay for.

School costs can tip over €700 per child, says Barnardos, and only 37pc of schools have a book rental scheme, which is disappointing, despite extra funding from the Government in this area.

There are good refurbished laptops and tablets avail-able from Amazon, Laptops- direct and some Oxfam shops.

Back to school lending is also recommended with credit unions, but regular bank personal loans of short duration don't differ that much in interest charged.

Bank of Ireland's loan rates are as low as 7.5pc starting from €300, but you need to meet certain criteria.

Separately, Tesco has an offer of Clubcard points with every euro spent on www.schoolbooks.ie which will keep grocery costs down.

self-help: Teenagers should have a bank account with free banking, which all major lenders offer.

Pocket money, part-time jobs and gifts should be deposited, and setting up a side-by-side deposit account is also free, leading to better money management and saving habits for things they want.

Starting off a credit union account now means a track record is in place when they need a student loan for university.

College

College students can take out their own loans - both AIB and Bank of Ireland offer student rates, the latter having an interest-free €1,500 loan which is unbeatable (parents go as guarantor).

AIB's personal loan rates are 1.5pc cheaper than standard, and they have a rolling four-year Student Contribution loan which draws down €3,000 per annum over four years, repay- able at 8.76pc, which is up to 3pc below standard rates.

Overall, rates are not a whole heap better otherwise (see table), so the credit union may still be the best option.

SELF-HELP: Many shops offer discounts on presentation of a student card and budgeting becomes vital.

Learning to cook, getting a student travel card and planning for household bills if you're living away from home are all good steps to get started.

 

 

Broker best for health renewals

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Most of us use an insurance broker for motor, house and life insurance. We figure they've done the leg-work and can find an affordable policy. However, research from Glo Health shows that only 13pc will use one to get through the maze that is health insurance.

With more than 220 plans on the market and frequent changes in cover from one year to the next, it's a minefield that most of us would prefer to avoid.

The numbers taking out private cover have gone up, thanks to Health Minister Leo Varadkar's "stick approach" of penalising over-34s, loading the premium by 2pc a year the longer you wait.

Whatever the merits of this (a better approach would be the "carrot" of increasing tax relief and making plans cheaper), it means the number of those covered has passed the two million mark.

Still, it's a bewildering product that companies complicate with tough terms and conditions. I'm not certain the DIY approach is best as I find even the State's Health Insurance Authority (hia.ie) website asks too few questions.

Adviser

Renewing automatically is worse. An adviser knows that different plans suit different family members and can understand all those corporate plans too, which many don't realise are available to the public, even though they are priced lower for group use. Try and save money on renewal.

 

Free app helps you cut your phone bills, and now it's for pre-pay too

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THE KillBiller app, which uses your mobile phone data to determine which price plan is best for you, has just been extended to pre-pay phones.

As 50pc of users are pay-as-you-go, this is good news for them. Simply download the app, which is free, and let it do your thing.

It will list, in order, the cheapest options depending on whether you use texts, calls or data the most. I was delighted to see I'm already on the best plan for me, but will keep a close eye on the nearest options before renewing my contract next time.

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