1. Home
  2. UK Finance Discussions
  3. financial illiteracy

financial illiteracy

Was talking to beloved the other day about money.

Mrs BM: Isn't renting a waste of money? MB: Renting what? Mrs BM: Renting property. It's just money down the drain, isn't it? BM: Er, no. At the moment the cost of renting *property* is about 5%. The cost of renting *money* to buy property is also about 5%. So they're the same. Mrs BM: Eh, what? But it's just money down the drain. BM: What if you rent somewhere valued at 100,000, live in it for a year for

5,000, and a year later it's worth 90,000. Who's poured most down the drain? You or the bloke who paid 5,000 on a mortgage on it? Mrs BM: But it's just money down the drain.

Some people, really.

Another one is overdrafts.

Mrs BM: I'm going to go overdrawn this month. BM: What's your overdraft rate? Mrs BM: 17.9%. BM. Christ. And what's your credit card interest rate? Mrs BM: 8%. BM: So borrow on your credit card. It's cheaper. Mrs BM: But everyone knows borrowing on cards is expensive.

There's a lot of this about, isn't there?

Reply to
The Blue Max
Loading thread data ...

In message , The Blue Max writes

Your right!

Reply to
john boyle

What has happened is that people used credit cards because negotiating an overdraft with the bank used to be tiresome. Credit cards came along and offered trouble free credit but charged by the month IE

1.9%/month. So the banks then responded by offering an overdraft facility of GBP N,000 ?, guaranteed, without having to ask. But without making it clear they were charging credit card rates of interest. Meanwhile comers-in to the credit card market started offering credit card debt at bank loan (not overdraft as originally were) rates. That's still beneficial for the borrower BTW.

If you are smart enough and devote enough time you can beat them at their own game.

DG

Reply to
derek

His right to what?

Reply to
usenet

... but sometimes one has better things to do with one's time.

Reply to
usenet

Absolutely,

It's funny you should mention that because today I had an email from smile to point out that last year the BOI increased rates by 0.25%, and once again have increased rates by 0.25%, but Smile have not changed the rates on their smile mini ISA. Just great that, hey?

But they go on to say that if I had a smile current account I could get an extra 1% on my smile mini ISA but I'd have to pay a minimum of £1,000 into my smille current account. If I had one. - That is. - But I don't -, and the bank rate has increased *twice* whilst there rate has remained stable.

Fandabbydozy!

But I don't want to spend the whole of my entire life monitoring balances, and bicycling cheques between accounts. So unless I can do it automatically It's too much like hard work, especially considering the time the banks claim it takes to clear cheques.

If I have to re- arrange my affairs to get reasonable up to date rates I'd just as soon look somewhere else.

DG

Reply to
derek

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.