My financial fads wishlist

As the economic crisis has eased, we’ve seen a resurgence of longer balance transfer deals (read full MSE News story), and very slowly rising savings rates. So it got me thinking, what other products or T&Cs from the pre-credit crunch era would I love to see get a second coming.

  • NO FEE balance transfers

    A couple of weeks ago, Santander launched a 0% for twelve months balance transfer deal (where you shift credit card debts to a new provider, at a lower rate). At first glance this was pretty standard, yet the details nearly toppled me out of my office chair – it didn’t charge a fee when you use the balance transfer.

    You can only get this if you’ve a Santander or Alliance & Leicester bank account, but it evokes reminiscences of the golden days when credit card tarts could keep shifting balances and never pay a penny. Pursestrings have tightened in the intervening years, and one-off 3%-ish fees are par for the course.

  • Guaranteed rate loans

    If a personal loan offers a typical rate of 10%, what is the interest rate of the loan? Sadly yes, that is a trick question. Not only is there a substantial chance of rejection nowadays for anyone without the credit rating that lenders crave, very often anyone after a loan can’t even be sure of the rate they’ll get if the bank says yes!

    These kind of loans are called ‘rate for risk’, and they’re all the rage. Banks accept applications for loans, but whack borrowers on a far higher rate than expected, leaving them with an expensive lump of cash they may not want (read Martin’s blog on our ‘Right to know rates’ campaign).

    Even more sadly for me, this opaque process is made worse by the demise of ‘guaranteed rate’ loans. These, prominently offered by Nationwide building society, said very plainly ‘If you get accepted for this loan, you WILL get this rate’.

    The interest rates on offer were always slightly pricier than the absolute best on the market, but the certainty that came with them, along with the knowledge that you wouldn’t be wasting a credit search, often more than sweetened the deal.

  • Headline-grabbing regular savings

    These were often much-maligned in the wider media, but in my opinion they were much-misunderstood too. Regular savings accounts let you make set monthly payments, up to a stated maximum (e.g £250/month), and often have tight restrictions on withdrawals or missed monthly deposits.

    They used to proudly wear super-high headline-grabbing interest rates (current top is only 4.5% AER – read Regular Savings guide) guaranteeing them media coverage. This was possible as savers could only feed money in bit-by-bit, so banks could advertise huge rates but didn’t have to dole out interest on big lump sum savings.

    It probably sounds as though their shady reputation was justified. However, smarty-pants MoneySavers used a technique called ‘drip-feeding’ to max the interest, and effectively save lump sums in them.

    As well as grabbing the 8%-ish regular savers that were on offer, you also opened the top easy access savings account, and dunked your cash pot in there. Then simply set up standing orders to move money month-by-month from one to the other, and earn the top interest possible on ALL the cash

These are just my geeky hankerings for financial fads of yesteryear – what are yours?

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