Today, a High Court judge ruled that bank charges ‘can be unfair under UK law’. This has come about because over the last couple of years lots of us have been demanding that banks refunded our bank charges. You know the kind of thing, £30 for an unauthorised overdraft, another £30 for the letter TELLING you you have an unauthorised overdraft.

People were getting increasingly fed up with these brutal charges. Last year, customers started to reclaim millions of pounds of charges through the courts. Ad hoc basis, some courts ruling one way, some another. So OFT, 7 High St banks and a Building Soc sought clarification through High court. And while that case has continued, further refunds have been put on ice.

The way people were getting their money back was by claiming that the charges were unfair or ‘penal’. The banks argued in court that the charges weren’t penal (ie penalties) but were just fees.

Now the Judge, Mr Andrew Smith has actually agreed with the banks up to a point. He said that these charges are not, by definition unfair - so banks ARE allowed to levy charges. BUT THE INTERESTING BIT FOR BANK CUSTOMERS is that his ruling DOES shatter banks’ argument that the charges were exempt under a 1999 law, called the Unfair Terms in Consumer Contracts Regulations (UTCCR). tHE OFFICE OF FAIR TRADING (THE OFT) won ruling in High Court that BANK charges come under ‘unfair contract’ rules, designed to protect customers.

HOW MUCH ARE WE TALKING ABOUT?!
OD charges worth 3.5bn a year to banks. £500m already paid back, but on hold while the test case proceeded. STILL on hold as just preliminary ruling. HSBC has said the ruling could cost £303m, but I’ve read other analysts predicting £1.1bn.

What next?
The next hearing is 22 may 2008, and next stage is for the Courts to decide a fair amount for charges … if you’ve written to your bank and are awaiting an answer, it’s still on hold to then.

REMEMBER!!!
This is about reclaiming bank charges, NOT credit card or any other fees.

WHAT TO DO?
In short, you HAVE to claim on an individual basis … ie write a letter. Even though NOTHING will be actioned by the banks till 22 May, you still want to get a dated letter off to your bank if you think you do have a claim, because claims only go back six years in England and Wales and, I’m sorry to say, only five years in Scotland!

It’s not all good. Many customers whose accounts stay in credit would argue that that they’re being rewarded for prudence. If there is no charge for going overdrawn (customers might call it a penalty but the bankers would just call it a fee) then there’s no reward for running your account well. The banks would also argue that SOMEONE has to pay … though that’s a tough one to swallow if you’ve just been charged £30 for being £5 overdrawn for 3 days.

SO DOES IT SPELL THE END for free banking? There is an argument that the banks are so competitive for cash just now that they WON’T start levying charges for fear of scaring customers away. But if they have A black hole of UP TO £1BN they have to fill it from somewhere. My hunch is free banking is on the way out. Get your letter off to the banks now. I’ll have more on this story as it develops, and we’ll be posting some links on how to claim.

And if you are suffering with your finances just now, check out Financial tips of the week: adverse credit problems UK for advice on how to start repairing the damage.

This week on the Wallet Watcher personal finance podcast we talk about:-

• What is a principal sum?
• What is compound interest?
• Pay yourself first
• Council Tax rebanding

Thanks for the emails, keep them coming in to walletwatcher@btpodshow.com. Also be sure to pay a vist to the Wallet Watcher blog for articles on petrol prices in the UK, personal finance companies, credit card balance transfers and Bank of England interest rate cuts.

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Hardly anyone has a good word to say about the ever-rising Council Tax, yet we all grumble and pay up. Yet, while you can’t do much about the rates of Council Tax, you may be able to get your property switched into a cheaper band. And Council Tax rebanding means you can enjoy savings of hundreds, even THOUSANDS of pounds.

The reason is that Council Tax is a bit of a mess to start with. Think back to the early nineties, the Poll Tax riots and the desperately hasty launch of the replacement system … Council TAX.

All houses in England, Wales and Scotland were swiftly banded, from A to H, depending on the value of the property. It doesn’t take a genius to work out that with millions of homes rated over a period of months, some of the estimates were arbitrary and plain wrong.

There are many thousands of people in this country in higher bands than their neighbours … though in identical houses, often right next door.

And as nobody’s making much of a fuss, nobody in officialdom in England is DOING anything about changing it. Back in 1995 Welsh properties were rebanded, though Welsh property owners should still check.

And it’s very easy, with websites to help you do it. In England and Wales you should go to the Valuation Office Agency or VOA. In Scotland visit the Scottish Assessors Association (SAA).

Go to the website and tap in your postcode and you’ll be told your council tax band. Then do the same for a neighbours’ house. It HAS to be comparable to yours in size, bedrooms and so forth, so, if you live in a semi, start right next door.

Then radiate out, finding similar properties in the area until you have a few that are rated lower than yours. Okay, you now have your first piece of evidence.

Your second is to find if your property was actually valued wrongly in the first place. Properties under £40,000 (yes there were such things back then) were placed in Band A.

Band B covered £40,000 to £52,000. Band C from £52,001 to £68,000. Band D from £68,001 to £88,000. Band E from £88,001 to £120,000. Band F from £12,001 to £160,000. Band G from £160,001 to £320,000. And Band H for homes of £320,001.

A salutary lesson in how prices have SOARED over the last 17 years.

Take the current value of your house and feed it into the Nationwide House Price Calculator, which will give you an estimate of its approximate value in 1991. Then compare that price to those bands we’ve given you above - this will help you in your case of getting Council Tax rebanding.

Now a word of warning here. Speculative punts are NOT a good idea. I punched in my postcode and worked back from the price I paid for my house in 2001 to the estimated value in 1991.

According to that data, my house is actually in a LOWER band than it should be. Now these figures are a blunt tool. In fact, it’s MORE likely that house prices where I live in London have simply gone up higher than the average.

But be warned … a speculative assessment could actually see you getting PUSHED up a band. Unlikely, but possible. Also be aware that the ‘reverse valuation’ we did there has no legal basis, as it is simply a guesstimate … but it’s all useful information in your quest to reclaim your cash.

Let’s say you DO think you have a good case. If you’ve been in the house six months or less, then appeal directly to your local authority (the council in other words).

If it’s longer than that, then you have to go to the VOA (in England and Wales) or the SAA in Scotland. You can appeal online … it’s quick and it’s easy.

And the potential gains can be huge. Remember, in England and Scotland the bands haven’t changed since 1991. So if there is a rebate to be paid, it could potentially be thousands … all the way back to 1991.

And even if you can’t get Council Tax rebanding changed, check you’re getting any council tax rebates you’re entitled too.

If you earn under £16,000 a year (or £9600 if you don’t have kids), if you live alone, if you’re in full time study, if the property is empty, if you are disabled or a carer … you are liable to at least a discount or possibly exemption. Contact your local authority to find out where you stand.

Links: Council tax banding England and Wales, Council tax banding Scotland, How the Council tax bands were set in 1991, Nationwide House Price Calculator

Tags: Council Tax rebanding, Council Tax rebanding article, council tax reclaiming, standing order

A long established financial principle. Set aside a sum you WILL save each month - it can be £50 or £500 - and set up a standing order to salt it away in a savings account. If you wait till all the bills are paid before you tuck something away you never will. Pretty soon, you won’t even notice the money going from your account each month.

Tags: Regular savings account

This is the rule whereby you earn interest on your interest on your interest. It’s not going too far to say it’s the rock on which capitalism is built. Apply it to property, to investments, to any form of capital in fact and it will slowly, steadily make you rich.

Tags: compound interest, compound interest explained

Learn the difference between the principal and the interest. Too many of us pay off interest on loans, credit cards and the like each month without ever chipping into the core of the sums we owe. That’s how people can borrow £500 to buy a new hifi and, years later, have paid off loads of interest and STILL owe £500. That immovable sum is the principal. Look at the big picture of what you owe.

Tags: principal sum, principal vs interest

Petrol prices in the UK have been going only one way over the last few months. Conversations in my house tend (rather monotonousl) to have followed the pattern ‘That’s the first time I’ve ever got £50 worth of petrol in the car’, to be followed swiftly by ‘That’s the first time I ever got £60 worth of petrol in the car.’ With that in mind I paid a visit back to Petrolprices.com to see how much difference it could actually make to my weekly fill up. Petrolprices is a typical Web 2.0 interface, the classically Google-simple front page simply offering a large type-in box where you enter your postcode. Register, the work of moments, and you are given the five cheapest filling stations for your unleaded, diesel, premium or whatever.

Now Ive been slightly sceptical about fuel price comparison sites in the past. The way I buy buy petrol is 1) I notice I’m low and 2) pull in at the next filling station. The idea of driving out of my way to get to a cheap petrol station (thereby using petrol notice) has always struck me as counter productive and distinctly ungreen. I’m also wary of becoming the sort of middle-aged man who obsesses about petrol prices and discusses them with his workmates. Such conversations often continue with the relative merits of leaving the M6 at Junction 5 or Junction 6. But with local variations from 105p a litre up to 118p, I’m saving around £6 a time on each fill up. Using my unreliable maths, I work out that the additional driving I’m doing is costing me 30p … though is it worth an extra 30 minutes of my time to drive there and back? A complex sum which you’ll have to do for yourself.

Incidentally, a quick look at the petrolprices.com blog (I kid you not) reveals the usual litany of ‘NuLabour are a bunch of thieves’ and ‘this country is finished, I’m moving abroad’ complaints, so I’ll not be lurking there for long. But petrolprices gets an honourable mention as this week’s financial deal of the week.

The credit crunch and its attendant problems for UK consumers are focusing people’s attention as never before (well not since the early nineties anyway) on getting their finances sorted, and we’ve had a raft of enquiries as to whether there are personal finance companies that can actually help you get your finances back in order. It kind of follows on from my recent post about personal financial advisers and whether you do, or don’t really need one. My personal take on IFAs is that, given the research you can do the job yourself … to a certain degree, though for mortgages you’re always going to want to talk to an adviser as the deals change daily. But ‘personal finance companies’? This perhaps exemplifies part of the problem we have in the UK now with our finances. IFAs will help you buy new products, but as for sorting out the spaghetti of your own budgeting - nobody can do it but you.

The good news is that you don’t need anyone else. There is so much information out there now. As well as walletwatcher we’d give an honourable mention to sites such as fool.co.uk, thisismoney.co.uk and moneysavingexpert.com. There is very good personal finance software, which I’ll be covering in more depth in a post later this week, and there are superb online news pages from the Financial Times, the Telegraph and myriad others. The main things to do are as simple as they always were - pay down debt, get organised, get a complete picture of your financial standing, cut out waste. In fact you could let your granny and grandad be your personal finance company, as it’s homespun wisdom they would have appreciated.

This week on the Wallet Watcher personal finance podcast John Rennie talks about:-

• Always make a shopping list
• Shop at the bargain sheds
• How to quadruple your supermarket loyalty cards
• Setting up Direct Debits

Always great to hear from you, our email address is walletwatcher@btpodshow.com with your personal finance questions. Also be sure to pay a vist to the Wallet Watcher blog for articles on credit card balance transfers , Bank of England interest rate cuts , car finance calculator and why is my mortgage so expensive? .

Wallet Watcher is brought to you with GoDaddy.com and offers you some great discounts on domain names and hosting. Use our Wallet Watcher GoDaddy discount codes to save money - wallet1 gets you 10% off domain name purchases and wallet2 gets you 20% off orders over £25. Some restrictions may apply so see the GoDaddy web site for details.

Tags: always make a shopping list , how to quadruple your supermarket loyalty cards , shop at the bargain sheds , personal finance

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This week I look at making your life easier and your bank balance healthier, by using direct debits to the maximum.

But let’s get our terminology straight before we start. As well as direct debits (where a company draws money from your bank account), there are also standing orders (where you tell your bank to pay out a fixed amount each month). These are now less common than direct debit, but they’re perfectly safe as you can stop them any time you like - they’re also good for paying regularly into a savings account.

The one to seriously avoid is ‘recurring payments’, typically where you give your Credit Card details for a magazine subscription or the like. Be aware that you’re giving the company carte blanche to keep drawing cash from your account, and you don’t have the same protection as under the Direct Debit scheme, which is strictly regulated.

Okay. Direct Debit Saving number one: Providers will give YOU a discount for putting things on direct debit. Gas and electricity providers should be offering you a discount of around 10%,

The reason they give that discount is that bills are based on estimated usage - and they tend to be higher than your actual usage, thereby leaving you in credit. They have that as security and also earn interest on your money. It’s a small price to pay, as your discount is more than the interest your money would otherwise have been earning in your bank account. But to SAVE the maximum, send back regular meter readings to the provider and get your DD reduced if it’s too high.

At the same time of course, CHECK that you are using the cheapest provider. I’m not in favour of continually switching power providers as that just eats up in time what you save in money - once a year is enough to check you’re getting the best deal.

Direct Debit savings with phone and broadband providers tend to be smaller, but they can still be saving you lots of time and headaches. The great thing about direct debits is that they are for a variable amount. Where they can REALLY score is paying off your credit card bill each month. ALL OF IT. You don’t need to worry if you’re going to be paying interest on a purchase you missed. This will save you a packet … trust me.

Whatever you do, don’t set up your Direct Debit for the minimum credit card payment each month … that way you’ll just be running up interest and servicing the debt.

And don’t assume direct debits are good for everything. Insurance of all types is one financial area where you’ll usually pay MORE by not paying the premium upfront. If you can afford to pay the whole lot now, it’s usually worth doing so. Do the sums on monthly or one-off payments before you sign the agreement. The TV licence is also cheaper to pay upfront. Another thing to beware is a Direct Debit taking you into overdraft. If your current account is running low, you could risk fines from your bank if that moneysaving debit takes you into the red.

Saving number two: The old cliché has it that time is money, and you can save LOTS of time by putting ALL your regular and unavoidable expenses (gas, council tax and the rest) on direct debit. You’ll also save all the time and worry of missing payments, and the possible fines that accrue, and you’ll save many hours a year hunting through paperwork, writing cheques and trucking off to the post box. Now spend that time on something you enjoy doing instead!

Saving number three: CANCEL direct debits. No, I’m not contradicting the first point. The fact is LOTS of us set up debits for things then forget all about them. The problem with direct debits is that they ARE SO convenient. You set up a charitable giving direct debit years ago and, because you never look at your bank statement, you’ve never noticed the five pounds a month trickling from your account.

Common mistakes I’ve found are people having two lots of travel or other insurance (and this is money you’ll never get back), and simultaneous subscriptions to the AA and the RAC. Do an audit of your direct debits – your bank will be able to provide you with a list of the ones you have running on your account. Then cancel any that are doing you no good, but simply leeching money from your account each month.

Okay, now we’ve cleared the real junk, let’s look at the rest of your direct debits and regular payments. Do you really need Sky? Or that monthly subscription to Amazon DVD rental? Or the gym membership you never use? Why not work out how much they’re costing you each month, cancel the direct debits and spend the money on something you REALLY want.

Better yet, set up a standing order for that money you saved, putting it into a high interest monthly savings account. You’ll never notice it but you’ll have a steadily growing fund earning good interest.

Links: Tesco Clubcard, Direct Debit

Tags: Setting up Direct Debits,  direct debit, direct debits