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MONEY COMMENT
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In an earlier article, we wrote about Five Terrible Financial Products (extended warranties; payment protection insurance; mortgage endowments; guaranteed equity bonds and anything we don't shop around for). We don't enjoy writing (or reading) negative news all the time, so here's some good news to redress the balance. Some financial products that are simply too good to miss - here are our five gold medal winners: 1. Current Account Mortgages (CAMs) Quite simply, by offsetting our savings and current account balances against our mortgage debts, we only pay interest on the difference, calculated daily. This saves us thousands over the life of our mortgages, meaning we pay less overall and can cut the term of our borrowing by years. Also, we're effectively earning tax-free interest at our mortgage rates on our credit balances (which beats taxed savings accounts hands down). Furthermore, we can also absorb more expensive loans and credit card balances into our mortgages, which dramatically reduces the cost of these debts. Finally, many lenders allow us to overpay, underpay and take payment holidays. As Austin Powers would say, "Groovy, baby"! Find out more at our 21st Century Mortgage Centre. 2. Individual Savings Accounts (ISAs) Read how to get the most out of ISAs in You Choose: Cash, Bond Or Share ISA, Time's Running Out For 2003 ISAs, To ISA Or Not To ISA and visit our ISA Centre. 3. Stakeholder (Low-Cost) Pensions Stakeholders, on the other hand, are flexible, low-cost plans that are easy to grasp and are suitable for the majority of adults (even those who don't work). You can increase, decrease, stop and start contributions and charges are low - the exact opposite of the discredited personal pensions. Visit our Pension Centre to learn more. 4. Interest-Free Credit Cards Read how to do this in Five Card Tricks and Switch To Interest-Free Cards and apply online at our Credit Card Centre. 5. Better Current Accounts (Online Banking) Read more in Break It Off With Your Bank and Get A Better Current Account. Visit our Online Banking Centre - easy as pie. So, there you have it: five first-class products to make your finances as fit as a butcher's dog! If you'd like the full story on saving, investing, buying and borrowing, read our Third UK Investment Guide, which could easily save you its £9.74 cost (including a £3.25 discount and free P&P) many times over. For the same price, we also have a book specifically aimed at enriching female Fools: A Girl's Best Friend Is Her Money.
Without doubt, the best borrowing product around by far - they make traditional mortgages look positively prehistoric.
ISAs are probably the best way for us to save money for a rainy day, build up a nest egg and save for the long term. Whenever we want to put aside money in cash, bonds, shares or funds, we should use one of these tax-free wrappers. This is definitely one of our favourite Foolish products.
Until stakeholder pensions came along, personal pensions were horrible. They were complicated, included huge (often hidden) charges and were completely inflexible. They should have been profoundly unpopular but, thanks to huge upfront commissions, IFAs and company salespeople promoted them very heavily. This created a national mis-selling scandal that rages on to this day - see How To Spot Dubious Advice.
Imagine if someone offered to lend us money for, say, up to ten months, without charging us a penny in interest. Well, that's what around twenty or more credit card issuers are doing. Many don't charge us interest on our purchases for a pre-arranged period, others charge no interest on balance transfers, and several allow us to do both. Even if we don't owe any money elsewhere, we can just borrow the money from the card company, bank it in a cash mini-ISA for six months and then pay it back before we start being charged interest!
To be frank, the traditional current accounts offered by well-known High Street banks are awful. We can earn 30 times as much credit interest and get far cheaper overdrafts by switching to a superior account. There are some great deals in branch-based banking, but the best deals are found online. Don't worry about the hassle of switching; the improved Banking Code should make it more of a doddle to desert.