Q. I'm planning to go to the European Championship in the summer with a group of friends. One of them said AIB was marketing loans at less than 10%. How does this compare with the credit union and other lenders? - Bill Tyson
The Consumers' Association of Ireland accused AIB of going back to the bad old days of ‘reckless' lending after it offered ‘Euro 2016' loans of up to €30,000.
But the bank defended itself saying that normal lending criteria would apply. In fact, the deal is not a special offer at all, merely the bank's standard lending rates promoted to cash in on the Eurocraze.
With financial products it's better to research what's best rather than be led by marketing. The best value products often aren't promoted because they advertise themselves.
Splurging €30,000 on a Euro 2016 holiday, as AIB seems to suggest, would have been excessive, even in the boom.
To get the 9.99% rate you have to borrow over €10,000 – and even that is a bit much for a holiday.
A more sensible figure to borrow is €5,000, which you can always top up with your holiday pay and extra savings between now and the summer.
The loans comparison site Bonkers. ie shows that AIB ranks about halfway down the rate table with an APR rate of 12.99% for €5,000 loans. But to get the cheapest - Bank of Ireland's 75% – you have to jump through a few hoops. You need a BoI current account for starters. And the eligibility criteria warns that “rates also depend on your individual circumstances and may vary’.
The next best deal is Ulster Bank's 9.9%, but again you have to have a ufirst current account. Without it, the rate is 10.9%.
Next comes the credit unions with an average of 10.5%. But there are hundreds of unions and your local one may differ.
You'll also need to save and keep that money on deposit. This means you'll have to borrow more, which increases the cost of the loan.
Bank and credit union lending rates are not good value considering that they've remained in double digits for years, while euro interest rates have fallen to practically zero.
Q. Our family spending this Christmas was a bit tight. My brother and his family are coming home from Australia to celebrate with us next December and I want more to spend than I had this year. I see the Park Ireland Christmas savings club was advertised. Is this a good idea?
You pay instalments during the year and can spend this on vouchers or hampers at Christmas. You can earn commission of 1%-3% if you save at least €700. That's more than you would get in a savings account (see Best Buys). But you can only use your money for vouchers or specific food products. The problem with vouchers is that you rarely spend the exact amount on them and will have a small sum left over. Will you use that—or lose it?
Christmas savings clubs are better than using moneylenders for many poor families. But they're not as secure as banks or credit unions. They are not regulated by the Central Bank, or covered by its investor compensation schemes.