Foreign Perspectives

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If you’re like most people I’m sure you’ve hardly gotten beyond thinking that you’ll either get a few hundred from the travel agent or perhaps just use a card when you get there.

In the first case, you’ll end up spending a small fortune un-necessarily and in the second you could be stuck without any money. In both cases, it’s worth putting a little thought into it and to help you make the best choices I’m putting together a little series on it over the next week or so.

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In times gone by, getting inflation down was always considered to be a “good thing” and it still is but the problem is that the underlying reasons for inflation these days are quite different from those a few years ago.

Nowadays, inflation is largely driven by the oil price either directly through increasing the cost of your own petrol or indirectly through increasing transport costs generally. More to the point though is that it isn’t driven by the banks handing out money as they used to as anyone who has tried to get credit lately will tell you.

Yet, the Bank of England persist in using interest rates as their seemingly only means of driving down inflation. It isn’t working and it won’t work because it’s not bank lending that’s keeping inflation up (as is clear by the “credit crunch” that we’re all experiencing): it’s the oil price. Even if they took interest rates to 50%, inflation would still remain high.

What those high rates are doing though is killing the economy; they’re certainly not killing the inflation.

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Although it’s best to retain your endowment for the full term sometimes that’s just not possible for one reason or another.

However, you don’t need to take the pitifully low amount that you’ll be offered by the insurance company as it’s possible to sell endowments these days and almost always that’ll bring you in a significantly larger amount than the insurance company are offering you. If it’s an endownment that you’ve notionally been using to pay off your mortgage the amounts involved can be very substantial indeed (you usually can’t sell the endowment if it’s been assigned to the bank).

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