Missed a bill? It pays to own up

Two or three times over the years we have missed the odd payment on our GM Visa and Mastercard credit cards through pure forgetfulness. We have cursed ourselves and paid up the interest and capital the next month.

We did it again with both cards for the May statement. Nothing happened with the Visa card, but for the Mastercard we were hassled by telephone several times to pay the minimum amount. However, we did not complicate matters by paying an additional minimum payment because we had already arranged to pay the full amount, including interest, by the due date on the June statement directly from a bank.

Is this a difference between Visa and Mastercard or because we owed £3,953 on Mastercard and just £284 on Visa? We queried a late charge of £20 levied on the June account and were informed that this was a standard fee.
DP, Maidstone

The missed payments were treated differently because you owed more on the Mastercard. The minimum payment due on your Visa card was £5 and GM says it does not charge a £20 penalty on small balances. The late fee is common although Barclaycard charges £15.

All credit card companies urge you to telephone the bank immediately you realise you have missed a payment. They are more likely to be lenient if you send in the payment straightaway rather than waiting for the next due date in a month's time.

Even in months when you remember the bill, unless you settle the whole account, it costs less to pay early. Card companies credit your account immediately the money arrives, not at the end of the month - so the sooner you reduce the balance, the less interest you have to pay.

Charges teach PTA a lesson

As chairman of a Parent-Teacher Association, I notice that we have been paying bank charges even though we are always in credit with Barclays Bank - sometimes with a £1,500 balance. We spend many hours working hard to raise cash for the PTA, and it seems a shame to spend money if we don't have to.
PD, Weston-super-Mare

There are a few club accounts that impose no charges - including Alliance Business Banking (tel 0800 214807), NatWest (0800 200400) and Unity Trust (0121 631 2743). The trade-off is that you receive no interest on credit balances, which Barclays does pay.

Three banks charge nothing and pay interest: Bank of Scotland pays 1.25 per cent (0500 313111), Clydesdale Bank 0.3 per cent (0141 223 2223) and Yorkshire Bank 0.25 per cent (0845 703 4567). You might ask the school's bank if it would give you a special deal for piggy-backing its larger volume.

Tax tangle over transfer of title

My elderly parents were advised by their solicitor to transfer the title on their £40,000 flat to me, to avoid it being used to pay for nursing care should they need it in future.

I have no objection in principle, but am concerned that I might be liable for capital gains tax when I dispose of the flat as it is not my main residence.
PT, Ashby de la Zouch

You pay capital gains tax on the difference between £40,000 and the selling price unless your total gains in the year, after deducting buying and selling costs, are under £7,500 (2001-2002 figure).

If your parents continue to live in the house without paying you a market rent, it still counts as part of their estate for inheritance tax purposes.

Even if they do need to go into a nursing home, the local authority might decide they deliberately gave away the house to avoid paying fees and treat it still as their property, perhaps approaching you to pay any shortfall. If your parents kept the house and only one of them needed nursing care, the house is anyway excluded while the other lives there.

You should ask the solicitor to explain in detail why he suggested the transfer.

Note of caution on tax threshold

My wife is a non-taxpayer and a cautious investor who holds permanent interest-bearing shares (Pibs). With the income from her small pensions and investments, she is approaching the limit of her allowance as a non-taxpayer. Can she put the Pibs in a stocks and shares Isa?
AE, Monmouth

The Inland Revenue would not give a definitive statement; Isa managers differed in their opinions. But the consensus seems to be that Isas can take both Pibs, which are issued by mutuals, and perpetual subordinated bonds, which are issued by ex-mutuals such as Halifax, Bradford & Bingley and Bristol & West.

To put existing Pibs into an Isa, she must sell them and buy them back. But work out the figures because the broker's charges might not be worth the tax saving.

Writeback: the pain in Spain lingers on

A reader is still waiting to hear about his holiday
insurance claim following a cycling accident in
Spain.

His claim, which has dragged on since February,
ground to a halt when the intermediary, the
Management Company, went into liquidation in
May.

The policy had been placed though Lloyd's of
London - but Lloyd's thought the Management
Company's agreement had ended a year ago.
Lloyd's hoped a court case on 24 July would
resolve liability, but this turned out to be so
complex that it has abandoned hope of an early
resolution.

Two days after the hearing, to restore
policyholders' confidence, Lloyd's agreed to pay
all valid outstanding claims. However, it has left
policyholders to resubmit such claims, which is
difficult if you have already sent original
documents to the claims-handling company. My
advice is to ask the handler to forward the
paperwork to Lloyd's.

For more information, policyholders should
contact the broker or travel agent who sold them
the policy. Failing that, Lloyd's has a dedicated
helpline on 0800 917 5971. The telephone number
for general Lloyd's enquiries is 020 7327 5693
during normal office hours.

• Write to Margaret Dibben, Money Writes, The Observer, 119 Farringdon Road, London EC1R 3ER, including a phone number. Don't enclose SAEs or original documents. Letters are selected for publication and we cannot give personal replies. The newspaper accepts no legal responsibility for advice.