MDL berthing fees anomaly

[strakeryrius]

This is an adjunct to the "paying berthing fees early" thread, but would lead to significant thread drift so I thought that I'd start a new one.

Just got my berthing renewal earlier today; fees have gone up by 3% which is OK as roughly in line with inflation. However, the early settlement discount has gone down from 5% last year to only 3% this year, which is where the anomaly kicks in.

The anomaly is in how they have presented payment options - there are only two:
Pay by 24th December with VAT at 17.5% to get 3% discount - amounts to about £163 total discount for me.
Pay by 15th March 2011 with VAT at 20%.

If you pay early by credit card the cost of doing so (assuming your Visa APR is approx 18.95% or 1.4% pcm) then the extra interest I would pay over the 2.75 months that I've paid early is likely to be in the region of £220 compounded. Thus its actually cheaper to pay later rather than earlier due to the lower rate of discount for paying early - seems perverse to me and is likely to cause many people not to pay early methinks.

I've just written to MDL to ask for a third option - I confirm my berthing booking by 24th Dec, they invoice for it by return of post (eg before 4th Jan) and it can still be at 17.5% VAT to allow me some semblance of a saving, approximating to the cost of the increase in berthing fees.

I'd advise other MDL berth holders to look carefully at their renewal details too, as to the true cost of paying early, as some people may achieve significant savings by manipulating the system.

 

[AdeOlly]

If you pay early by credit card the cost of doing so (assuming your Visa APR is approx 18.95% or 1.4% pcm) then the extra interest I would pay over the 2.75 months that I've paid early is likely to be in the region of £220 compounded.

There's quite an easy way to solve this problem - apply for one of the credit cards that gives 12 months at 0% APR on purhcases from account opening. Sainsbury's are currently offering this (and I'm about to apply) then you can have the benefit of paying for berthing over the year at no interest cost

 

[Granthsmith]

There is a 3% transfer fee associated with that Sainsbury card (and most other similar cards) but it certainly is a way to make the most of the early discount, spread the cost over a year and save a few pounds!

 

[AdeOlly]

There is a 3% transfer fee associated with that Sainsbury card (and most other similar cards) but it certainly is a way to make the most of the early discount, spread the cost over a year and save a few pounds!

Yes there is a fee for transfers, but there is no fee on purchases and you get 12 months at 0% on these too, so just whack the whole berthing fee straight on it. Banks getting back to their old habits already....

For anyone interested the card is this one

 

[Richie]

I've just had my MDL renewal through too and notice you can still get 5% early settlement discount if you pay for 2 years. Though that's nowhere near enough for me to consider (even if I had the money). Especially at Cobbs Quay where who knows what's going to happen once the new bridge is built next year...

 

[beejay190]

Thus its actually cheaper to pay later rather than earlier due to the lower rate of discount for paying early - seems perverse to me and is likely to cause many people not to pay early methinks.

[/QUOTE]

This is of course not the case if you pay without recourse to borrowings / credit cards on 24 December.

 

[gjgm]

The anomaly is in how they have presented payment options - there are only two:
Pay by 24th December with VAT at 17.5% to get 3% discount - amounts to about £163 total discount for me.
Pay by 15th March 2011 with VAT at 20%.

If you pay early by credit card the cost of doing so (assuming your Visa APR is approx 18.95% or 1.4% pcm) then the extra interest I would pay over the 2.75 months that I've paid early is likely to be in the region of £220 compounded. Thus its actually cheaper to pay later rather than earlier due to the lower rate of discount for paying early - seems perverse to me and is likely to cause many people not to pay early methinks.

You've lost me. Pay early and save £163 from MDL, or pay later with no discount and higher VAT but save £220 in credit card interest charges incurred by paying early? This isnt really very meaningful. To illustrate, if you could find a credit card charging 1000pct, you would "save" even more by not taking up their early payment offer, or, if you prefer, MDL offer would be even less attractive.
All you are saying in effect is that borrowing money at 19pct to save 3pct isnt very attractive.

 

[enterprise]

MDL renewals

1 yr deal;

If paying early by credit card you can save £62 per £1000 off your annual fee, so I would apply for a zero % card if you need to pay it that way, certainly better than the instalment option.

If paying early by cash/debit card it still works out at a saving of £60 per £1000, but additional saving of 1.5% (surcharge levied for credit card transactions) on the total.

So same discount for either payment method for paying early, just the 1.5% surcharge for credit cards which I think is levied by the credit card company so cant blame MDL for recovering their costs.

 

[jfm]

The anomaly is in how they have presented payment options - there are only two:
Pay by 24th December with VAT at 17.5% to get 3% discount - amounts to about £163 total discount for me.
Pay by 15th March 2011 with VAT at 20%.

If you pay early by credit card the cost of doing so (assuming your Visa APR is approx 18.95% or 1.4% pcm) then the extra interest I would pay over the 2.75 months that I've paid early is likely to be in the region of £220 compounded. Thus its actually cheaper to pay later rather than earlier due to the lower rate of discount for paying early - seems perverse to me and is likely to cause many people not to pay early methinks.

I've just written to MDL to ask for a third option - I confirm my berthing booking by 24th Dec, they invoice for it by return of post (eg before 4th Jan) and it can still be at 17.5% VAT to allow me some semblance of a saving, approximating to the cost of the increase in berthing fees.

As others have said your numbers are just the result of your choosing to borrow at 19%. I can't believe anyone actually does that; you must know that base rates are 0.5%, right? So you're paying a margin of over 18%. Sheesh! Can I lend you some money please?

The problem with your 3rd option is that the production of the invoice pre 4 Jan might nicely trigger 17.5% rate VAT for you but it also triggers an obligation for MDL to pay that VAT to HMRC (the exact date they must pay the VAT depends on their VAT quarter). If you haven't paid your bill that stuffs them with a cashflow cost. So its no wonder they insist you actually pay the bill, as a quid pro quo for them invoicing early. I would if I were them, I mean if you asked me to invoice you around 31 Dec but you'd pay 15 March I'd politely tell you to FRO .

 

[BlueSkyNick]

How do you politely tell somebody to FRO ? A contradiction in terms, surely !!

 

[PaulGooch]

How do you politely tell somebody to FRO ? A contradiction in terms, surely !!

I think you smile while you're saying the words

 

[mjf]

I would not fund berthing using a cc unless it was 0%.

Does MDL charge for using the card or do they absorb the cc fee themselves?

 

[DAKA]

I would not fund berthing using a cc unless it was 0%.

Does MDL charge for using the card or do they absorb the cc fee themselves?

I always pay with my credit card.
If the marina goes bust you can claim off the credit card for unused services.

I settle before any interest is due.



I dont see the credit card charge is relevant to this thread as anyone who borrows and pays 18% are still going to borrow 3 months later when its really due anyway, they may as well pay early , pay the same 18% as they would by paying late and theoretically pay it off 3 months earlier anyway but also benefit from the VAT saving.

Paying two or more years in advance does have serious dangers as we need to know what happens if you leave within the first year.

If they charge visitor rate then you will not get anything back for the second unused year, that cant be worth 1-3% saving.

 

[gjgm]

I would not fund berthing using a cc unless it was 0%.

Does MDL charge for using the card or do they absorb the cc fee themselves?

MDL charge for CC, which makes the OP case even more perplexing.
There is presumably a number of days where the 3pct discount and 2.5pct vat saving, annualised, is a better deal that 19pct charged for a given number of days, but I cant be a**ed to calculate it, and I suspect the CC charge by MDL removes most of that anyway.

 

[Richie]

Does MDL charge for using the card or do they absorb the cc fee themselves?

Suprisingly it's only £50 surcharge (on my renewal anyway) for paying by CC -had thought it'd be 2% surcharge like other retailers charge on big ticket purchases. But for £50 it's going on a 0% card for me!

 

[AdeOlly]

I would not fund berthing using a cc unless it was 0%.

Does MDL charge for using the card or do they absorb the cc fee themselves?

MDL charge a 1.5% cc processing fee.

 

[colingr]

I always pay with my credit card.
If the marina goes bust you can claim off the credit card for unused services.

I settle before any interest is due.



I dont see the credit card charge is relevant to this thread as anyone who borrows and pays 18% are still going to borrow 3 months later when its really due anyway, they may as well pay early , pay the same 18% as they would by paying late and theoretically pay it off 3 months earlier anyway but also benefit from the VAT saving.

Paying two or more years in advance does have serious dangers as we need to know what happens if you leave within the first year.

If they charge visitor rate then you will not get anything back for the second unused year, that cant be worth 1-3% saving.

Ditto

 

[BlueSkyNick]

I dont get this. Firstly, if peeps are concerned about their marina operator going completely bust (not just into administration) they must be in a poor marina.

Secondly, to pay a credit company anything just to insure against this risk, is a waste of money. It would be a better investment to put that cash into premium bonds and hope for the best.

 

[mm1]

MDL payment

first of all being of a gentle disposition what does FRO mean,secondly,if i had to fund my mooring fees by C C@19% i would be asking myself can i really afford it,this is not meant to be rude or condescending,just a personal thought,i don't suppose given the new bridge situation there will be many in cobbs take up the 2 yr deal,regards mm1

 

[mjf]

I always pay with my credit card.
If the marina goes bust you can claim off the credit card for unused services.

I settle before any interest is due.



I dont see the credit card charge is relevant to this thread as anyone who borrows and pays 18% are still going to borrow 3 months later when its really due anyway, they may as well pay early , pay the same 18% as they would by paying late and theoretically pay it off 3 months earlier anyway but also benefit from the VAT saving.

Paying two or more years in advance does have serious dangers as we need to know what happens if you leave within the first year.

If they charge visitor rate then you will not get anything back for the second unused year, that cant be worth 1-3% saving.

It is of course relevant as its £50 or 2% or whatever is charged on top of the price....


To then pay the lots off at 18% adds further misery imho