FEAR OF FINANCE

Christmas came early this week for borrowers generally and home- owners in particular, thanks to Santa Ken and Santa Eddie and those hard- working elves at Halifax, Nationwide, Abbey National and so on down the list. Anyone with a one-year mortgage discount of 6.1 per cent from Yorkshire Building Society will shortly be paying just 1.39 per cent interest!

What we borrowers really need next is a cut in the interest rates that the credit card companies levy. If you fail to pay off your balance in full by the end of the free credit period, interest rates range from 1.5 per cent to 1.75 per cent a month and, including annual charges, the annual percentage rates for the vast majority of cards range between 21 per cent and 23 per cent a year on unpaid balances.

But Christmas is precisely the time of year when credit card companies really clean up because shoppers traditionally over-spend on their plastic and simply lack the means to pay the bills promptly in January. Retail spending using credit cards over Christmas is usually more than 50 per cent above the annual average.

So far only Save & Prosper has cut a quarter point off the rate it charges on its base-rate linked cards, but these have no free credit period. By the time the rest of the pack get round to a cut they will have had at least two months feasting on fat post-Christmas credit balances. The amount outstanding on credit balances rises to an annual peak and it takes until the end of February before the seasonal excess is paid off.

Christmas brings an increasing collection of gift suggestions. Unit trusts and investment trusts are suitable gifts for children, especially as the risks are well spread and the investment can be added to regularly to build up a larger holding over time and transferred to the child's own name when they reach 18. Autif, the unit trust trade body, publishes a free guide on how to make gifts without incurring tax liabilities. Call 0181-207 1361. Johnson Fry combines a trust investing in five high-yielding shares with a trust that uses a child's tax-free income and capital gains allowances to build up an investment fund.

Invesco offers a low-risk investment fund for regular savings as low as pounds 20 and lump sums of just pounds 50. Named after Rupert Bear, it is targeted at grandparents, parents and godparents investing for children. Harpenden Building Society has a special high-rate account paying 6.75 per cent (which can be paid tax-free) on amounts as small as pounds 5. National Savings offer tax-free children's bonus bonds in amounts as small as pounds 25, with a guaranteed 7.85 per cent return if held for five years. Halifax Building Society offers children's bonus bonds with an identical return.

Many friendly societies, like the Southampton-based Foresters Friendly Society, will open accounts for as little as pounds 1 a month to build up a nest-egg for the future. The money builds up into a tax-free lump sum, but charges on small sums can be high.

The most popular individual shares at this time of year are those that also offer shareholders perks. P&O give discounts on ferry sailing, British Airways gives discount vouchers on selected flights, and Laura Ashley shareholders get a 15 per cent discount on one full-price purchase. AB Foods, Austin Reed, Burton Group, Forte, General Accident, Greenalls, Kwik-Fit, Ladbrokes, Moss Bros, Next, Scottish & Newcastle, Storehouse, Vaux and Whitbread are also among the 150 companies listed in stockbrokers Henry Cooke Lumsden's book of perks for shareholders.