July 4th, 2017 | Andrew Hagger | News

Nearly one in six adults rely on their plastic for financial survival as debt worries grow, new research from financial services insight specialist Consumer Intelligence shows.

Its study found that 80% of the population has a credit card. Of those, 19% of credit card customers admit they cannot get through a month without their cards with around 31% juggling three or more cards.

The shock figures show 11% of card holders are maxed out to the limit on one card, painting a picture of growing financial strain for millions of households.

Bank of England figures show total unsecured debt on credit cards, car loans and overdrafts is now £198 billion – the highest level since the 2008 financial crisis.

Consumer Intelligence’s research found 42% of adults worry about unsecured debts they have in addition to mortgages with 11% admitting they worry a lot about how deep in the red they are.

Around one in five adults (18%) have debts of £10,000 or more, on top of their mortgages, the study found, with one in four owing at least £5,000

One in six adults (17%) have exceeded their agreed overdraft limit in the past three years, while a fifth (19%) admitted they have had to borrow money from family or friends in the past three years.

Debt problems affect higher earners just as much, the study found. Around 23% of adults with a household income of more than £50,000 do not usually clear their credit cards.

July 4th, 2017 | Andrew Hagger | News

Seven in ten energy customers in Britain (17 million) are languishing on expensive deals known as standard variable tariffs (SVTs), potentially throwing away nearly £300 each but half of all customers don’t think they’re on one.

The new research from uSwitch.com, the price comparison and switching service, demonstrates a distinct lack of awareness amongst consumers, with over three quarters (85%) admitting to never having heard of the phrase ‘SVT’. When shown a list of possible phrases that it could refer to, only 1% could correctly identify SVT as an energy plan.

Once they had the term explained to them, 35% of respondents said they realised that SVTs are amongst the most expensive deals on the market, but just one fifth (21%) of customers knew for definite that they were on one while 52% of customers were sure they weren’t.  Furthermore, only 26% recalled being contacted by their energy supplier in the last 12 months to inform them that they could be saving money by moving to a cheaper deal.

The majority of consumers feel that the responsibility for alerting them to changes to their tariff and possible savings should lie with their energy company. Over half of bill payers (56%) believe that energy suppliers should send an annual reminder that they could save money by switching, whilst almost a third (31%) feel that consumers should be given more information about the tariff they are signing up to.

Other initiatives that would motivate more people to switch to a better energy deal include being sent a letter that is difficult to ignore (e.g. in a red envelope) advising them they are on the most expensive tariff (29%) or changing the name of a tariff to reflect the fact it is more expensive (37%). Popular suggestions included ‘rip-off tariff’ (24%) and ‘out of contract tariff’ (14%).

Searching and switching to a better deal can be done in minutes and consumers can save an average of £357 per year, with some households saving up to £618..

July 4th, 2017 | Andrew Hagger | News

British motorists who drive their cars abroad are being urged take care, as Admiral reveals the number of overseas insurance claims it has dealt with has risen 160% in the last five years.

With millions of Brits taking their car abroad each year, the car insurance specialist has identified the most common destinations for accidents as part of its new campaign to ensure drivers have a safe summer, including advice and tips for those who have accidents on their road trips.

The study of Admiral insured drivers by the insurer looked at ten years of motor accidents abroad and shows Londoners aged 30-39 and driving a VW Golf in France are the most likely to have an accident whilst driving oversees. The most common type of car to be involved in an accident abroad is a BMW (11%) followed by a Volkswagen (9%) and the Audi (9%). 

Over the last ten years, drivers aged 30-39 have made the most driving abroad car insurance claims (30%), followed by those aged 40-49 (24%). Interestingly, drivers aged 20-29 accounted for 19% of accidents.

When it comes to who’s at fault for the accidents, the 2016 data shows British drivers insured with Admiral were responsible for 51% of accidents abroad claimed for while the most common month is August, the height of summer. In 2016, a quarter of all claims for driving accidents abroad were made in the month of August.

Commenting on the figures, Lorna Connelly, head of Claims at Admiral said: “Driving abroad is a great way to have the freedom to explore new places, without the cost of flights. There’s no reason it shouldn’t be a really enjoyable experience, but just as accidents can happen at home, they can happen abroad too, and different laws and languages can cause additional stress.

“To ensure an accident doesn’t ruin your holiday we’re calling on all drivers to make sure they’re well informed, so if the worst should happen, they are properly prepared.  You can do this by having the right documentation on you, by being aware of the rules of the road in the country you’re visiting and finally by knowing what to do and where to report details of any accidents.”

June 23rd, 2017 | Andrew Hagger | News

Drivers are facing accelerating increases in car insurance taking average premiums to £666 as Government compensation rules come into effect, new research from insurance research experts Consumer Intelligence shows.

Average car insurance bills have increased by 15.7% in the past year – more than five times inflation – with nearly half the rise happening in the three months to May.

Action by regulators to cut the discount rate governing payouts in major personal injury claims to minus 0.75% from 2.5% effective from March 20th is driving the rise in bills. June’s Insurance Premium Tax rise will further add to the pressure.

Average motor insurance premiums have increased by 34.6% since October 2013, Consumer Intelligence, whose data is used by the Government’s Office for National Statistics to calculate official inflation statistics, estimates.

Drivers aged between 21 and 24 pay the highest prices at £1,202 but have seen slightly lower annual premium increases at 13.1%. Over-50s motorists are experiencing the biggest rises at 17.9% but pay premiums of £418.

Motorists in London pay the highest average premiums of £1,000 across the country – more than double the £474 bill in Scotland and the South West – and are seeing average increases of 16.7% as claim costs grow.

John Blevins, Consumer Intelligence pricing expert said: “Price rises had been levelling off at the end of last year but are now rising rapidly as the full impact of the discount rate cut comes into effect.

“Government plans to review the Ogden rate have so far taken a backseat following the Election although there is some relief from plans to push ahead with whiplash reforms announced in the Queen’s Speech.

“However with the impact of the latest Insurance Premium Tax rise still to come into effect drivers need to shop around to limit increases in premiums”

June 19th, 2017 | Andrew Hagger | News

Research by Saga Travel Insurance has revealed that 350,000 over 50s have travelled without insurance in the last 5 years.

With reports suggesting that the weakening of the pound is resulting in a rise in so-called ‘staycations’, the survey of almost 12,000 shows that of those not taking out cover almost eight in ten were travelling in the UK (79%) and two in five (43%) said that UK travel was the main reason for not taking out cover.

Almost half of UK trips taken without insurance (47%) included a pre-booked hotel stay and with the average hotel in the UK costing £82 per night2 the losses can add up if people find they are no longer able to travel. Combine this with ever increasing UK rail fares and people could find themselves hundreds of pounds out of pocket should they have to cancel or cut their trip short.

Other popular staycations for people citing a UK trip as the reason for not taking out insurance include coach tours (59%), river cruises (50%), trekking holidays (43%) and city breaks (41%). Many providers of UK breaks will have cancellation charges which range from the loss of a deposit to forfeiting the full cost of a trip.

Analysis of Saga claims data from 20163 shows that almost seven in ten (68%) insurance claims for UK trips were as a result of illness or hospital visits forcing, in many cases, a trip to be cancelled or curtailed with the average claim costing £728.

And whilst the NHS will cover the cost of medical treatment within the UK, it won’t pay for friends or family members to stay by their loved one’s side, or travel to be with them if they fall ill whilst away and require a stay in hospital.

Kevin McMullan, Head of Saga Travel Insurance, commented: 

“Whilst it’s great to see people boosting the economy by experiencing the beauty of the UK as an alternative to going abroad, it is concerning that many think they do not need travel insurance for UK trips. Whilst medical bills will be covered by the NHS it would be wise to make sure you are covered for any pre-paid accommodation and travel costs in case of cancellation and for the costs incurred by friends and family who will want to be by your side if the worst happens and you’re admitted to a hospital many miles from home.”

June 19th, 2017 | Andrew Hagger | News

New research from Santander UK reveals that over seven million adult Brits (14 per cent) have used someone else’s Wi-Fi because they cannot afford their own. The study found that five per cent of people have ‘borrowed’ Wi-Fi from their neighbours because they couldn’t afford their own, Five per cent have spent time in a café or shop with free Wi-Fi without ordering or buying anything and three per cent of people have jumped on an unknown, unsecured Wi-Fi when out and about.

Other key findings from the release include:

• While data security is a concern for over half (52 per cent) of individuals when using someone else’s Wi-Fi, 17 per cent of those with security concerns are willing to use Wi-Fi hotspots if they ‘need’ to check their social media profiles or download shop or restaurant discount codes and 19 per cent put aside their worries to use an unsecured network for work.
• Over a quarter (26 per cent) of British adults, and 49 per cent of those in the 18-34 year old age group have carried out financial transactions on their phone using an unsecured Wi-Fi network
• Over the past ten years, the cost of phone and broadband bills has increased by 24 per cent. Bills are made worse for 30 per cent of Brits who say they go over their data allowance, with six per cent doing so every month.
• Those topping up data spend an average of £16 per month – a collective £212 million.

June 14th, 2017 | Andrew Hagger | News

The latest data shows UK inflation (CPI) grew by 2.9% in May 2017, up from 2.7% in April. This change in inflation leaves UK households collectively needing to find an extra £21.7bn a year to maintain their standard of living compared to 12 months ago, according to Retirement Advantage.

Each household will typically need to spend an extra £797 a year to maintain their standard of living compared to a year ago.

Andrew Tully from Retirement Advantage commented: ‘Households across the UK will be left reeling from the latest inflation numbers. We are feeling the financial pressure of rising prices and flat wage growth, as evidenced by the slowdown in consumer spending and impact on living standards.’

The cost of living rises can have a significant impact on people with fixed incomes, including retirees who typically live off pension income. Over the course of a 20 year retirement, if inflation averaged 2%, the typical retired household would need to find a further £187 a week to maintain their standard of living.

Tully added: ‘Inflation is the hidden force that can wreak havoc with retirement plans. People thinking about their future need to consider how they can mitigate against losing half or more of their spending power over the course of retirement. The new retirement accounts create the flexibility for people to bank a guaranteed income to pay the bills and can leave money invested to pay for life’s little luxuries and help protect against inflation.

‘A professional financial adviser can help you decide the best course of action for your personal circumstances and ensure you stay on track to enjoy the retirement you have worked hard for.’

June 14th, 2017 | Andrew Hagger | News

Holiday makers will see their money go further this summer after B, the digital banking service powered by Clydesdale and Yorkshire Banks, launched its travel-friendly credit card with no charges for overseas transactions.

The card removes the typical 3% credit card foreign exchange fee for purchases abroad and allows customers to access competitive foreign exchange rates on their holiday spending, without the charges that usually apply. Using the card abroad also enables customers to benefit from the added security and protection that buying with a credit card brings.

In addition to the travel benefits, there is no annual fee for the card, a low interest rate of 9.9% APR and there are no fees for transferring a balance in from another card.

B credit card customers can also take advantage of B’s super smart app, making it easier to manage their money by tagging spending, setting budgets and receiving helpful personalised insights into their spending habits.

Helen Page, Group Innovation and Marketing Director at Clydesdale and Yorkshire Banks, said: “B is all about putting customers back in control of their money and the B credit card does exactly that. It’s a great way to manage holiday spending with no foreign exchange fees, a competitive rate and a super smart app to tag spending at home and abroad.”

Andrew Hagger, Personal Finance Expert from Moneycomms, said: “This is good news for consumers who travel abroad for leisure or business as it will save them a small fortune in foreign transaction charges when compared with most high street credit cards and debit cards”.

June 7th, 2017 | Andrew Hagger | News

One in ten Brits still stash cash under their mattress, according to a new study by pension advice specialist, Portafina.

The research, which polled more than 1,500 UK adults, looked at the average amount of cash carried, and hoarded at home, plus opinions on the impact of becoming a cashless society.

With digital payment methods becoming increasing accessible, it’s no surprise that the average Brit is carrying just £28 in 2017. Men typically carry significantly more money than women (£37 versus £19), and people living in Dublin carry the most (a massive £197 on average) in contrast to people living in Liverpool, who carry the least (£16 on average).

Around eight in ten (82%) of those polled said that digital payments facilitate more effective spend tracking, whilst a third (36%) feel that digital payments are a lot easier overall. PayPal and contactless cards are the most common digital payment options (used by 80% and 52% of those polled, respectively).

Whilst digital payment options may mean there is less need to keep cash to hand, 77% still proactively stash notes or coins at home; with 41% storing loose change in a jar, and 10% even hiding money under their bed or mattress.

Men aged 45-54 are most likely to have £200+ tucked away (23%), whilst people living in Edinburgh are most likely to have £500+ in ‘readies’ at home. The average amount of money kept at home is £110, plus around £20+ in ‘forgotten’ change hidden in coat pockets, suitcases and gym bags.

When considering what impact going cashless may have on day-to-day life, two in ten (20%) said it would have a big effect as they are currently paid in cash.

More than a third (37%) admitted they would be less likely to be able to give money to the homeless if we went cashless.

Overall, the perception was that digital payments are often quicker, but cash remains key – both on a practical level (not every transaction can be made digitally) and an emotional one (notes and coins are palpable items of value).

In addition, Portafina asked tomorrow’s earners and spenders (518 children aged 13-172) when they believe we may be living in a cashless society. The average year stated was 2031, but do the experts agree?

Nationwide Building Society’s Director of Payments, Paul Horlock said: “Ever since the advent of the credit card, society has been on a general drive towards a cashless society. This has gathered pace over the last 10 years with the advent of the contactless card which has started to make inroads into traditionally cash based transactions (low value).

“At Nationwide we have seen almost exponential growth in the use of contactless and an unparalleled reduction in ATM usage over the past two years which is a strong indicator of the move towards a cashless society.

“The introduction of digital based payment mechanisms like Apple pay and Android pay are further cementing the move away from cash as the payment method of choice. We have also seen an increasing migration to shopping online for goods previously bought on the high street which also helps drive cash usage down.

“Moving to a cashless society requires core behaviour shifts which in some generations would just not be likely unless it was mandated by the Government. It is unlikely we will see a true cashless society within the next 20 to 30 years but with some Government intervention we could see a real move towards this by 2050.”

Jamie Smith-Thompson, managing director at Portafina, added: “Digital payment methods have undoubtedly become mainstream in the last decade and we are clearly approaching a tipping point where a cashless society becomes a reality for most people in the not too distant future. However, it must work for everyone.

“The internet, direct payments and online buying are enjoyed by the majority of people, but access is still restricted either through age, internet skills, lifestyle or income. If the government and financial institutions are going to back such a move to a truly cashless society, it will need a well-designed infrastructure which is totally inclusive and accessible to allow people to manage their money.

“From a psychological point of view, people still like physical notes and coins because it is tangible wealth and financial security in the palm of their hand. It will take a few years for people to feel comfortable with just a number on a screen – even if ‘going cashless’ in the long run makes tracking spending and completing financial transactions simpler, easier and safer.”

June 6th, 2017 | Andrew Hagger | News

Nine out of 10 Brits have unrealistic expectations of how much money they will need in retirement, reveals a new poll.

The findings from deVere Group, one of the world’s largest independent financial services organisations, come days after a report from the World Economic Forum (WEF) calculated that the UK pension savings gap will rise from £6trillion to £25trillion by 2050.

The three primary reasons for the stark forecasts are increasing life expectancy, lower birth rates and, crucially, not enough being saved for retirement.

Nigel Green, founder and CEO of deVere Group, comments: “Nine out of 10 of all the new clients we have taken on as a firm in 2017 have unrealistic expectations of how much they will need in retirement.

“Typically, when we first meet new clients we discuss their personal financial circumstances and their long-term objectives, namely their retirement goals and aspirations, including at what age they would like to retire and how much they would need and/or like to have as income per year.

“Most people aim to retire at the default retirement age with a pension income of 75 per cent of their pre-retirement earnings, which is generally recommended by the pension industry.

“However, once we first do the sums with our new clients, it becomes alarmingly clear that the overwhelming majority are not yet on course to reach their goals.  Indeed, nine out of 10 of all the new clients we have taken on as a firm in 2017 have had unrealistic expectations of how much they will need for retirement.”

He continues: “The ideal for most people is to retire in their mid 60s and enjoy a fulfilling, financially-secure retirement.  But unless you have the discipline to set money aside whilst you’re working, it is, sadly, likely that you’ll need to quite drastically reconsider your retirement plans.

“Failure to save for your mature years whilst you’re earning will probably mean that you’ll need to work well into your 70s, or that you’ll have to considerably compromise your lifestyle when you retire – neither option is particularly appealing for most people.”

Earlier this year, another deVere Group survey found that a ‘live for today’ attitude means that as many as eight in 10 workers are not saving enough for their old age.

At the time, describing the findings as “very worrying indeed”, Nigel Green, observed: “Just 20 per cent of new clients were putting enough aside to realise their own long-term financial goals of retiring at an age they want and having enough money to last throughout their retirement.

“Too many people have a ‘live for today’ attitude, but what happens when ‘tomorrow’ does come and you want to retire? The ‘head in the sand’ mentality when it comes to saving for retirement is very concerning.