August 20th, 2015 | Andrew Hagger | News

Many people will have put their savings in cash based NISAs to save paying tax on their interest but despite this benefit they will be dismayed with the level of returns currently on offer.

Unfortunately for savers the ISA market mirrors the dismal outlook for the savings market as a whole.

With rates at rock bottom and little sign of improvement maybe now’s the time to consider peer to peer lending, an alternative and more rewarding investment option.

The returns from peer to peer providers look more attractive than ever, with RateSetter for example offering 4.2% for a 1 year bond as I write this. Even if you deduct 20% tax, the net return is 3.36% AER and is in a different league from the best 1 year fixed rate ISAs from Shawbrook Bank and Virgin Money paying just 1.75% and 1.71% respectively.

In cold hard cash terms 1.75% interest on the maximum cash NISA allowance of £15,240 would give you a net annual return of £266.70 compared with a far healthier £512.06 net from the RateSetter 1 year bond option.

Zopa remains the biggest player in the peer to peer marketplace having lent more than £1 billion and is equally competitive with its rates. It currently boasts more than 59,000 lenders, not surprising when you see that at it advertises a 5.00% return over 5 years.

RateSetter is growing fast too and saw an inflow of more than £40 million in the last month alone.

It even offers a monthly access account paying 3.1% (at time of writing) – so if you’re a little nervous or unsure if this is right for you, you can dip your toe in the water and try it out with a minimum deposit of just £10.

Lending Works is another straightforward retail P2P provider currently offering 4.8% fixed for three years and an impressive 6.3% for a five year term.

If it’s the level of net interest earned that’s important to you then peer to peer wins hands down, plus you’re not restricted to a maximum annual allowance as with a NISA so if you wanted to save £20,000 or even £50,000 that’s an option.

One of the main concerns with people depositing their cash with peer-to-peer providers is that although the returns far outweigh those paid by the banks, they don’t offer the cast iron guarantee to savers that bank customers enjoy under the Financial Services Compensation Scheme.

As long as you fully appreciate and are comfortable with this, lower overheads of not having to run a nationwide network of branches, means you can obtain better returns on your cash in the peer-to-peer market.

Providers also have their own robust methods in place to depositors. RateSetter for example maintains a ‘provision fund’ with a balance of more than £15.3 million built up from borrower fees. The fund is used to reimburse lenders in the case of late payment or default.

This safety net has ensured since it started almost five years ago, every penny of capital and interest has been returned to every single Lender. Zopa also operates a similar model with its Safeguard feature whilst Lending Works utilises a reserve fund and a unique insurance scheme to protect lenders cash.

As long as providers keep rates competitive and bad debt levels under control, there’s no doubt in my mind that P2P will become an even bigger thorn in the side of the high street banks, particularly when it enters the ISA market in April 2016.

August 20th, 2015 | Andrew Hagger | News

Hitachi Personal Finance is the latest lender to reduce its loan rates as experts predict interest rates may rise in response to rising inflation.

The lender has cut its headline APR to 3.8% from 4.7% on loans from £10,001 to £15,000, and to 3.8% for loans between £7,500 and £10,000 over two to five years.

The move, from August 24 guarantees customers no set up fees or hidden extras, and no charges if they make overpayments or settle their loan early.

Hitachi Personal Finance recently announced it had applied industry leading levels of flexibility across its range of loans. Once accepted, borrowers can alter the length of their loan, to make the monthly payments more affordable.

If borrowers take a loan over the maximum term available (usually 60 months) they would be able to reduce their payments by almost £500 a year on a loan of £2,500, and £1,800 a year on a £25,000 loan by flexing their term.

The UK inflation rate (CPI) rose to 0.1% in July, heating up the debate over when the Bank of England will start raising interest rates which have been at 0.5% since March 2009.

Experts are saying it is now a case of when interest rates will rise, rather than if, meaning the cost of borrowing will inevitably rise.

Gerald Grimes, managing director of Hitachi Personal Finance, said that the latest rate cut comes at the right time for borrowers.
“Customers can get their spending plans in place now before the predicted rise in interest rates happen,” he said.

August 20th, 2015 | Andrew Hagger | News

More than one in five (21 per cent) pensioners have gone back to work since they reached the State Pension age, or are planning to do so in the future, according to new research from Prudential.

The rise of the retired jobseeker, along with the growing trend for a period of pre-tirement as previously identified by Prudential, shows how the modern retirement reality continues to shift further from the traditional norm of giving up work for good on a set date.

The most common motivation for pensioners heading back into the jobs market is a desire to keep mentally active (61 per cent), although the need to boost retirement income (56 per cent) is also driving retirees back to work.

Voluntary work is the choice of around one in six (16 per cent) retirees who are back at work or plan to return in the future – underlining the point that it is not always financial reasons that drive pensioners to seek employment. Even those who are earning are likely to take a pay cut – more than half say their post retirement wages will be lower than their previous income in employment.

Meanwhile, nearly one in 20 working past State Pension age are earning more than they did before, while one in 12 are setting up their own companies.

Stan Russell, retirement income expert at Prudential, said: “Although it’s striking to see how many retirees are choosing to return to work, it’s not optional for some people. While many say that working in older age is a good way of staying active, there are others who are forced to go back to work to make ends meet.

“Of course, there are real financial benefits from going back to work, such as earning extra cash and deferring taking the State Pension or income from private savings. However, for people who are hoping to give up work completely when they retire, saving as much as possible as early as possible in their working life remains the best way to secure the most comfortable retirement.

August 14th, 2015 | Andrew Hagger | News

Insurance guru Adam Powell from Policy Expert recommends that before you fork out for any specialist student insurance – check your parents’ home contents insurance policy.

Your possessions may already be covered under their policy, so you might not need to buy any additional cover. If you normally live with your parents outside of term time, your possessions could be covered under ‘contents away from the home’ within their existing policy.

There will probably be a maximum limit for each individual item that’s covered, which is normally around £1,500 – but could be less.

Powell warns that there may also be caveats around specific items such as an expensive laptop and certain circumstances (e.g. communal areas) – so make sure you check the policy wording carefully.

Some insurers might specify that belongings are kept in a locked room and may only cover a claim if there’s evidence of forced entry.

If a high-value item goes missing outside your accommodation e.g. from a coffee shop or library, you probably won’t be covered under your parents’ home insurance. For more comprehensive cover, your parents may need to add personal possessions insurance onto their existing policy.

You can buy stand-alone Home Insurance for Students – but this often works out as a more expensive way of doing things.

Your student accommodation might already have a basic level of contents insurance in place. Around 80 universities have this core cover – so it’s worth checking if yours is one of them. Normally, this will only be a basic level of insurance, so make sure you know exactly what’s included.

August 14th, 2015 | Andrew Hagger | News

With A level results announced this week, students will soon be busy sorting their university arrangements for the autumn, and that includes opening a student bank account.

The banks are keen to attract the potential high flyers of tomorrow with one eye on signing them up for their profitable insurance, pension and mortgage products in later life.

The big high street providers have released details of their student account packages for this year and as usual are offering an array of incentives in an effort to win the custom of the new intake of 2015.

However, the most important element of a student bank account for most people will be the ability to borrow as much money interest free as possible.

So even though gift cards and money off deals may sound tempting, the following numbers should convince you to give the freebies a wide berth.

If you can borrow an additional £1,000 interest free, you would save around £154 every year compared with a Lloyds Bank student account which charges interest at a rate of 8.2% EAR plus a £6 monthly fee.

That adds up to considerable saving over the course of your time at college, more than £600 over four years, and far outweighs the value of any incentives on offer.

Halifax and HSBC offer the largest interest free overdraft limits of up to £3,000, but be aware that both are subject to application and not granted automatically.

Also some of the banks will limit how much you are able to borrow each term, particularly in the first year.

Whichever bank you choose, make sure you don’t go over your interest free limit as you could end up paying hefty charges which you can ill afford on a student budget.

The only possible exception to the rule regarding incentives and one offer that maybe worth a look again this year comes from Santander.

New Santander student customers are eligible for a free four year 16-25 Railcard which cuts student rail fares by a third, a benefit that could prove a big money saver if you plan to use the train frequently to get to and from college.

August 13th, 2015 | Andrew Hagger | News

With A level results out today, here’s some useful advice from  Charlotte Burns the editor of the student website’ http://www.studentmoneysaver.co.uk/

Well, I imagine you’re exhausted. Sleep doesn’t come easy to those waiting for their results. Your results should be available from about 8am on results day morning (don’t freak out if the site’s slow, it’s a busy day).

You’re going to make some big decisions today, so be prepared – make sure you take a pen and paper, a fully charged phone, your results, UCAS number and login details, contact details for both your firm and insurance offers as well as chocolate, tissues, your childhood teddy-bear… whatever calms you.

It’s a good idea to bring someone with you. If it all goes a bit wrong, you may really appreciate someone sensible to be able to talk to about your options.

You’ve got your place! Nice one.

If your results match up to your university offer – YES! It’s nearly time to plan which bars you’re going to tonight – you’re off to uni! But you can’t relax quite yet, there are a few things to do.

Keep an eye on UCAS Track, as your university should change from ‘Conditional’ to ‘Unconditional’. This isn’t instant, so don’t panic if it doesn’t happen for a few hours. If by the next day it still hasn’t changed, give your university a call (your uni – sounds good right?!).

You’re then going to get your AS12 letter, which is an official confirmation letter sent from UCAS. Once you have this – it’s on, expect this on Friday or Saturday, by post and email. Read the instructions as you might need to ring up and confirm at some universities, while others won’t need you to.

Make sure you keep your letter safe, it’s what you’re going to need to get your student bank account, railcard etc.

You didn’t get the grades you needed.

Don’t panic. Breathe. And remember that going through clearing is not the end of the world.

You may even still be able to go to your first choice university. Check UCAS Track to see what your status is, if it says ‘Unconditional’, you’re in. If you’ve missed out by a few marks, have extenuating circumstances, or intend to appeal your grade you can call your first choice university to explain, but it’s a long shot.

If the university won’t accept you, you have a few options. You can accept your insurance offer, retake your A Levels and reapply next year (some universities will wait for you) or go through Clearing.

Clearing is an opportunity for you apply to a different university that has spaces on their courses. According to UCAS, 9% of students (61,000) found a university place from Clearing in 2014.

Applications through Clearing close on September 21 2015, but it really kicks off on results day. Don’t hang about, as the best courses/universities will be filled by the end of the first week after results. Check the UCAS Track site and if you’re eligible for Clearing, you’ll get a Clearing number which you should write down somewhere.

You’ll then ring up universities through their special Clearing phone lines and speak to an adviser about the course you’re interested in. They will ask you about your grades and will make a decision about you on the spot after a mini-interview.

Try not to stress out, think about the universities you might consider going to and prepare all the documents and phone numbers you need. Quickly practice your mini-interview and write down answers to questions you might be asked.

THINK – I know you can’t wait to get to uni, and the thought of resitting sounds horrific, but don’t accept anything because you are panicking. This might decide where you’re going to spend the next three/four years, and possibly what career route you’ll go down. Be prepared to say no to an offer if you’re not 100% sure.

If you end up at a university that wasn’t your first choice, sort out your accommodation as soon as possible. Your second choice uni might not have reserved a halls place for you, and you won’t have applied for halls at a Clearing uni, so check right away.

For my handy student information check out http://www.studentmoneysaver.co.uk/

August 5th, 2015 | Andrew Hagger | News

According to new research from Tesco Bank many consumers find it difficult to compare the value of their bank account, a problem that is preventing them moving their custom elsewhere.

The findings show that the majority of current account customers (55%), for example, find it impossible to understand the value of their account – one of the earliest conditions that must be met before customers will consider switching.

Furthermore, there were stark differences between ‘stickers’ (people who are not considering switching), of whom 62% cannot determine the value of their current account, and switchers, of whom only 24% cannot determine the value of their current account.

Tesco Bank has provided the findings to the UK Competition and Markets Authority to support their review into the current account market, and has called for the industry to make it easier for customers to see the true cost of their accounts and the value of what they receive in return.

Personal finance expert, Andrew Hagger of Moneycomms commented: “The switching process is now quicker and easier, but if consumers aren’t confident that moving their account will be of financial benefit then they’ll stick where they are, even though their existing account may be a bad fit.”

He added: “There’s currently too much focus on introducing portable account numbers at a time when the inability to easily compare the financial benefits appears to be a bigger barrier to account switching.”

Benny Higgins, Tesco Bank Chief Executive, said, “Customers are telling us that more needs to be done to enable them to understand the true cost and value of their current account. Only then will customers be able to make sure that they are choosing an account that is right for them.

August 5th, 2015 | Andrew Hagger | News

With the new Premier League season kicking off this weekend football fans across the country will be donning their new replica shirts and scarves, whilst some supporters will take their loyalty a step further by carrying a club branded credit card in their wallet.

It may be a great talking point and often a bit of a wind up when you get your football club credit card out in the bar or restaurant in front of your friends, but these deals aren’t the best option for all fans and by choosing the wrong plastic you could end up scoring a financial own goal.

MBNA remains the primary provider when it comes to football affinity credit cards, currently behind the deals for almost 30 clubs – not just the premiership big boys, but also some of the cash strapped smaller teams in the lower leagues.

Creation cards is the other influential company in this sector and currently advertises cards for six football league clubs although the financial terms of these cards are less attractive.

A prime example is that even though the 0% balance transfer term is a mere 6 months on the Creation football cards the one off balance transfer fees of 5% are way out of line when compared with the market average of 2% to 3%.

Aside from the pride of carrying your club colours in your purse or wallet, simply spending on your football credit card can deliver a welcome cash injection to the coffers of your favourite team.

The funds donated from these cards make a vital financial contribution to the grass roots player development your club thus helping the first team players of tomorrow.

If you sign up for a card the youth training academy at your club will receive up to £20 when you first use it and then a further contribution every time you spend on the card, in the last 14 years the partnership with MBNA has resulted in over £10 million being donated to teams up and down the country.

The interest rates on these cards at 18.9% APR representative are in line with the market average but if you can’t afford to pay your balance off in full each month you would be better opting for a cheaper rate deal such as the Halifax Low Rate credit card at 6.4% APR or MBNA’s own 6.6% low rate deal and making a separate donation to your club – as long as you remember!

MBNA Football Credit Cards offer 24 months interest free on balance transfers, that’s a full year less than the best non-football cards, however a plus point is that you can transfer money from your these football cards directly to your bank account subject to a one off money transfer fee of 4% – a low cost way to clear that nagging and expensive overdraft once and for all.

For fans who always pay their statement in full every month, these cards won’t hurt your finances and can get you decent discounts in the club shop and the chance to win ‘money can’t buy’ and VIP days at your club

Some of the Creation Card deals also allow you to spread the cost of your season ticket over 9 months interest free which could prove a useful option when funds are tight.

However, if you keep a big balance on your card, then look for a lower rate non-football card and don’t be blinded by club loyalty as it could cost you far more than the value of benefits you receive.

August 4th, 2015 | Andrew Hagger | News

Almost 18 million over 50s are planning to go on holiday this year and while the majority will stock up on sun cream in anticipation, some won’t actually make it to their intended holiday destination according to Saga Travel Insurance.

Analysis of claims data shows that cancelling a holiday is the most common claim that over 50s make on their travel insurance policy. However, it could be extremely expensive if they don’t have any insurance, as the average cost of a cancellation claim is around £1,000.

This amount could climb even higher as lots of people pre-pay for excursions, book rental cars and pay for cattery or kennel fees in advance; all of which can be claimed for on their travel insurance policy.

However, packing the right travel insurance may not seem as fun as picking up new swimwear or designer shades, but it is just as crucial as packing the sun tan lotion if you don’t want to get financially burnt.

A review of claims data shows that over 50s are most likely to cancel their holiday 17 days before their scheduled departure date, however many will have to cancel just 24 hours before they are due to jet off.

Saga is urging people to buy insurance as soon as they have booked their holiday so that they are covered for any eventuality.

The most common reasons people have to cancel a holiday are because someone falls ill, gets injured or someone passes away. Other common reasons people cite for cancelling their holiday are strikes or hotels that they have booked to stay in closing down.

A spokesman for, Saga Services, said: “No one books a holiday thinking the worst but if you don’t want to risk getting financially burnt then you need to pack the right travel cover along with the sun tan lotion. Too many people find themselves with a financial hangover having booked and then cancelled a holiday.”

If people have already booked a holiday and then the Foreign and Commonwealth office (FCO) advises against travelling to that specific country then they will be covered on their insurance to cancel their holiday, so people should always check the FCO website before travelling.

July 29th, 2015 | Andrew Hagger | News

Research  from Sainsbury’s Bank Life Insurance reveals that four in ten parents with children under the age of 18 do not have any life insurance in place. Around two thirds of these parents do not have any critical illness protection.

The findings highlight the life insurance gap for families who may be unable to cope financially and afford the same lifestyle if one parent can no longer provide.

Surprisingly, of those without life insurance, 21% do not believe it is necessary and almost half (49%) say they cannot afford it, with 7% saying they used to have it but the increasing cost of living has made it no longer affordable. One in ten parents (14%) claimed they plan to take out life insurance cover but have not got around to doing it.

The research showed that among those with life insurance, 36% say they have never reviewed their cover and just 10% increased their life insurance cover as they had children.

Scott Gorman, Head of Sainsbury’s Life Insurance said:  “Life insurance is an important financial safety net and should not be overlooked. Families should consider life insurance with critical illness protection  as early as possible to cover their mortgage, any borrowing  and other day-to-day commitments to ensure financial stability, if the worst happens.”