October 18th, 2016 | Andrew Hagger | News

Nearly seven in 10 (68%) of people are unaware that over the next few years there will be increases to the minimum contributions they will have to make into their workplace pension scheme, according to the latest Scottish Widows Workplace Pensions Report. But despite this lack of knowledge about the mechanics of the initiative, nearly four in five (78%) say they will stay enrolled, with only 3% saying they will opt out when contributions increase.

While awareness of auto enrolment is increasing markedly, from 39% in 2012 to over 76% in 2016, a quarter (24%) still remain unaware.  Other statistics from the research revealed that over two-thirds (35%) of people working for large businesses and almost half (49%) of those working for medium businesses are not saving adequately for retirement. However, the report also reveals that the number of employees from smaller companies now saving sufficiently has increased from 40% to 44% in the last year.

Over a quarter (27%) say that they can’t save any more into their workplace pension due to financial pressures. Younger generations, in particular, are most likely to be prevented from saving because of a lack of understanding, with a quarter (24%) of 22-29 year olds and over a tenth (13%) of 30-39 year olds giving this as the reason.

The younger generation (22-29 year-olds) are also twice as likely as the rest of the nation to save more into their workplace pension if they had more information from their employer (14% versus 7% on average). Furthermore, over a third (36%) of those aged 22-29 and 31% of 30-39 year olds think an employer who offers a pension scheme should also offer advice on how to budget for retirement.

Younger generations place a high value on employer contributions to their workplace pensions. Those aged 22-29 and 30-39 are the most likely of any age group to choose to save into a company scheme because their employer contributes too, at 60% and 58% respectively, with 26% of 22-29 year olds and 27% of 30-39 year olds wanting employer contributions to increase a little year on year.

October 12th, 2016 | Andrew Hagger | News

New figures from StepChange Debt Charity, released today, suggest that almost two thirds of people seeking its help with overdraft debts have regularly exceeded their limit and faced charges of £45 each time on average.

Every month, between 6,000 and 10,000 people contacting the charity will have incurred unarranged overdraft fees. In the year before they sought debt advice, the charity estimates that they will have been hit with over £1.3 million in fees between them.

The new figures also show that people with overdrafts had gone into the red in almost every month during the last year. The charity believes that too many people in financial difficulty are being trapped in an overdraft cycle and it is calling on the FCA to take strong action to both cap charges and reduce the role of overdrafts in persistent problem debt.

Regular overdraft use rife among people in problem debt

The charity’s new survey of 1,019 clients with overdrafts revealed that on average, they went overdrawn in 11 of the last 12 months. Recent national research from StepChange Debt Charity has shown that around 1.7 million people are trapped in an overdraft cycle, consistently using overdrafts to meet essential and emergency costs. This makes them significantly more likely to fall into financial difficulty.

More than half of the people advised by StepChange Debt Charity in the first half of 2016 had overdrafts. This amounts to 93,000 people struggling with overdraft debt and they owed an average of £1,679 on their overdrafts, in addition to their other debts.

People in financial difficulty paying millions a year in charges

Many of those trapped in a cycle of using their overdraft regularly had exceeded their overdraft limit. Nearly two thirds (62%) of survey respondents had gone over their limit in the last year and did so in an average of five of the past 12 months. 39% of respondents revealed that they faced average charges of £45 each time for using an unarranged overdraft, adding around £225 a year to their already heavy debt burden.

Each month, the charity is contacted by around 15,500 people with overdraft debt. Based on the survey results, the charity estimates that approximately 9,600 go into an unarranged overdraft, doing so in an average of five of the 12 months before they seek debt advice. Around 6,000 would pay an average of £45 per charge, a total of £225 for the year. The charity therefore estimates that those seeking advice on overdraft debt in any given month will have paid at least £1.35 million in unarranged overdraft fees between them over the last year.

October 11th, 2016 | Andrew Hagger | News

New research from UK peer-to-peer lender RateSetter has found that most people in the UK think their family members know best when it comes to financial advice.  Four in ten people (38%) have gone to another family member for advice about money, while only one quarter (25%) have used a professional, qualified adviser.

The most common source of advice in the family are mums and dads; overall, 29% have asked their parents, rising to nearly two-thirds (63%) of under 35s. But the flow is not all one way, with one in ten over 55s saying they have asked their grown up children for advice, perhaps reflecting that many financial services are now accessed online.

Indeed, a quarter of under 35s say they have provided tips to their parents, and 5% say they have advised their grandparents.

Strikingly, almost half of people across the UK are sufficiently confident in themselves to have never asked for financial advice.

Half of those that have provided advice to family members did so about savings, with the next most common topic being credit cards and loans (47%).

When it comes to the question of who is most trusted to provide financial advice, 59% of under 35s trust advice from their parents, with 39% trusting financial advisers.  Under 35s are also the least likely age group to trust tips provided by websites and newspapers, and more likely than other age groups to trust advice from friends and work colleagues.

However, there is cause for financial advisers to be optimistic for the future.  While only one in seven under 35s have consulted a financial adviser in the past, half (52%) say that they are likely to use one in future, along with four in ten (41%) 35-55s compared to only a quarter of over 55s.

Lucy Bott from RateSetter commented on the research:

“We’ve heard how millennials are tapping the ‘bank of mum and dad’ for things like a deposit to buy a house, and this research shows that parents and grandparents are important and trusted sources of financial advice too. Perhaps more surprising is that many parents are now turning the tables, seeking advice from their grown up children.

“The key thing is to keep your finances under review – and with interest rates recently cut even closer to zero, it is all the more important not to bury your head in the sand and hope for the best. Putting money to work now can help turn dreams for the future into reality.”

October 11th, 2016 | Andrew Hagger | News

More than 1.5 million people have lived more than 45 years having never borrowed a penny from a bank or lender.  However, this commendable existence could come back to bite as many of these credit virgins may struggle to secure a mortgage or even a mobile phone contract.

A credit score is a three digit number between 0 and 999 which is allocated to every adult in the UK and is used by banks to determine whether they should trust someone to pay back a mortgage, loan or credit card

However, there is a common misconception that opting not to use a credit card or loan makes you a more trust worthy borrower to a bank.  In fact, it does the opposite.

According to the research from Amigo loans, more than 13 million UK adults are oblivious to the fact that it is actually more difficult to secure credit, including a mortgage, if you’ve never used credit in the past.

The reason for this is that banks want trustworthy borrowers with a proven history of paying back debts – credit virgins simply don’t have the credentials.

The ignorance surrounding credit scores is apparent on a wide scale with only 12% of people in the UK having ever checked their own personal credit score.

With increasing financial pressure, families are buckling under the costs of everyday life. Missing bills may seem menial, but these can dramatically affect your credit score.  Nearly a quarter (22%) of those in the 45-54 age bracket have missed a payment, such as mobile phone payment or gas bill, which has affected their credit score and one in 20 have held a joint account with someone with

Glen Crawford, CEO at Amigo Loans, which commissioned the study said: “It’s so often that we hear customers ask why their bank wouldn’t lend to them when they’re so good with money – they’ve never had a credit card in their life, they’d say.  However, as ironic as it sounds, if you’ve never used credit, it’s often hard to access it.

“Many banks and lenders use credit scores as an indication of how likely you’d be to repay a debt, whether that be a £5,000 loan or a £5 overdraft.  But, if like millions of credit virgins, you’ve never demonstrated that you can be trusted, they shut the door. This is unfair and leaves lots of deserving, trustworthy people without access to finance such as a mortgage.” 

October 4th, 2016 | Andrew Hagger | News

Research from Sainsbury’s Bank into the cost of a wedding has revealed that couples who have married in the past five years claim to have spent on average £13,200 on their wedding, and those younger hitchers aged between 18-34, who are more likely to be first-timers are spending an average of £21,109.

Analysis of Sainsbury’s Bank’s loans data shows that the average amount borrowed for a wedding, according to borrowers is £8,936.

However, the true cost of the wedding is closer to £52,000, when all the expenses – including those incurred by the guests are added together.

On average, guests can spend up to £423 on attending a wedding – when all the following expenses are calculated.

For those who attend the stag or hen do, an average of £92 can be added to this total, bringing the full wedding-guest experience to over £500.

With the average number of wedding guests now put at around 92, this could mean that the true cost of a wedding is well over £52,000 – not including any stag or hen festivities. This is almost four-fold the reported average wedding cost.

Simon Ranson, Head of Banking, Sainsbury’s Bank says: “Our research shows that weddings are expensive for guests as well as the hosts, so planning ahead and budgeting is a must for anyone planning or attending one.

”Loans are a popular way to fund a wedding but credit cards provide another option. For example, there are cards available offering no interest on purchases – including ours which offers 27 months.  If you take out one of our cards, make sure you pay the balance off in the promotional period to avoid paying any interest.”

The research showed that paying off a wedding takes on average, four months, rising to a mean of 10 months for 18-34 year-olds. However, 4% of those who had married took one-two years to pay of their wedding, and 3% took two to three years.

Sadly, 6% of those who got married became divorced or separated whilst they were still paying off their wedding, though for 29% who got married then split up, at least the wedding had been paid off by this time. Happily, most respondents were still together.

October 4th, 2016 | Andrew Hagger | News

A brand new credit card name has hit the best buy tables today – namely nuba – powered by card giant MBNA.

There are two cards to choose from – a market leading 41 month 0% balance transfer deal with a one off fee of 3.49% – the good news is that if you qualify and transfer at least £1000 you’ll be entitled to a £20 Amazon gift card.

nuba has also launched an all round card with 25 months interest free on purchases and balance transfers – the transfer fee is 2.39% but again there’s an option to get your hands on a £20 Amazon gift card if you switch at least £1000 within 60 days of opening your nuba card account.

Mark Elliott from MBNA said: “With nuba, what you see is what you get. nuba is a no-fuss brand. Simple products with competitive rates and attractive benefits. nuba allows us to use the strength and experience of MBNA to do some exciting new things.”

For more details www.nubacards.co.uk

October 4th, 2016 | Andrew Hagger | News

Your credit score is the three digit number that helps everyone from mortgage companies to mobile phone providers decide how trustworthy you are when it comes to paying them back the money you owe them.

A survey of 1100 people by MyCreditMonitor (www.mycreditmonitor.co.uk) found that 42.5% of those questioned expected their credit score to have some impact on their financial decisions in the coming year.

However, while this seems to demonstrate a general awareness of how important credit scores might be, the survey also finds that others seem to contradict this what with an astonishing 6 out of 10 people admitting to not knowing what their credit score was.

Moreover, 40% of those consumers who use credit wouldn’t check their credit score before applying for a credit card, loan or other type of borrowing. This is despite the process being quick and easy to do online.

These figures from the survey suggest that while consumers seem to know that their credit score is important, most of them don’t actually know what their credit score is!

MyCreditMonitor wants to get rid of this contradiction, urging consumers to become savvier when it comes to keeping their credit activity in good shape.

Jenny Walker of MyCreditMonitor, said, “Credit scores are nothing new and we all have one. It seems that a large percentage of consumers are aware of how significant their credit score is, and the impact it could have on the important decisions they make. Yet the majority of people don’t actually know what their credit score is. Worse still, it seems many of us are still applying for credit without even checking our credit score to find out what chance we have of being accepted, or if we’re in a position to get a better deal than the one we were applying for.”

September 27th, 2016 | Andrew Hagger | News

Prudential and Unbiased.co.uk, the site that connects millions to advice, this week launched the eighth annual  ‘Write a Will Week’, with new research* which reveals  that 59 per cent of UK adults have not made a will.

When a Will is not in place, a deceased person’s estate is subject to intestacy laws, which may not reflect their final wishes.  Write a Will Week is part of the annual Tax Action campaign, which revealed that £4.6billion was due to be paid in unnecessary tax in 2016, including £595million in Inheritance Tax, some of which can be avoided through proper financial planning.

Unsurprisingly, it’s the younger generation who are least prepared, with only 17% of those aged 18-34 having a Will in place and only 29% of those aged 35-54.  Older people are more prepared, yet still 36% of people aged over 55 do not have a Will and risk dying intestate.

The most common reason people gave for not yet having a will was simply that they are putting it off until they are older (23 per cent), but 16% said they didn’t think they would have enough left to be worth passing on when they die. Other reasons for not having a Will in place include it never having occurred to them (13%) and assuming that their estate will automatically go to the right person when they die (11%).

Les Cameron, tax specialist at Prudential, said: “Whether you have a will in place or not is one of the things that will be at the forefront of any financial planner’s mind. It’s important to have an up-to-date will to ensure that your estate passes to those you want it to, as tax efficiently as possible, when you die.  Trusts are often created in wills to control an estate beyond death, perhaps due to complicated family circumstances or when considering the financial position of the beneficiaries. Making a will can range from being a fairly simple to a very complex area of financial planning and an adviser can work together with a solicitor to make sure you have the right will in place for your personal circumstances.”

To find a local solicitor or financial adviser to help organise your will, go to www.unbiased.co.uk and enter your postcode.

September 26th, 2016 | Andrew Hagger | News

New findings from Endsleigh’s 2016 Student Survey show that many parents are in the dark about their child’s spending habits, as more than a quarter (28%) believe their child never uses an overdraft, when in reality, less than 2% of students surveyed said they never use the facility.

The study of over 4,300 students and parents also reveals a majority (70%) of parents believe their child does not have a credit card in their first year of studying, despite 94% of students saying they do own one. And those who have a credit card make good use of it – over half (58%) of students in this group said they use it always or regularly.

Likewise, students are failing to budget properly, with over a quarter (26%) admitting their first student loan instalment lasted less than a month, whilst almost two-thirds (60%) of students admitted it only lasted a couple of months. The first loan payment is usually made just a few days after registration in move-in week.

Two out of five (41%) parents admit money management is their main concern for their children’s first year of university; and the majority (70%) believe their child also worries about finances. Although managing their money ranks high on many (44%) students’ list of concerns, it comes second after achieving academic success, followed by applying for jobs after graduation (40%).

To add further potential worry, the survey finds UK households are hit by £683.30 of unexpected costs when a student goes to university. Food is the highest of these – for almost a third of students and a quarter of parents; followed by course book costs which took nearly a fifth of students and a quarter of parents by surprise.  After food and course book costs, the price of travelling to and from university was unexpectedly costly for over one in ten students and one in five parents.

September 26th, 2016 | Andrew Hagger | News

Younger people are more willing to buy a home prone to safety, flood or crime risks in order to get on the housing ladder, new research from Aviva reveals, as the ‘ideal’ home is replaced with what people can afford.

According to the findings, a third of would-be homebuyers aged 34 and under say they would buy a home in a high crime area (34% for both 18-24s and 25-34s). Across all age groups, only 19% would do the same, falling to just 7% of those aged 55 and above.

Despite widespread coverage of damage caused by flooding in recent years, almost half of 18-24s  and a third of 25-34s would consider living in a flood-risk area, compared to 23% across all age groups, and only 8% of those aged 55 and above.

Anxiety over being able to afford a property could be leading younger buyers to make sacrifices when it comes to the safety and location of their home. Previous research from Aviva highlights the continued importance of homeownership in the UK, with four fifths (79%) of people agreeing becoming a homeowner was important to them. However, a quarter (27%) fear they will never be able to afford to buy a property.