November 22nd, 2016 | Andrew Hagger | News

New research released today by Zurich shows that nearly half of UK adults say that a lack of savings is stopping them from achieving life goals now.

Based on a survey of over 2,000 UK consumers, the study is a benchmark of how financially confident people are they will be able to fulfill their aspirations for life now and in the future.

The study, which aims to highlight the savings gap in the UK, found that millennials in particular believe a lack of savings stops them from realising their current goals.

Three in five of 18-24-year-olds and half of 25-34-year-olds said lack of savings prevents them from realising goals such as starting a family or travelling the world. This compares to just 33% of those aged 55 or over.

Furthermore, almost three quarters (72%) of those under 65 said they have goals they want to achieve when aged 65 or over, such as travelling more often or for longer periods, taking up new hobbies or being in a position to financially support their own children, grandchildren or stepchildren.

Despite recognition of the importance of saving in achieving aspirations, people under the age of 65 are not actively saving for at 65 and over. A quarter of those who are yet to retire do not have either a private or workplace pension while nearly one fifth (17%) have no savings.

While over half of those pre-retirement hold private or workplace pensions, of those only one in six said they felt confident they knew how much they should be saving into their pension every month to comfortably afford the standard of living they expect from their retirement. Furthermore, 26% stated they had no workplace or private pension provision in place at all.

Anne Torry, of Zurich UK Life, commented: “It is positive that people are so optimistic about their long term future and have clear goals they want to achieve after the age of 65, from travelling the world to starting a new hobby or financially supporting loved ones. Yet, when it comes to realising goals, whether in the long or immediate term, money is a clear brake on ambition with a lack of savings fundamental to realising aspirations. Despite realising this, our research shows just half of non-retired people have pension provision. This simply will not be enough to support the aspirations that people have.

In a low interest rate environment, a professional adviser can also help to create a plan and make the most of savings. The earlier action is taken, the more likely it is that your savings will be sufficient to realise your aspirations today and in the future.”

November 21st, 2016 | Andrew Hagger | News

Personal Finance Expert, Andrew Hagger, has just released new credit card research showing how the 0% purchase sector of the credit card market has evolved over the last two years.

Andrew Hagger of Moneycomms comments:

With the credit card balance transfer market the balance transfer fee is frequently the element of a card that helps pinpoint the best deal.

However with the 0% purchase cards there is no corresponding one off fee so consumers need to consider other card attributes when selecting their plastic of choice.

This includes looking at the reward scheme/cashback, maximum interest free days and the ‘revert to’ or ‘go to’ interest rate that kicks in once the 0% promo offer expires.

The battle for best buy status remains fierce because most aggregators compile their tables based upon the longest term.

This has been the key driver that has pushed interest free deals to record levels – up by 50 per cent, from 20 to 30 months in just two years.

The supermarket banking brands Tesco Bank and Sainsbury’s Bank have long been key players in this market with a compelling combination package of long interest free term and rewards, as an example the latter is currently offering a 5000 Nectar point intro deal worth £25 for new customers.

The average promotional term for a 0% purchase credit card is now 11.9 months (was 9.3 months in Nov 14) and there are now 18 cards offering 20 months or more compared with just a solitary deal in November 2014.

If it’s a card that’s going to be a long term shopping companion consumers should also factor in whether they’ll get any kick back for their loyalty and what the interest rate will be when the promotional deal ends.

Many rewards providers have cut the reward earn rates or ditched their schemes altogether due to cost pressures from the EU interchange fee changes.

In this latest 0% credit card purchase market analysis carried out by Moneycomms only John Lewis (Partnership Card), Nationwide Building Society and Sainsbury’s Bank have maintained their reward rates of 2 years ago .

I’m sure this market will continue to develop and a 36 month 0% purchase card may well be a possibility before too long, however as with the balance transfer market I urge consumers not to base their choice purely on the longest deal as it’s not necessarily the most suitable or financially beneficial.

November 21st, 2016 | Andrew Hagger | News

Thousands of Brits are oblivious to when they’re being credit checked, according to a study from Amigo.

From overdraft extensions to mobile phone contracts, thousands of Brits across the UK are completely unaware that they are being silently judged by a number on a screen.

Monthly insurance premium instalments, monthly gas direct debits and monthly electricity direct debits are among the top things consumers are not aware they’ll be credit checked for – with more than half of the population admitting that they weren’t aware big brother was checking out their trustworthiness.

More seriously, one in five people (22 per cent) aren’t aware that they’re credit checked when applying for a mortgage, meaning they may not only be declined but they could actually damage their credit score even more, making finding a mortgage acceptance even harder. Other financial transactions people didn’t know were credit checked included applying for a personal loan (24 per cent) and applying for a credit card (19per cent).

Top Ten financial transaction that people DIDN’T KNOW they were being credit checked for

1.    Monthly insurance instalments – 63%

2.    Gas direct debit payment – 56%

3.    Electricity direct debit payment – 56%

4.    Flat rental – 50%

5.    Mobile phone monthly contract – 37%

6.    Overdraft extension – 49%

7.    Store cards – 42%

8.    Retail finance – 37%

9.    Car finance – 27%

10.  Personal loan – 24%

A damaged credit score severely impacts an individual’s ability to borrow from a lender, especially a mortgage. If your credit score is poor, it indicates that you are less trustworthy when it comes to paying back a loan.

Every individual in the UK has a credit score, yet only 12% of people recall knowing their exact rating. This means many could be in for a nasty shock when they apply for a loan, credit card or mortgage.

What’s worse, if you apply for a credit card, loan or mortgage and are declined, that process can actually damage your credit score even further.

There are three principal reference agencies which allow people to check their score before applying for credit including; Equifax, Experian andCallcredit.

Glen Crawford, CEO at Amigo Loans, which commissioned the study said: Thousands of people are completely oblivious to the fact big institutions are checking their trustworthiness. The days when you would only be checked for a mortgage or a loan are long gone. What’s really worrying is that people could be inadvertently destroying their own credit score, and as a result may be closing the door on life dreams like home ownership.

November 21st, 2016 | Andrew Hagger | News

Adam Powell, Head of Operations of home insurance provider Policy Expert commented:

“With predictions for heavy snow just around the corner, it’s important to ensure that your home is prepared for everything that the winter months might throw at it. Cold and stormy weather can ravage buildings so it’s important to take the time to quickly make sure you have the correct level of home insurance cover before the weather worsens. Check the small print – some policies may not cover sheds and outbuildings, and others won’t cover damaged boilers if they haven’t been seen by a registered plumber.”

Top tips for protecting your home from winter weather:

• Check your boiler and heating system – If you haven’t done so already this year, get your boiler checked and/or serviced by a Gas Safe registered plumber.
• Roof tiles– Check for any cracked, missing or loose tiles and replace them. If a roof is in disrepair the weight of snow or high winds can prove to be hazardous.
• Keep the central heating on – Set the central heating to a minimum of 14 degrees Celsius throughout the winter. It helps prevent pipes freezing and frost damage.
• Repair damaged chimneys– Look for cracks around chimney pots and at the roof join, also for loose render and render that’s come away from the stack. High winds and heavy rain can damage chimneys even further, make sure they’re properly stable before extreme weather happens.
• Windows– Take a look at your window frames and fill any cracks and put on a coat of paint if needed. Extreme temperatures and wet weather can cause untreated wood to expand and rot, treating the window sills helps prevent water and frost damage.
• Insulation – Lag any pipes and water tanks in exposed areas such as lofts, garages and utility rooms to prevent pipes freezing and bursting.
• Guttering and drains – Clear your guttering and drains of any debris such as leaves, mud and stones; they can block easily and freeze up.
• Walls – Check the pointing in brickwork both on the main house, all outbuildings and garden walls, look for any loose stone or areas that are in need of repair.

November 21st, 2016 | Andrew Hagger | News

Research from Aviva has revealed the extent to which pension policies are being forgotten. A survey of almost ten thousand people who hold a pension has revealed that just under one in eight (13%) admitted they have at least one pension that they had forgotten about. This is equal to more than 2.5 million pension policies currently sitting in the back of people’s minds.

Among those with a forgotten pension, the majority believe they have misplaced one pot (77%), although 17% think they have forgotten about two and 6% have forgotten three or more.

According to Government figures, there is an estimated £400m in unclaimed pension savings. At the same time, almost three in five (59%) UK adults are worried about not having enough money to last them in retirement.

Although tracking down a lost pension can provide a valuable boost to retirement income, those who delay could receive a smaller amount than expected. Forgotten pensions may have been subject to charges and not invested in the best way suited to the policyholder, making it worth less than it would have been if it was actively managed.

Andy Curran, from Aviva, said:

“It’s unsurprising that so many people have pensions they have forgotten about. The ‘job for life’ is now a distant memory with people much more likely to change employer on a regular basis. With auto-enrolment doing such a great job of getting more people saving for retirement, we are likely to see the number of pension pots that people hold increase further as each time a person gets a new job they get a new workplace pension. This is why Aviva is now working to help create a pensions dashboard – a platform where people will be able to see all their pensions in one place.

“People need to be aware of the potential risks of having a number of different pension pots with small amounts of money in each. It’s likely that there will still be charges taken out of those pots for their management and administration and that can have implications if you are no longer contributing into them.

November 15th, 2016 | Andrew Hagger | News

A new online budgeting app, Squirrel, is helping thousands of Brits take control of their personal finances. Through an ultra-intuitive web app, soon to be available on iOS and Android, users can budget effortlessly, spend responsibly and save money with minimum fuss.

Squirrel users start by directing their monthly salary into a Barclays-powered Squirrel account that’s created in their name, and then set up their recurring commitments, e.g. rent or mortgage payments, utility bills, council tax and Sky TV.

Their monthly commitments are then deducted from their salary and are paid out on a ‘just in time’ basis, meaning no bills are ever missed because the necessary funds arrive just before they go out. At the same time, they allocate funds for any savings goals, whether saving for a new car, Christmas or a dream holiday.

After all costs and any savings have been allocated, Squirrel creates a spending amount for the month out of what’s left. ‘Squirrels’ then decide if they’d like their ‘spending money’ to be divided into weekly or monthly instalments. If weekly, their spending money is paid into their current accounts every Monday, preventing them blowing it all too early in the month.

Against a backdrop of rising inflation and low wage growth, it’s becoming even more important for Britons to manage and control their finances. But importantly Squirrel helps people save, too: currently, two in five working Brits have less than £100 in savings*, whereas the average Squirrel user currently has £650 ‘squirrelled away.’

Squirrel costs £3.99 per month, for which users get:

• Their own secure FCA-regulated, Barclays-powered bank account
• Unlimited personalised savings pots for different goals
• 24/7 support from real people
• Integration with all high-street banks
• Full use of the unique budgeting and savings tool

November 15th, 2016 | Andrew Hagger | News

Consumers could be paying thousands of pounds more in interest payments on personal loans and credit card balances because they are failing to check and take steps to improve their credit scores, according to research carried out by credit improvement service Credit Improver. Lenders use credit scores to determine who qualifies for a loan or credit card, and at what interest rate and credit limit.

Credit Improver looked at the typical interest rate a borrower could secure – depending on their credit score – on a £5,000 personal loan paid back over 36 months. It also looked at the typical rate a borrower might secure on a credit card, and how much interest they would pay if that card had a £3,000 balance, and they committed to paying 4% of the outstanding balance every month.

Taking a £5,000 personal loan paid back over 36 months, and comparing a borrower with an ‘Excellent’ credit score, between 961 – 999*, and someone with a ‘Very Poor’ credit score, between 0 – 560*. The former could secure a typical rate of 3.8% APR, with monthly interest payments of £8.14 and total interest paid over the duration of the loan of £293.08. However, someone with a ‘Very Poor’ score, may typically secure an APR of 79.4%, with monthly interest payments an eye-watering £162.96 a month, and total interest paid of £5,866.60 over three years. That’s a staggering £5,573.52 more interest.

Even a borrower with a ‘Fair’ credit score, between 721 – 880, could still pay more than £1,000 extra in total interest over the duration of the loan, as the typical rate on a personal loan would be 16.9%. Also, by improving your credit score from ‘Very Poor’ to a ‘Poor’ rating, you could secure a better loan rate of 29% rather than almost 80%, and reduce the total interest paid by more than £3,500.

November 15th, 2016 | Andrew Hagger | News

Andrew Hagger of Moneycomms.co.uk today warned borrowers that overdraft costs could wipe out the discounts that shoppers receive during Black Friday promotions.

He Said: “The hype around ‘Black Friday’ and buying furniture and carpets in time for Christmas seems to increase every year, but before you get carried away with your debit card and max out your overdraft it’s worth weighing up the potential costs against cheaper alternative options.

Whether you’re going to blow a few hundred pounds or a four figure sum by repeatedly clicking the ‘add to basket’ button over the next few weeks, take a minute to understand what it’s going to cost in terms of interest and fees.

Some overdraft tariffs can be very reasonable – with First Direct charging just £1.96 if you’re in the red by £400 for a full 30 days – on the other hand a £2,000 overdrawn balance with a Halifax Current Account for 60 days will set you back an eye watering £180 – so what are the alternatives?

The credit card ‘Money Transfer’ or MT is often overlooked, but as you’ll see from the tables below can deliver huge cost savings when compared with an overdraft.

You have the same flexibility as an overdraft as the funds are transferred from your card into your bank account so you can shop for Xmas however you wish – that includes withdrawing cash at the ATM without having to pay the usual hefty credit card transaction fees.

The two most cost effective Money Transfer deals at the moment come from Virgin Money and MBNA offering 0% on the amount you borrow for 32 and 24 months respectively.

I’m not saying you should look to spread the cost of Christmas over such a prolonged period, however the only fee you’ll pay on these deals is a one off Money Transfer Fee which is 1.69% of the sum borrowed with Virgin Money and 1.99% with MBNA – both outperforming the high street bank overdrafts as you’ll see in the tables below.

Compared with a £1500 overdraft for 2 months an MT could easily save you more than £70 and for £3000 over 3 months the difference could be in excess of £210.

If it’s a credit card with a 0% deal you’d prefer, maybe for section 75 protection, look for maximum reward on minimum spend such as the new intu credit card which gives you a £20 gift voucher for just £250 spend – the equivalent of an 8% return.”

ENDS

November 8th, 2016 | Andrew Hagger | News

Every year millions of consumers make New Year’s resolutions and for a good number of those people it means consolidating their credit card and overdraft debts on to a zero per cent balance transfer deal.

Personal Finance expert, Andrew Hagger said: ” if you’ve got a solid balance that you’ve been carrying over from month to month, it makes financial sense to sort it out now rather than wait for 2017 to arrive and trigger you into action.”

“By getting ahead of the game and switching now you’ll save yourself two full months’ worth of interest and for someone with a £7,500 card balance at a market average of 18.9% APR that’s a saving of £236.25.”

So while we’re all looking of ways to keep the cost of Christmas down, there’s an obvious saving opportunity staring many people in the face every time they open their monthly credit card statement.

According to the latest statistics from The British bankers Association there is £26.8 billion pounds worth of credit card balances upon which interest is being charged – at 18.9% APR average this works out at £13.8 million in interest every day so there’s plenty of people who could save a good bit of money by switching  – as long as they have a decent credit record.

Individual cost savings depend on the current balance and interest rate being charged, however the following table gives you an idea of the amount of money you could save by acting early.

Credit card lenders are falling over themselves for your custom at the moment, so why not get your New Year’s resolution in ahead of the game and give your finances an early boost as a result.

November 8th, 2016 | Andrew Hagger | News

According to new YouGov research commissioned by Equifax, the credit information expert, 29% of Brits who celebrate Christmas say they feel pressured to spend more than they can afford for the festive season. On average, people expect to spend £441.24 on Christmas this year, with around 1 in 5 (21%) thinking they will spend more than they did last year.  The research also revealed that 7% of those who used a credit card to pay for Christmas 2015 still haven’t paid off the debt.

It appears, from the Equifax commissioned research, that women feel the pressure of festive spending more than men.  Nearly a third (32%) think they will feel pressured into spending more than they can afford compared to 26% of men. And when it comes to blowing the budget, 42% of women expect to spend £500 or more, but only 32% of men say the same.

Scottish consumers appear to be the biggest spenders, on average at £479.14; those living in the South seem to be more prudent averaging £403.16.

And those living in the East of England and Wales feel the most pressure to spend more than they can afford, with 33% of people in these regions admitting to this, compared to just 22% in the South.

In Scotland, 29% think they will spend more this year than they did last year, a significant increase on the overall average of 21%.

“It’s clear that many of us feel the pressure to spend for Christmas – which can leave us with hefty bills to pay come the New Year”, commented Lisa Hardstaff, Equifax credit information expert.  “But with over a quarter of people using credit cards towards paying for Christmas last year, we’re reminding consumers to plan ahead to ensure they can pay it off as quickly as possible. This particularly applies to the 11% who expect to spend more than £1,000 or more this year. It is vital that if they plan to use credit that they make repayments on time and if possible not just pay the minimum each month, otherwise they could end up like the 7% who are still paying off their Christmas spending from last year.”

Christmas on credit

Over a quarter (26%) used a credit card towards paying for Christmas last year, with a third of those aged 45 to 54 taking this option, compared to just 10% of 18 to 24 year-olds.

For those who chose to use credit, over half (54%) paid off the bill within 1 month.  However, 15% took 2 months or more.  Worryingly 5% took more than 6 months to pay off the Christmas spending on their credit card and 7% admitted to still not having paid off the bill fully by October of this year.