April 28th, 2015 | Andrew Hagger | News

A third of parents in Britain (32 per cent) are secret piggy bank raiders, taking money from their children’s savings accounts to pay for something for themselves, according to new research from Santander.

An unexpected bill was the most common reason (44 per cent) for raiding their children’s savings, but many also took cash to cover the cost of living expenses, to buy a new car, go on holiday or to make home improvements.

 While 49 per cent of piggy bank raiders paid the money back as soon as they could, 19 per cent said they intended to pay it back but didn’t, and 15 per cent admitted to having no intention of paying the money back.

 The study also reveals that over a third of parents (39 per cent) in Britain who set up a savings account for their children admit they have stopped putting money into it. Of those parents, 73 per cent say they can no longer afford to and 15 per cent have just got out of the habit.

A spokesman for Santander, said: “Regularly putting money away, however little, and building a savings habit has a hugely beneficial long-term impact. Our new cash Junior ISA is a great way to build a tax-free savings pot to help save for a child’s future.”

 Of those parents surveyed who have children under the age of 18, half (49 per cent) have set up a normal savings account for them, a third (36 per cent) have set up a Child Trust Fund, and one in five (20 per cent) have set up a Junior ISA. The average amount parents put away for their children is £23 per month. One in five parents (19 per cent) have never set up any kind of savings for their children.

April 24th, 2015 | Andrew Hagger | News

With the recent Budget having announced plans to consult on allowing UK retirees who have already purchased an annuity to cash-in their policy, new research has revealed that a large proportion of existing annuity holders will consider selling their guaranteed incomes for a cash lump sum.

The Tilney Bestinvest survey, carried out by YouGov amongst over 1,800 GB adults who had already purchased an annuity, found that 17% of respondents agreed with the statement ‘I would personally consider selling the annuity I have already purchased for a cash lump sum’.* Of the remaining respondents, 33% said they ‘would not personally consider selling the annuity I have already purchased for a cash lump sum’, and 50% said they didn’t know.

A spokesman for Tilney Bestinvest said: “While this announcement certainly grabbed the headlines and is likely to be popular with some retirees for whom “annuities” has become an almost dirty word as a result of the depressed gilt-yields that have driven annuity rates, the practicalities of implementing the policy are far from straightforward. Indeed, those looking to receive their original annuity investment minus what they have already taken from their annuity will likely be severely disappointed for several reasons.

“It has been announced that insurance companies who currently provide annuities will not be able to enter the market, and therefore the function of selling annuities will be carried out by third party brokers. This cost, coupled with the fees involved in medical underwriting which will be required to carry out the encashment, means that the overall fees for selling an annuity are likely to be substantial. These are on top of the tax which would need to be paid when receiving the cash, payable at your highest tax rate as well as any financial advice taken.

“As it is more likely that those with smaller annuity pots will be the ones most tempted into selling them due to the low levels of income received, the combination of these costs will have a considerable impact, perhaps even prohibiting the sale.

April 23rd, 2015 | Andrew Hagger | News

The number of current account customers who switched banks in the last 12 months has jumped by 7%,with Barclays experiencing the biggest net loss of customers.

The latest figures from the Payments Council reveal that 1.14 million customers switched bank up to 31 March, compared to 1.06 million the previous year, taking advantage of new, faster switching rules.

Between July and September, the most popular banks to switch to were Santander and Halifax, with a respective net gain of 43,312 and 53,624 customers. The only other providers to make net gains were Nationwide (6,608 customers) and Tesco Bank (2,467).

But Barclays saw the biggest net loss of 31,331, with HSBC, Lloyds and NatWest all suffering losses too.

Personal finance expert Andrew Hagger of MoneyComms said customers should attempt to shop around to get the best deal, though the “confusing array” of tariffs, overdrafts charges and interest payments, makes it a “minefield” for those looking for the best offer.

“The figures show that although more people are voting with their feet and looking for a more suitable banking relationship, the vast majority are refusing to budge from their existing provider despite the array of enticing up front cash incentives on offer,” he said.

April 17th, 2015 | Andrew Hagger | News

Many RBS and NatWest customers face paying higher agreed overdraft charges after being automatically switched to current accounts with higher overdraft interest rates.

Approximately 140,000 customers with money in seven old accounts that the bank no longer offers will be moved to its standard Select account, which has an overdraft rate of 19.89% EAR.

NatWest charges a £6 monthly fee for authorised overdraft usage plus interest at 19.89% EAR. First Direct’s charging structure is 15.9% EAR but the first £250 of overdraft used is interest free.

The bank said it expects the switch to mean around a third of affected customers will see their overdrafts charges increase.

Those affected are customers with NatWest’s Personal Current and Gold Plus accounts and RBS’ Personal Current, Gold Cheque, Private and Private Banking current accounts and the Child &Co current account.

Personal Finance expert Andrew Hagger said: “There are plenty of cheaper overdraft options out there – this is a perfect example of why people should shop around.

“The cost of an agreed overdraft varies greatly between the main banks and building societies and because of the different types of charging tariff they use it’s a tricky job for consumers to fathom out the cheapest deal.”

April 16th, 2015 | Andrew Hagger | News

Barclays is to launch a paid-for new rewards scheme on Monday 20 April, called Barclays Blue Rewards.

For a fee of £3 a month, customers who sign up will get monthly fixed cash rewards up to £15 depending on which Barclays products they hold.

Blue Rewards members will also be eligible for cashback of up to 6% when spending with selected outlets.

Customers signing up to the Monthly Loyalty Reward scheme will receive £7 a month paid into a digital wallet connected to a Barclays current account of their choice, meaning they will be £4 up after the £3 fee. Mortgage customers will receive £5 a month , and home insurance customers £3 a month.

Experts warned that such reward schemes shouldn’t tempt you to switch your financial products to a provider without checking to see if there are cheaper alternatives elsewhere.

Andrew Hagger from Moneycomms.co.uk said”Although it may be convenient to have all your financial products under one roof, you could end up paying over the odds by not shopping around. By buying these products elsewhere you may be able to save more than the £60 and £36 you’ll receive each year for keeping your mortgage and home insurance respectively with Barclays.”

Hagger added: “It looks as if Barclays has realised it needs to be more competitive to maintain its share of the current account market.

March 13th, 2015 | Andrew Hagger | News

Scottish Friendly has called for the issue of formal ‘think again’ warnings to be issued to customers wishing to cash in all or part of their pension when the new pension freedoms take effect next month.

The savings and ISA provider says that guidance alone from bodies such as Pension Wise and Citizens Advice is not enough to prevent people putting their hard-earned pension savings at risk.

A spokesman for Scottish Friendly, said: “Like many in the industry, we have concerns that people will make investment decisions that could fall flat and ultimately leave pensioners without any source of income. Those retirees planning to invest into property are of particular concern as the volatile nature of the market could leave thousands of people penniless if the housing bubble was to burst.

“The prospect of considerable numbers of people using their pension to buy property for buy-to-let purposes is a very real and present danger to them and the wider long term economy. The industry needs to be doing a lot more to alert people to the risks they could be taking before they take the decision to withdraw all their money to fund this type of investment.”

It added “For those with modest pensions, putting all their money into property represents a real risk compared to those with larger pots who could use property as part of a diversified portfolio. Putting all their money into property means they would in effect be running a business, they’d have no access to their capital and there is no certainty that their property will generate the income they originally envisaged. Unlike regulated investments where customers are protected by Treating Customers Fairly rules, investing in buy-to-let property moves outside this protection.

“It is good that pensioners have access to guidance from such bodies as Citizens Advice and Pension Wise, but this relies on the individual reaching out to examine their options. A more formalised approach also needs to be adopted that ensures that all retirees are alert to the potential downside of drawing down all or part of their pension savings and in particular the risks of using buy-to-let for retirement income.”

March 6th, 2015 | Andrew Hagger | News

Up to one million people nearing retirement age still owe money on their mortgage, according to a new report.

The latest research from LV= looking at the finances of retirees reveals that less than one in four over-50s were planning to seek professional financial advice before they retire.

These numbers are worrying ahead of the government’s pension changes next month which will give people the chance to use their retirement savings as they wish.

LV= said that a third of people do not understand the new rules or how the changes will affect them.

Some may simply not be able to invest another property as a way of providing a monthly income with a million mortgages yet to be fully repaid by retirees.

It is estimated that more than four million current retirees have outstanding debts, with more than half of these owing money on credit cards.

A spokesman for LV= Retirement Solutions, said: “In just a few weeks those approaching retirement will have even more choice as to how they take their pension income. This is a great opportunity for pension savers and the men and women who take advantage of these new rules could significantly boost their income.

“We would always encourage people to seek financial advice to ensure they make the most of the savings they have spent a lifetime building. We believe that it is crucial that the industry works together to demonstrate the value of guidance and advice to savers.”

March 6th, 2015 | Andrew Hagger | News

Mobile phone giants O2 and EE are hitting customers in the pocket with a 1.1% price increase.

The hike in prices comes just over a year since the regulator OFCOM ordered mobile phone providers to allow customers to exit their mobile phone contract without paying any penalty if the cost of monthly their monthly tariff was increased.

The downside is that this ruling only applied to customers who signed contracts on or before 23 January 2014 when the new rules came in to force.

Customers who signed up after this date have it written into their contract that the provider is allowed to increase their monthly price mid-contract.

O2 said customers on a Sim Only tariff, or one of its non-refresh Pay Monthly tariffs, paying £28 a month would see their bill rise to £28.30 from their April bill onwards.

It is also upping some bundle call charges from 1 April including the cost of making voice calls in the UK which will rise from 40p to 45p a minute from 1 April.

EE Pay Monthly customers who have been on their existing tariff since before 11 February 2015 will see their bill rise by 1.1% from 26 March.

Pay monthly customers who joined or upgraded on or after 11 February 2015 won’t see any uplift in the cost of their tariffs until March 2016.

EE calculates that the tariff increase move will add around 31p per month to the average bill.

March 5th, 2015 | Andrew Hagger | News

Three-quarters of UK adults – approximately 38 million people – worry that they aren’t saving enough money – yet many admit to wasting significant sums each month according to research by Standard Life.

The average UK adult ‘wastes’ £52 per week, money which they feel could have been ‘saved or better spent’ – totalling £2,704 per year. Additionally, they could reduce their spending on average by £92 a month without it having an impact on their lifestyle.

The research indicated that many people favour short term gratification over larger long term gains.

More than 36% of UK adults said they would rather have £100 now than £1,000 in five years’ time. The main reason for favouring the short term was impatience – 45% said five years was just too long to wait.

Furthermore, over half find it hard to resist spending all of the money they earn each month – rising to 69% for those aged under 35. ‘Impulse purchases’ drive this, with 14% making an impulse purchase of over £50 in the past month which they regretted.

And it doesn’t take long for regret to take hold – for 54% it kicks in within a day of spending it.

Over half of adults feel they don’t have enough money left over at the end of each month to make saving seem worthwhile – but this ‘worthwhile’ amount was revealed to be surprisingly high.

On average, UK adults believe that £145 is the minimum amount worth saving each month. Men have a higher threshold in terms of what is considered worthwhile (£174 vs £118 for women).

A Standard Life spokesman said: “It is clear from the research that a large proportion of adults don’t have enough savings to give them peace of mind.“

“An ISA is a fantastic way to start saving regular small amounts of money – you could start by putting aside just £50 per month. Saving through an ISA offers fantastic benefits; unlike other accounts, any interest on your cash balance or gains from investments are tax free, which can help savings grow faster over time.”

February 26th, 2015 | Andrew Hagger | News

Almost two-thirds of remortgage customers in January switched deals to take advantage of the new lower mortgage rates that are currently on offer, according to research from LMS.

The company surveyed customers opting to remortgage at the start of the year and found that almost one in five (19%) homeowners increased the size of their loan by more than £10,000 to free up capital to pay off other debts or spend elsewhere.

Releasing equity in their home meant that 19% were able to fund home improvements, while over one in ten said they would use the extra capital to consolidate their debts.  This is 2% more than the number who did this in December, highlighting that families are still feeling the pinch post-Christmas. A small number of homeowners also said they planned to use the money to help their children onto the property ladder.

Four in ten customers were motivated to remortgage by the potential cash savings on offer and the opportunity to reduce their monthly mortgage repayment..

More than eighty per cent of borrowers switched lenders, while just 2% were incentivised by their existing lender to stay with them, a sign that lenders could be doing more to keep current customers.

Almost half of customers consulted with an independent mortgage adviser or broker – a marked improvement since December when only 37% did this – to highlight the value that advisers and brokers have in sourcing the best rates available to customers.