March 20th, 2024 | Andrew Hagger | News

Most UK adults are unaware of a major shake-up of an ISA rules coming in April 2024 that could make it easier for them to get better deals and create more ‘balanced’ investment portfolios, according to new research commissioned by Wesleyan Assurance Society.

A raft of ISA rule changes designed to simplify the scheme and encourage more people to invest tax free were announced by the Chancellor in his Autumn Statement in November 2023.

This includes allowing investors to open multiple ISAs of the same type every tax year. The reforms are designed to incentivise ISA use by giving savers more flexibility with their money – enabling them to create ISA portfolios better suited to their needs, and making seeking better returns easier.

But new research conducted on behalf of financial mutual Wesleyan found 78% of 2,000 UK adults surveyed don’t know about the rule change to allow multiple ISAs of the same type to be opened within the same tax year. Although, when told about the imminent shake up, almost a third (31%) said the changes would make them want to invest more money into ISAs.

The survey also uncovered enduring misconceptions around ISAs that could mean savers are missing out on the potential benefits.

Seven in ten (70%) of the UK adults surveyed don’t know the different types of ISAs available work.

Of those who don’t hold ISAs, close to half (45%) believe you need large sums of money to open an ISA and more than one in five (22%) say they don’t want to lock their money away where they can’t access it.

In reality, you can typically open an ISA online, with low minimum subscriptions, and there are options available that allow you to withdraw your money at any time.

Toby Hester, Deputy Chief Product Officer at Wesleyan Assurance Society said: “The changes to ISA rules announced in the Autumn Statement are a welcome step towards providing more flexibility for investors but could have gone further.

“Being able to open more than one ISA of the same type and switch between providers will give people the freedom to shop around for better deals and achieve better returns on their investment.

“And it means they can create a portfolio of ISA investments that’s more varied and balanced to their needs, which can provide more security and peace of mind during times of market volatility.”

The research found that more than two-fifths of UK adults surveyed (42%) have invested in ISAs, with more than three quarters (76%) of them opting for Cash ISAs and 29% choosing Stocks & Shares ISAs.

They are investing in ISAs to benefit from the tax advantages (51%), to grow their money (33%) and invest for their retirement (25%).

Toby Hester added: “ISAs are an extremely powerful savings and investment tool, so it’s concerning that that there are still so many misconceptions around ISAs, which means many are missing out.

“I’d urge savers to take a good look at how they can make the most of the new flexibilities as soon as possible to maximise the time they have to benefit.”

The value of your investments can go down as well as up and you may get back less than you put in.

March 18th, 2024 | Andrew Hagger | News

With Easter holidays on the horizon, new research¹ from American Express has found that the average UK family will spend £3,045 entertaining children during the school holidays in 2024.

The total comprises sports activities, clubs, toys, books, magazines, games consoles, tech devices, meals out, days out, TV subscriptions and films. The figure is per child so families with multiple children could end up spending more.

School holidays are a time for many children to relax from school, make new memories, discover new interests and spend quality time with family. With that in mind, 43% of parents say they expect to spend more entertaining kids during the school holidays, compared with term time (with only 7% spending less).

Digital dreamers

Tech leads the charge when it comes to keeping kids entertained. In 2024, British parents plan to spend an average of £401 on tech devices like phones, laptops and tablets to keep children busy out of term time. Clubs come in second, with parents expecting to spend £366 this year which includes the likes of sports clubs, drama, dance, music and more.

Parents said that entertaining kids outside the home is the biggest factor behind school holiday spend (59%). With that in mind, over half (59%) of UK parents will be spending money on the likes of cinema tickets and days out.

38% of parents are motivated to spend on entertainment as a way of having bonding time with children. Eating out is the most popular bonding activity, with just under half (47%) of parents saying they will take their children out for food to spend quality time with them. Other popular bonding activities include watching films and television (39%), cooking together (36%), and various outdoor activities like hiking and camping (35%).

Dave Edwards, Vice President, American Express: “Keeping kids entertained over the school holidays might not always be easy but our data shows it is a focus of many parents’ spending, whether it’s a meal out with the family, a sports club, or a games console. We know our Cardmembers, many of whom are parents, value entertainment and experiences, and our Cards offer that – from access to Amex^® Experiences, to cashback and tailored offers.”

March 18th, 2024 | Andrew Hagger | News

With price hikes expected across broadband packages in the next few weeks, Go.Compare broadband is warning customers to review the terms and conditions of their current agreements, to see if they can negotiate a better deal.

The average price rise expected this April is 7.7%, with some broadband providers increasing their tariffs by up to 8.8%. The increases come into force every year and in 2023, some households faced annual increases of 14.4%.

The comparison site has provided a breakdown of the top five providers and their expected price increases in April 2024:

• Sky and NOW: 6.7% average increase across some broadband, phone and tv packages.
• Virgin Media and O2: 8.8% increase (New customers who joined after Feb 8th, 2024, are exempt until April 2025).
• Vodafone: 7.9% increase.
• BT: 7.9% increase.
• TalkTalk: 7.7% increase. 

Virgin Media is the only provider in the top five who has increased its prices based on inflation (RPI) + 3.9%, where others base the price increase on Consumer Price Index (CPI) + 3.9%.   There are exclusions on all of these price increases, which will depend on the broadband package and when customers started their contract.

There are also a number of providers who are offering a fixed price guarantee, meaning that they have committed to not increase their prices rises within the initial term of the agreement. These include Zen Internet, Cuckoo, Zzoomm, Hyperoptic and Trooli.

Catherine Hiley, broadband spokesperson at Go.Compare, said: “While the price hikes expected this April aren’t as high as those we saw in 2023, these increases are still a difficult pill to swallow when consumers are facing increased energy bills, mortgage payments and other outgoings.”

The comparison site is now encouraging anyone who is out of contract with their current provider to review the market and see if they can find a better deal elsewhere: Catherine continued: “Anyone who is out of their contract with their current provider can switch easily, and without being penalised. These bill payers could already be paying a lot more than they should be for their broadband, even without the additional hikes so it’s absolutely worth doing a comparison to see how your current deal stacks up.

“For those who are still in a contract, price increases are unfortunately written into broadband agreements. But we would still recommend reviewing the terms of your existing agreement and if you’re unhappy, contact your provider as you may be able to haggle on the price rise, or ask about an early termination fee amount.  Many providers add an early termination fee into their contracts to stop people leaving providers, but even with this fee, it may still be worthwhile to pay this and switch to a better deal.”

In fact, recent research from Go.Compare* has found that broadband and TV packages were the most popular bills to barter with 59% of those who currently barter on their bills saying that they like to strike a deal with their broadband provider.

For more information about broadband packages and how to shop around for them, visit:  https://www.gocompare.com/broadband/how-to-avoid-broadband-price-increases/.

https://www.cable.co.uk/broadband/check-my-area also offers a fast and easy way for people to see what deals are available for their specific postcode.

March 12th, 2024 | Andrew Hagger | News

With holiday bookings for Easter and summer sun holidays in full swing, leading travel insurance provider Multitrip.com is reminding holidaymakers of the importance of purchasing holiday cover as soon as they book, or “ASAB”, to ensure their coverage begins immediately.

Almost two thirds (63%) of travel insurance policies purchased from Multitrip.com in 2023 were bought less than seven days prior to departure, meaning a significant number of holidaymakers run the risk of not being able to recover the cost of their holiday should they have to cancel their trip.

Jason Whelan, from Multitrip.com, warned: “If you wait until closer to departure to arrange your travel insurance, you run the risk of something happening that could lead you to cancel and losing out on the cost of your trip. That’s why we always urge holidaymakers to take out travel insurance as soon as they book their flight or holiday.

“When arranging your travel insurance, it’s crucial to consider the level of cancellation coverage you require to ensure your trip is protected in case you encounter any obstacles or need to shorten your journey due to an unexpected event like a medical emergency,” he concluded.

Multitrip.com offers various tiers to suit all type of travellers, ranging from Essential Travel Insurance from £19.99* with cancellation cover that pays up to £1,000 per insured person, all the way up to the Premier Plus plan that covers up to £5,000, ensuring holidaymakers are prepared for unforeseen circumstances that may arise during your travels.

According to the Multitrip.com Annual Travel Survey^**, meanwhile, 92% of holidaymakers do plan to purchase travel insurance in 2024.

To view policy types and exclusions in full visit, Multitrip.com.

*£19.99 is the online price for Essential European Cover per person under 40 years. Prices excludes £3.95 handling fee.

March 11th, 2024 | Andrew Hagger | News

A recent study has revealed that many used car buyers skip vital checks before making a purchase. In fact, one in ten Brits admitted that they make no checks at all when buying a used car, leaving them unaware of any potential vehicle issues.

The survey, conducted by online car-changing marketplace Carwow, uncovered just how common it is for used car buyers to skip essential checks. Despite being free and crucial in determining a car’s condition and history, 38% said they didn’t consult the vehicle’s logbook (V5C) and 37% didn’t assess the MOT history.

Overall, only 64% of respondents believed they performed the correct checks before buying their used car. This suggests that of those who bought a used car in 2023, more than 2.6 million of them could be inadequately informed about their significant purchase.

Link to chart

While aspects like the bodywork and engine are examined by a significant portion of buyers, safety-related checks like testing brakes and checking tyre tread depth are less commonly performed.

Similarly, only 29% of respondents said they asked about modifications to the vehicle. Missing this type of assessment could lead to potential performance, insurance, or safety issues being overlooked.

Despite the availability of professional services such as HPI checks and independent vehicle inspections, only around a third of respondents used these options. Carwow says that relying solely on personal inspection might not uncover all potential issues, and obtaining a professional opinion can make all the difference.

John Rawlings, Consumer Editor at Carwow, said: “It’s concerning to see so many used car buyers skipping vital checks before making their purchase. The reality is that buying a used car is a significant decision, and overlooking these crucial steps is a huge gamble.

“Moreover, the rise of free online resources has made it easier than ever for buyers to access information about a vehicle’s history and condition before they finalise their purchase, such as our Car Check tool. So, it’s puzzling that so many buyers do not consider these resources.

“Taking the time and effort to conduct proper checks is an investment in peace of mind and financial security. It’s crucial for buyers to take control of the buying process and not leave their decisions to chance.”

For more information on conducting the right checks when buying a used car, visit Carwow’s website.

March 4th, 2024 | Andrew Hagger | News

According to a new study, younger residents might be at a much higher risk of being underinsured for their home contents. Over two-thirds (68%) of under-25s said that they were unfamiliar with the potential pitfalls that could leave their contents underinsured. Only 17% of over-54s said the same, suggesting that younger generations are far more vulnerable to missteps.

The findings come from a recent survey by Go.Compare home insurance, which asked respondents about the issues that could leave them without full protection. It found that a much greater proportion of younger residents lacked awareness of these factors, meaning they might not receive the funds needed to replace their possessions in a worst-case scenario.

Underinsurance, the comparison site explains, occurs when a policy does not provide enough protection to cover everything it needs to. For contents insurance, this can happen when the possessions valuation given on a policy does not match the true value of what someone owns. As a result, a claim would not provide enough funds to replace everything.

According to Go.Compare’s research, only 15% of under-25s know how to calculate an accurate valuation of their possessions, leaving the majority of them at risk of underinsurance. In comparison, around a third (34%) of over-54s said they know how to give an accurate valuation.

Just 15% of under-25s also said the value of their possessions is up-to-date on a contents insurance policy, compared to over half (57%) of over-54s. This suggests that their valuation has a higher risk of being outdated, another issue which could leave them short when making a claim.

A similarly low percentage (14%) of under-25s said they know about single-item limits, meaning many might not have protection for the most high-value items in their homes. More than half (53%) of over 55s were aware of this.

The study also revealed that renters might be more likely to fall foul of these potential pitfalls – despite contents insurance being the main policy they need. The survey found that just under half of renters (47%) were unaware of all three issues, compared to a fifth of homeowners.

Ceri McMillan, home insurance expert at Go.Compare, says: “It’s shocking to see that so many might not have the coverage they need to keep their possessions safe, particularly younger generations and those living in rented accommodation. Millions of pounds are at risk of being lost, highlighting that many of us need to take action to make sure our possessions are properly protected.

“While it might not be the first thing on your mind, it’s critical that you update the value of your contents regularly. Otherwise, you risk being underinsured and might not get the funds you need in a worst-case scenario like a fire, flood or theft. This results in the cruel double-whammy of losing your possessions and having to absorb the financial cost of replacing them.

“A good way of getting into the habit of updating your insurance is to make sure you revalue your possessions whenever your policy renews. You should also consider updating it after you’ve made any big purchases, such as jewellery or tech, or after big occasions like Christmas and birthdays where you might have an influx of new possessions.

“If you do make any big purchases, be wary of single article limits that might be on your, too. For anything you buy that might be worth more than £1,000, double-check that your policy will provide sufficient coverage. You might need to inform your provider about these so that they can be listed individually.

“Many people find it difficult to provide an accurate estimate, but there are ways you can get support with this. Our online contents insurance calculator can help you come to a realistic valuation, so consider trying this if you’re struggling.”

February 28th, 2024 | Andrew Hagger | News

Holiday packages during school breaks can cost an extra £804 on average for a family of four, according to a new study. The research finds that this rises even more during the summer holidays when travel costs increase by an average of 23% – equivalent to an additional £276pp (per person).

By comparing holiday package prices for the upcoming year, Go.Compare reveals just how much extra it’s costing parents to travel during school breaks due to the rules around unauthorised absences.

It’s no secret that travelling during term time is much cheaper than during the school holidays, but the comparison site unveils just how much parents have to fork out to take their little ones abroad.

Term time packages to popular destinations like Spain, Italy and France have average prices starting as low as £289pp. Meanwhile, the lowest average package price during school breaks sits at £398pp – over £100 more per person.

Trips to Greece saw the largest increase in package prices with an additional 28% per person being charged for travel during school breaks. However, the most expensive destination for school break getaways is France with a median price of £1,208pp.

This increase in costs forces families to choose between paying high holiday prices or taking their kids out of school to travel, which could result in a hefty fine. A fifth (20%) of Brits said that they would consider or have taken their children out of school for travel and 38% of these stated that they did this to cut down on expenses.

With fines costing as much as £480 for families of four depending on your local council, parents put a lot at risk by taking their children out of school without authorisation. Only around a tenth of parents who took their children on holiday without permission said they avoided a fine, showing that this might be a more common occurrence than many realise.

Manon Jones, travel insurance expert for Go.Compare, said: “Family travel choices become increasingly daunting during the holiday price surges. The financial contrasts are stark, particularly during the summer holidays.

“It’s no surprise that travel during term time proves to be much cheaper. However, these insights provide a way for families to make the most of the school breaks without breaking the bank. It’s also worth considering the costs that come with travelling outside of just accommodation and flight prices alone.

“Travel insurance is something else to consider, especially as premium prices can vary depending on when you’re travelling as well as with who and the kind of cover you require. Additionally, there will be extra costs added once you arrive at your destination, so consider how much you’ll need to spend on amenities as well as food and local travel.

These considerations can help travellers to prepare and weigh out their options in full before booking.”

Find out how to make the most of travel this year as well as more information about the research on Go.Compare’s website.

February 28th, 2024 | Andrew Hagger | News

Yesterday, the Financial Conduct Authority launched a new campaign, urging customers to compare deals to ensure the best savings rates on their deposits. And to save people time and money, TotallyMoney has crunched the numbers and highlights some of the best and worst places to put their money:

• For the mean average* savings, a poor-value, easy-access savings accounts returns just £201.43 interest per year, compared to £896.03 for one of the best — a difference of £69.60†
• Meanwhile, savvy savers can earn £913.40 with a leading 1 year fixed-rate bond and make £920.35 with the best in market 90 day notice saver†
• Millions could be missing out on the best rates, as 37% of people haven’t switched for five years, while 27% have never switched‡
• In addition, just 52% of savers have switched or plan to switch accounts‡

Below, we continue with tables for various savings amounts in different accounts, and provide commentary from Alastair Douglas and Andrew Hagger.

 Savings: a matter of interest

14 successive Bank of England rate hikes should’ve signalled good times for millions of UK savers, but banks were slow to pass the benefits on to customers, leading to the FCA setting out a sets out 14-point action plan§ on cash savings last summer, and following it up with a £600k campaign‡ to encourage savers to switch accounts earlier this week.

And while the cost of living crisis has meant 56% of adults have stopped saving, lowered their amounts, or used their deposits to meet their daily expenses, 37.1 million (70%) still have a savings account of some type. The majority (54%) of these are held with savings accounts, building societies or NS&Is, 28% in cash ISAs, and 26% in premium bonds¶.

However, 37% of savers haven’t switched for five years, and 27% have never switched, while just 52% of savers have switched, or plan to switch accounts#.

The tables below compare a variety of accounts, and the amount of interest paid out on various levels of deposits, including the mean average held in a UK savings account of £17,365.

Both the Barclays EveryDay Saver and Easy Access Cash ISA pay a measly 1.66% on savings below £10k, and even less (1.16% and 1.21%) on anything over. For the mean average balance, this means earnings of £201.43, compared to £896.43 on the market-leading easy access Beehive Money saver, paying 5.16%.

For those looking to get a bit more for their money, the SmartSave 1 year fixed rate bond pays £913.40 interest on the average deposit — and if that seems like too long a time to lock away your money, there’s the StreamBank 90 Day Notice Saver, paying £920.35.

 Alastair Douglas, CEO of TotallyMoney comments:

“In recent months, the UK’s biggest banks have banked billions of pounds and recorded record profits from charging high rates on debt while paying low interest on savings. And with inflation at 4% — still double the target rate — some are paying as low as 1.16%, meaning some deposits are losing value every single day.

“But millions of customers unwittingly think their banks are doing right by them, and a quarter haven’t switched accounts because they trust their bank. But loyalty doesn’t pay, and if you’re one of the 10 million people who’ve never moved their money, then the chances are your bank will have been profiting from paying you a pittance. So work out which savings option works best for you, and switch accounts to a provider who’ll help your money grow.

“While the regulator is right to campaign for people’s money to work harder, they should be pushing banks, not people to change. The role of the Consumer Duty is to set higher and clearer standards of consumer protection across financial services, requiring firms to put their customers’ needs first. Not vice versa.”

February 27th, 2024 | Andrew Hagger | News

As inflation has slowed and expectations of the Bank of England’s base rate have risen, mortgage lenders have slashed APRs in a bid to grab the headlines and attention of would-be borrowers.

This week, borrowers can lock in rates as low as 4.63% for a 75% LTV two-year fixed rate deal. However, often these eye-catching offers only mention product fees (of c. £1,000) in the small print.

Fees become more of an issue with a 2-year fix compared with a 5-year fix, when the cost is spread across 60 months. They will also add up over time with customers locking in back to back short term deals, and when they choose to pay the fees over the lifetime of the mortgage (as they will accrue interest) instead of paying them up front..

While a low-rate high fee deal can work for larger mortgages (the table below shows Londoners could save £81 over two years), they’re often more expensive for homeowners borrowing smaller amounts (for example, an extra £639 for those in the North East).

The above table compares the cheapest two-year (Halifax 4.63% plus £999 product fee), and the cheapest two year fee-free fixed rate (Lloyds 4.84%) deals. And it shows that for all regions bar London, the cheapest two-year deal is more expensive than the cheapest fee-free mortgage offer.

 Alastair Douglas, CEO of TotallyMoney comments:

“Over the past three years, more than a third of people taking out a mortgage or changing to a new rate decided not to use a broker or advisor, and instead found it themselves. And this figure could rise, as 1.5 million cheap mortgage deals come to an end this year, and people look to cut costs as they’re faced with higher rates and the increased cost of living.

“The worry is that without expert advice, some might be distracted by the eye-catching headline rates, without having a real understanding of their cost over time. Costs which could continue to grow as more than half of customers lock in short term two year deals.

“Back in 2022, the FCA introduced new rules for overdrafts — removing fees and charges, so banks could only charge a flat rate. In simplifying overdrafts and making them easier to understand, the FCA estimates that customers are saving between £473 million and £525 million per year§.

“And with a mortgage being a far bigger commitment, we need to see similar action, making them simpler to understand and compare, while offering fair value and delivering better customer outcomes. That way people can make their financial future as safe as houses.”

 Andrew Hagger, founder of Moneycomms adds:

“The mortgage market is a potential minefield for would-be borrowers, with thousands of products and different rate and fee combinations — if you don’t use the services of an independent broker, you can easily come unstuck.

“The best ‘rate only’ or rate plus fee combination isn’t a straightforward choice and you’ll need an expert number cruncher to make sure you get the cheapest deal for your circumstances.

“Your mortgage is the biggest financial transaction that you’re likely to make in your lifetime, so don’t go in blind otherwise you could end up paying way more than you need to in repayments.”

February 22nd, 2024 | Andrew Hagger | News

A new study has revealed that a staggering £276 billion worth of possessions are uninsured in the UK. The research estimated that the total value of the UK’s contents is a jaw-dropping £827 billion, but said around 9.3 million households do not have any contents insurance. As a result, it’s likely that only a few of these belongings are properly covered, and could disappear should the worst happen.

The calculations, produced by Go.Compare home insurance, come from census data on the number of residential properties in the UK and FCA statistics on the number of contents insurance policies in place. Using these figures, the comparison site estimated that billions’ worth of our belongings are at risk of being lost.

The research also found that many of those who are insured do not have the right amount of coverage. Approximately 5.6 million homes in the UK are underinsured for their contents, meaning that millions will not receive the funds they’d need to repair or replace their possessions – even if they claim.

The comparison site says a possible reason for this is that many people might be falling foul of insurance pitfalls. Less than a quarter know how to calculate an accurate valuation of their possessions, according to the report, meaning 76% are at risk of having insufficient coverage from their policy.

Similarly, only 43% said the value of their possessions is up-to-date on a contents insurance policy, and just 39% said they know that contents insurance policies often have a single-item limit. Overall, a third of respondents said they did not know about any of these three issues – all of which could lead to underinsurance.

Ceri McMillan, home insurance expert at Go.Compare, says: “It’s shocking to see that so many might not have the coverage they need to keep their possessions safe. Millions of pounds are at risk of being lost, highlighting that many of us need to take action to make sure our possessions are properly protected.

“While it might not be the first thing on your mind, it’s critical that you update the value of your home’s contents regularly. Otherwise, you risk being underinsured and might not get the funds you need in a worst-case scenario like a fire, flood or theft. This results in the cruel double-whammy of losing your possessions and having to absorb the financial cost of replacing them.

“A good way of getting into the habit of updating your insurance is to make sure you revalue your possessions whenever your policy renews. You should also consider updating it after you’ve made any big purchases, such as jewellery or tech, or after big occasions like Christmas and birthdays where you might have an influx of new possessions.

“If you do make any big purchases, be wary of single article limits that might be on your policy, too. For anything you buy that might be worth more than £1,000, double-check your policy will provide sufficient coverage. You might need to inform your provider about these so they can be listed individually.

“Many people find it difficult to provide an accurate estimate, but there are ways you can get support with this. Our online contents insurance calculator can help you come to a realistic valuation, so consider trying this if you’re struggling.”

More information can be found on Go.Compare’s website.