July 27th, 2023 | Andrew Hagger | News

• A saver with £1,000 in Premium Bonds still likely to win nothing
• But someone with average luck and £50,000 in savings now stands to return 3.45% over a year in August compared to 3.2% in July
• This would work out as an extra £125 through the year in prize winnings

Analysis by actuarial consultancy OAC (part of the Broadstone Group) of Premium Bonds distribution modelling demonstrates the likely winnings of a median saver after the prize fund rate increases to 4% from August – from 3.7% in July – the highest in over a decade.

What does the prize rate increase mean for savers? The first thing to understand is that the 4% prize fund does not equal a 4% return on a saver’s money.

When you order all the prize winners over a year, the person in the middle with average luck – the median saver – would get a lower return than 4%. For example, if you have the maximum £50,000 saved, the median saver’s likely return is just 3.45%.

However, the odds of savers winning a prize in August will increase by 9% with the odds falling from 24,000-1 to 22,000-1 compared to July due to the rate increase.

While a median saver with £1,000 in savings will still likely win nothing over the course of a year, because the odds of winning any prize have lowered, the saver’s median return for those with around £9,900 or more invested in Premium Bonds is now larger.

For example, the median saver with £25,000 in Premium Bonds in August would have a median return of 3.4% which works out at an average annual return of £850. This compares favourably to July where a median saver was likely to see 3.1% returns equalling just £775 over a 12-month period.

Those with larger savings pots similarly benefit from larger, more frequent wins – a £50,000 median saver sees their returns rise from 3.2% to 3.45% amounting to a £125 increase (change from £1,600 to £1,725).

Table shows likely return based on Premium Bond savings

July 20th, 2023 | Andrew Hagger | News

More than a quarter (29%) of people have not yet booked a summer holiday, but more than three quarters of them are still planning to go away, according to a new survey* by travel insurance provider, Multitrip.com.

Almost half (48%) are hoping to travel to Europe, more than a quarter (26%) worldwide, 7% UK, and 19% are still unsure.

Two fifths (38%) say they are waiting to see if they can get a good last-minute deal, three in ten (27%) can’t decide what to do and 16% have been too busy.

Of those who have booked to go away this summer, a third (35%) booked last year, 31% booked in the first three months of 2023, 26% in the last three months, and 7% booked in July.

Two thirds (68%) are travelling to Europe, and more than a quarter (28%) worldwide.

Jason Whelan of Multitrip.com, said: “’Many people are leaving travel plans until the last minute and there is lots of availability still out there. However please don’t leave buying your travel insurance until the last minute. A fifth of our customers claim before their holiday even starts, for things like cancellation, or illness, so it needs to be bought at the time of booking.”

Annual Multitrip.com travel insurance policies start from £19.99**.

* 436 adults took part in the online survey of Multitrip.com customers between 12 – 14 July 2023.
**£19.99. Online price for Essential European Cover for person under 60 years. Price excludes £3.95 handling fee.

July 11th, 2023 | Andrew Hagger | News

Over half (55%) of hire car drivers pay for their holiday using a credit card, and a third (32%) use their usual credit card for purchasing things whilst abroad, according to a new survey of over 1,000 hire car drivers, carried out by Opinium on behalf of iCarhireinsurance.com, a leading supplier of car hire excess insurance,

Whilst it is a good idea to pay with a credit card because of the protection it gives consumers, for those planning to hire a car, the car hire company will generally insist on taking a pre-authorisation on the hirer’s credit card for the excess amount, which can be up to £2,000.

If there isn’t enough credit available on the card, drivers won’t be able to rent a car unless they purchase the rental desk excess insurance, which costs on average £213 for a week (£163 Damage waiver, and £50 tyre and windscreen cover) according to iCarhireinsurance.com’s 12-country study of car hire costs.

Ben Wooltorton from iCarhireinsurance.com said: “If drivers have recently paid for their holiday or had another big expense, they could find themselves without enough credit on their card to cover the security deposit on their rental car. Even if you’ve already got a car hire excess insurance policy from a specialist insurance company, like iCarhireinsurance.com, the excess amount still has to be held by the rental company.”

He continues, “It can be a good idea to have a couple of credit cards available, as debit cards are usually not accepted for making a security deposit. It also means that you’ll still have enough for holiday spending and emergencies, whereas once the excess is held, it could leave you with limited funds for your trip.”

July 5th, 2023 | Andrew Hagger | News

Holidaymakers are once again likely to face a summer of travel disruption. Whilst the recently announced strike by 2,000 security officers at Heathrow has now been called off, it follows BA’s IT meltdown and the electric passport gates failure during half term, as well as ongoing disruption caused by French air traffic control strikes, which caused hundreds of UK flights to be cancelled on 6 June, including 400 by Ryanair.

Dubbed the ‘Summer of Chaos’, thousands of passengers missed flights last summer due to significant queues at UK airports caused by security and check-in staff shortages.

Jason Whelan of Multitrip.com, said: “We’ve seen an increase in sales* of Multitrip.com Travel Insurance policies in combination with our Travel Disruption Cover, which is an add-on to our standard policy, which suggests that holidaymakers are more aware than ever of the risks posed by events like airline strikes and are taking precautions to protect their pre-paid costs or potential expenses.

“European airlines are obliged to refund or rearrange flights if they are cancelled, but this doesn’t extend to cover customers for lost accommodation costs. Multitrip.com’s Travel Disruption add-on cover gives additional coverage up to £1,000 for accommodation and travel expenses (including switching airlines) that you might incur or lose out on. While current strike action would only be covered if ‘Travel Disruption cover’ was booked seven days in advance of the announcement, holidaymakers, can cover themselves for future unannounced strikes or disruptions,” Jason Whelan added.

Annual Multitrip travel insurance policies start from £19.99. Travel Disruption Cover starts from £17 per person.

Travel Disruption is an optional extra that can be added to Multitrip Travel Insurance for an additional premium. It tops up the cover over and above the regular policy in the event of cancellation, delay and missed departure, holiday abandonment and accommodation due to strikes, severe weather, natural disasters, disease outbreaks and other circumstances for costs and expenses that are not recoverable from any other source.

Although regular travel insurance covers cancellation and curtailment, it does not provide cover in the event of emergency situations listed above. The cover is extended to include these when you add extra Travel Disruption.
Unforeseen emergency situations covered by Travel Disruption Cover include Strikes, Volcanic Ash, Hurricane/Earthquake, Airspace Closure, Flood/Storm, Explosion, Tsunami, Landslide, Avalanche, Tornado, Public Transport Failure and Fire.
There is a seven day moratorium period. This means that if a strike is announced within seven days of a policy being purchased, a customer would not be able to pursue a claim under the insurance even though they purchased the policy prior to the public announcement, because the announcement was made within the moratorium period and this has not been served.

July 3rd, 2023 | Andrew Hagger | News

HSBC UK has unveiled its new student account offer for those starting university, offering a mix of benefits to support students with their finances and help student wellbeing with free access to the meditation platform Headspace.

The account offer, which is now available, includes:

·         £100 in cash, to be transferred directly into the opened account

·         A one year subscription to Headspace to help provide support with mental wellbeing through its meditation and mindfulness tools

·         A guaranteed £1,000 interest-free overdraft buffer in the first year, which could increase to £2,000 in year 2 and £3,000 in year 3

·         Savings accounts that could encourage a savings habit, like the Regular Saver at a 5% interest rate

·         Access to a full set of online tools to support financial wellbeing, including tips on budgeting, and how students can make their money go further at uni.

HSBC UK’s Student Account seeks to support students with their financial and mental wellbeing as they venture into higher education, where many begin to live away from home for the first time and are required to manage their finances and studies independently.

The addition of the subscription to Headspace aims to help support students with their wellbeing through its science-backed meditation sessions and mindfulness tools. Headspace is easily accessible at home or on-the-go via its web platform and mobile app.

The emphasis on supporting student wellbeing comes as young people face financial pressures exacerbated by the increased cost of living and climate of economic uncertainty.

Findings from recent YouGov research commissioned by HSBC UK highlight concerns for student welfare, revealing that more than half of students (54%) reported they felt their standard of living had suffered as a result of the increase in the cost of living, with over half (55%) looking for ways to reduce their outgoings.

Pella Frost, HSBC UK’s Head of Everyday Banking said: “We know it’s been a particularly challenging time for young people, many of whom will be heading off to university and living independently for the first time. Managing personal finances, juggling study, part time work and looking after their wellbeing can be a big ask.

June 28th, 2023 | Andrew Hagger | News

Widespread uncertainty and confusion around Inheritance Tax (IHT) means millions of over 55s are at risk of leaving families with what could be a significant tax bill to be pay from the deceased’s estate. Research from financial planning experts at abrdn found that a third (32%) of UK adults over the age of 55 (16.4 million people1) are unaware of whether or not their families could be left to pay a tax bill when they pass away.

abrdn’s research also found three in ten (29%) over 55s don’t think their wealth is large enough to need advice on inheritance tax. Yet, when asked to value their current wealth, on average individuals estimated they would have a total of £354,000 in assets – which is above the inheritance tax threshold of £325,000 and is double for married couples. In London, the average estimation jumped to £556,999.

This comes as HMRC reports a 24% increase in the number of people paying inheritance tax in the 2022-23 financial year2. In April – May 2023 alone, £1.2 billion was paid to the Exchequer in IHT – an increase of £100m on the same period in the year before3. abrdn’s research – which follows its in-depth studies of the financial behaviour of near and new retirees in its ‘Class of’ series – found common confusion around wealth planning, heightening the risk of millions of families incurring unintentional tax liabilities:

• Nearly eight in ten (78%) don’t understand the residence nil rate band – an additional allowance that can increase the amount up to which an estate has no IHT to pay
• Seven in ten (70%) of the over 55s surveyed admitted they don’t know how to reduce inheritance tax bills for their loved ones
• More than half (51%) of the over 55s surveyed also said didn’t know how to start to value their property, savings and investments to understand how inheritance tax could apply to them.
• The majority (55%) didn’t understand the ‘seven year’ rule and two thirds (66%) don’t know how to gift during life without paying tax
• A fifth (19%) also don’t know where to begin setting up a will and 72% didn’t understand how to set up a trust.

Shona Lowe, Financial Planning Expert at abrdn, said: “Inheritance tax is no longer the ‘wealth tax’ it once was. Thanks to years of soaring property prices across the country, alongside the freeze of the ‘nil-rate’ band until at least 2028, more people are likely to be liable.

“Navigating inheritance tax can be a complicated and daunting but it’s a reality of life for more and more people so it’s something to grasp and talk about with loved ones. Our latest research found people feel more comfortable talking about their health problems and politics, than money. 

To help, Shona Lowe shares her tips for those wanting to help their families reduce their potential bill:

#1 Realise the power in gifting

Giving lifetime gifts is a way to reduce the value of your estate and therefore reduce your potential inheritance tax bill.

Some gifts are exempt, which means the value of them leaves your estate immediately. That could be because they fall under the ‘annual exempt amount’, which allows you to gift up to £3,000 each year split between as many recipients as you like. Or it could be because they fall under the ‘small gift exemption’, which allows you to make as many gifts of up to £250 as you choose in a year, as long as each one goes to a different person. 

You can also give away any extra income you have that you don’t need to fund your current lifestyle, provided it’s a pattern of gifting and again, the value of those regular gifts will leave your estate immediately.

If you give a gift that doesn’t fall within one of those exemptions, you will need to survive for seven years after giving it in order for its value to leave your estate completely.   

It’s important to highlight that gifts don’t just have to be made to other people. They can also be made to charities, in which case they are exempt and the value leaves your estate immediately. They can also be made into a trust.

#2 Consider trusts

If you have concerns about making gifts directly to another person, perhaps because it would be a lot for them to have to manage, or you are worried what could happen if they got divorced or had financial difficulties, you could look at making that gift into a trust instead. This can be complex and is an area where specialist advice is really important. On a basic level, it’s about working out the following points:

·      what you want to gift (which could be money, investments or a property for example),

·      who you would like to have control over it and make decisions about that gift after you’ve made it (your trustees, which can be you),

·      who you would like to be able to benefit from that gift going forward (your beneficiaries, which can’t include you if you’re making the gift for inheritance tax purposes) and,

·      how you would like that to work (your trust deed)

Most gifts into a trust will take seven years to leave your estate completely and if they are over your nil rate band, there may also be inheritance tax to pay when the gift is made. Depending on what you put into the trust, you may also need to consider capital gains tax and other taxes too. Specialist advice is critical here. 

#3 Remember who pays, how and when

If you have a will, the responsibility for working out how much inheritance tax is payable falls to your executors. The tax is then generally paid from the estate before it is passed on to your beneficiaries. However, if the tax is payable because of a gift you made while you were alive, the person who received that gift will generally have to pay that inheritance tax.

If you don’t have a will, it will be payable by the person appointed to administer your estate, again from the estate itself.

If you die with money in your bank account, the Direct Payment Scheme (DPS) can allow a portion or the entire tax to be paid directly from that account. Otherwise, the tax can be paid by selling investments or property for example. 

One thing to be aware of is that in most cases, the inheritance tax bill has to be paid within six months of the date of death, after which interest will be charged.

June 26th, 2023 | Andrew Hagger | News

Managing personal finances in 2023 presents a unique set of challenges in the UK. With an unpredictable economy, taking control of your financial situation is crucial. This article aims to provide five straightforward steps to clear your debts, cut down your living costs, and achieve financial stability in the year ahead. By implementing these tips, you can simplify your financial management, save more, spend less, and enhance your overall financial security.

Assess Your Financial Situation: The first step in achieving financial stability is to assess your current financial situation. Take an honest look at your income, expenses, and outstanding debts. Create a budget that accurately reflects your income and includes all necessary expenses. This will help you identify areas where you can adjust and prioritize debt repayment.  If you’re going through a financial claim at the moment, you need to plan as if you’re going to be looking at a small claims court loss, just so that you’re prepared for the worst.

Prioritise Debt Repayment: To clear your debts effectively, it is important to prioritise them strategically. Start by focusing on high-interest debts, such as credit card balances or personal loans, as these accumulate the most interest over time. Consider utilising the debt avalanche or debt snowball method to systematically pay off your debts and gain momentum as you progress.

Reduce Living Expenses: Cutting down your living costs is an essential step in achieving financial stability. Look for ways to save on everyday expenses such as groceries, utilities, and transportation. Consider switching to budget-friendly alternatives, using coupons or discounts, and being mindful of unnecessary spending. Additionally, evaluate your subscription services and memberships to see if any can be cancelled or downgraded.

Increase Income Streams: Explore opportunities to increase your income to accelerate your debt repayment and improve your financial situation. This could involve taking on a side job, freelancing, or starting a small business. Evaluate your skills and interests to identify potential avenues for generating additional income. The extra funds can be allocated towards debt repayment or building an emergency savings fund.

Build an Emergency Fund: Establishing an emergency fund is crucial for long-term financial stability. Set aside a portion of your income each month specifically for unexpected expenses. Aim to save at least three to six months’ worth of living expenses. An emergency fund provides a safety net and helps prevent the need to rely on credit cards or loans during financial hardship.

By following these steps, you can take control of your finances and work towards clearing your debts while reducing your living expenses in 2023. It is important to stay disciplined, make consistent efforts, and adapt your financial habits as necessary. Remember, achieving financial stability is a journey that requires patience and persistence.

June 20th, 2023 | Andrew Hagger | News

More than a third (37%) of hire car drivers are unaware that they are liable for the excess (the first part of any claim) if their car is damaged or stolen, which can be up to £2,000, even if it is not their fault.

Excess waiver can be bought to protect drivers from this, however Opinium research of over 1,000 car hirers, commissioned by iCarhireinsurance.com, a leading provider of car hire excess insurance, finds that two fifths (41%) don’t know what excess waiver is and 43% say it is confusing and difficult to understand.

Six in ten car hirers (59%) are also unsure or mistakenly believe that excess cover has to be bought from the rental company.  According to a cost comparison study by iCarhireinsurance.com, travellers could be wasting over £200 a week not buying excess insurance from an independent insurance company.

For example, hiring a medium compact car, e.g., a VW Golf, in Malaga this summer from 29 July to 5 August 2023, the study finds the six rental companies (i.e, Sixt, Hertz, Avis, Budget, Enterprise and Europcar) surveyed charged on average £259 for excess cover (i.e., £201 for super damage waiver and £58 for tyre and windscreen waiver cover). A week’s policy from iCarhireinsurance.com covering damage, theft, and tyres and windscreen cover is £33.15 or an annual European policy is from £41.99.

If a car hirer does not buy excess cover from the rental company, or they have a car hire excess insurance policy already, then the rental company will hold the excess amount on the driver’s credit card. Over half of hire car drivers (56%) are unaware that rental company is within their rights to do this.

Drivers need to ensure they have enough credit on their credit card to allow rental companies to hold the excess in this way if they are buying cover from another provider, as the survey found that almost a third (30%) of car hirers bought excess waiver from the rental company rather than let them hold the excess amount on their credit card.

Ernesto Suarez, Founder and CEO of iCarhireinsurance said: “The majority of people hire a car without anything ever going wrong, but when it does you risk being liable for hundreds, if not thousands of pounds, so it pays to have excess cover. Do your research and consider looking at independent providers which can be a much more cost-effective option than the rental company’s waiver policies. Then don’t forget to take a credit card with you to cover the excess deposit during the hire.”

Beginner Guide to Car Hire Excess Insurance

• What is the risk? – If a hire car is damaged or stolen in Europe, the car is insured but the driver has to pay the excess (i.e., the first part of the claim) which can be more than £2000.
• Rental company excess waivers – Rental companies often sell three excess policies: super damage waiver, super theft waiver and tyre and windscreen excess. For example, the average combined cost of excess waivers for a week in Malaga this summer is £259. (see above)
• Independent car hire excess insurance is usually cheaper and more comprehensive – A policy from a specialist insurance provider, like iCarhireinsurance.com,  charges only £33.15* for a week’s policy, covering damage, theft, and tyres and windscreen cover. Annual European polices with iCarhireinsurance.com are from £41.99.
• Car rental companies do not have to approve the use of an independent excess policy – this is because they refund the customer, not the rental company.
• The excess amount will be held on your credit card – All customers that do not buy the rental company’s excess insurance, including those with independent excess insurance, will need to let the rental company hold the excess / or deposit during the rental. Some companies will only accept a credit card deposit, not debit or cash, so it is a good idea to have a spare credit card available with enough credit.  When the car is returned undamaged, the deposit is refunded.
• Make sure you’re not charged for existing damage on a car – Always check the hire car for damage before it is driven and ensure any damage is recorded on the check-out sheet. Use the ‘iCarhireinsurance’ app, free to all travellers, with SNAPs technology, to record photos taken on pick up, drop off, and in the event of an accident.
• What happens if you claim – with a standalone excess insurance policy, drivers pay the excess charges and then submit a claim for reimbursement to their insurer.

June 13th, 2023 | Andrew Hagger | News

One in four are spending less on their holidays this year, than last year, according to a new survey of people who have hired a car in the UK or abroad carried out by Opinium for travel insurance provider, Multitrip.com.

Two fifths (40%) say they are spending the same and only a quarter say they are spending more. Of those who are spending less, over a quarter (29%) have or plan to cut back on how much they will spend whilst away, and 27% are holidaying in the UK instead of going abroad.

To save money, a quarter (25%) are cutting back on the number of holidays they take and staying in cheaper accommodation (21%).

Jason Whelan, from Multitrip.com, said: “Following the Pandemic, consumers were eager to travel again and were spending more on holidays. While the cost-of-living crisis is impacting how much people are paying on their travel plans this year, it’s clear that getting away is still really important, whether it be in the UK or abroad

He continues, “To protect your holiday investment, travel insurance is an absolute must. Travelling without insurance could leave you paying a hefty bill if something were to go wrong. We’re seeing increased medical costs globally, so you do not want to get sick or injured abroad without it. Even when travelling in the UK, cancellation cover protects you from unforeseen circumstances, such as you or a loved one suddenly being unable to travel.”

Multitrip.com’s ‘Essential Cover’ policy, which starts from £19.99 includes up to £1,000 per insured person for cancellation or curtailment. In addition, the Essential Cover policy provides for missed departure, delayed departure and ‘holiday abandonment’, i.e., if a flight is delayed to the extent a holidaymaker abandons the trip altogether.

Premier Cover, Premier Plus Cover and Backpacker Cover policies also take these eventualities into account, with up to £5,000 cover in place for cancellation or curtailment for Premier Plus Cover policyholders.

MultiTrip.com annual policies include Covid Cancellation and Medical benefits as standard. To view policy types and exclusions in full visit, multitrip.com.

If you’re travelling in Europe remember to check if your EHIC/GHIC card is valid. The cards are free for Brits and it is advised to take them on holiday as it gives you access to healthcare across the EU for the same prices as a local. But holidaymakers should still take out travel insurance as the GHIC does not cover all medical emergencies. The cards are only used for necessary medical treatment and not for non-urgent care.

May 31st, 2023 | Andrew Hagger | News

Research from Freedom Finance, one of the UK’s leading digital lending marketplaces, reveals that the growing demand for consumer credit is being underpinned by a move for consumers to consolidate debt.

The analysis reveals forty-one percent (41%) of all people who searched for a loan through Freedom Finance’s platform in April 2023 were looking to consolidate debt. The second most common reason was home improvements (25%).

As interest rates on overdrafts and credit cards have increased rapidly since the middle of last year, so have the number of people looking to consolidate more expensive, ongoing debt into lower-cost, fixed-term personal loans. Freedom Finance’s latest Credit Monitor revealed that credit card rates are now at their highest level since December 1997.

Demand for debt consolidation has, in turn, sparked an increase in demand for personal loans, which has bounced back since the market disruption seen last autumn. This demand has led to more consumers using digital platforms such as Freedom Finance – which has experienced a fifty percent increase in demand on its own platform compared to this point last year – to find loan products.

As well as increasing overall demand on the platform, Freedom Finance says that the trend to consolidate household debt has meant that more wealthy borrowers are also using the platform as the average salary of applicants has increased steadily over the past 12 months.

Figures released as Bank of England figures reveal a tightening credit market, showing that consumer credit availability is as limited now as it was in the early stages of the pandemic and worse than in 2008.

Freedom Finance allows customers to choose from the widest panel of unsecured loan providers on the market. Its proprietary technology is dedicated to helping consumers find the best deal, in the easiest possible way, without damaging their credit scores.

Andrew Fisher, Chief Growth Officer at Freedom Finance said that tightening credit conditions are prompting more people to use soft credit search technology to shop around competitive rates.

“We have seen a clear shift in the market of the past few months where all types of borrowers are moving toward using personal loans to pay off other more expensive forms of debt, such as credit cards and overdrafts,” he said.

“Consumers like to use platforms with soft credit search technology because they can get a realistic picture of all their credit options without risking damage to their credit rating.”