November 4th, 2020 | Andrew Hagger | News

A new study by GoCompare reveals that 9.7million households are facing Christmas on a reduced income, compared with this time last year, with 13% saying that Christmas is going to be financially very difficult indeed.

The research carried out ahead of the festive season, found that 35% of UK households are living on less money than last year. 54% said their household income is roughly the same, while 11% have seen their income increase in the last 12 months.

The financial impact of Covid has hit the household income of adults aged 18 to 44-years old the hardest.  Nearly half (49%) of those aged 18 to 24-years, 48% of 25 to 34-year olds and 43% of 35 to 44-year olds have seen their income drop – compared with the average figure of 35%.  At the other end of the scale, the household income for people aged 65 and over has stayed stable with 73% saying it is about the same as this time last year.  Only 14% of people in this age group said they had experienced a drop in income.

The squeeze on household budgets will see over a third (34%) cutting their Christmas spending.  A quarter of respondents said they ‘will have to be very careful with money this Christmas’.  Worryingly, 8% admit they are going to be spending money they haven’t got, to spread some festive cheer this year.

When asked about how they will pay for their Christmas, 52% plan to do so from income, while 30% have saved money throughout the year for their festive spending.  Credit cards will account for 16% of spending.  Some (5%) of those surveyed said they would borrow money to cover the cost of Christmas, while 5% admitted that they will probably go overdrawn.

Lee Griffin, CEO and founder of Gocompare Money commented, “Lockdown and other restrictions aimed at halting the spread of the coronavirus have plunged the UK into recession, leaving millions of households struggling to manage on reduced incomes.  On top of everyday money worries, Christmas is adding to the financial pressure on millions of households.

“If you are struggling to make ends meet, don’t ignore the problem in the hope it will go away.  There is financial help available.  Check to see what Government benefits you are entitled to and find out how to access them.  And, if you’re having difficulty in making bill payments or repaying loans, contact the relevant organisation as soon as possible to make more affordable arrangements.”

October 28th, 2020 | Andrew Hagger | News

Finance experts TotallyMoney have warned that those experiencing financial hurt due to coronavirus could see their credit scores suffer for six years as protections are taken away for over quarter of a million people still on payment holidays. The finance experts reveal:

• A blanket end to protections on 31st October will see lenders contacting the 323,700 borrowers on payment holidays1 to discuss tailormade repayment options
• Those unable to meet their full repayments in accordance with what’s agreed with lenders will likely see missed payments and defaults on their credit report
• Late payments and defaults remain on credit files for a lengthy six years, making it harder to get accepted for credit cards and mobile phone contracts
• Despite government Job Support Scheme, incomes remain considerably reduced, unemployment is at three-year high2, and over half of people fear losing their job3 over the next 12 months
• Devastating 12 million people thought to have low financial resilience4, says Financial Conduct Authority
• Reassessment of the current protections necessary, says TotallyMoney, to ensure consumers aren’t left out in the cold

A blanket end on 31st October to granting payment holidays on mortgages, credit cards, loans, and overdrafts will see lenders contact the 323,7005 people who took advantage of the protections. This will be to discuss repayment options.

Although lenders must make assessments on a case-by-case basis, in most instances they will likely take monies owed from payment holidays, add this to the outstanding balance, and recalculate monthly payments accordingly.

However, anyone unable to make full repayments as agreed with lenders will probably see missed payments and defaults appear on their credit report, TotallyMoney warns.

Vulnerable consumers will therefore be left reeling from these financial effects of coronavirus for over half a decade, as missed payments and defaults remain on credit reports for six years.

This will make it significantly harder to get accepted for credit cards, loans, mortgages, mobile phone contracts, and even paying for utilities by direct debit. It could also drive up the cost of car insurance6.

The end of payment holidays also comes at an inopportune time, TotallyMoney says, as it coincides with the end of the furlough scheme.

All out, little in

Despite the chancellor’s new Job Support Scheme7, there are ever-growing concerns that the dramatic drop in support compared with what was offered at the beginning of lockdown will mean many won’t be able to afford to live day-to-day, as well as keep up with full repayments.

It is suggested that a devastating 12 million8 people have low financial resilience, meaning they struggle to pay bills and loans.

Furthermore, with unemployment at a three-year high9 and over half of people concerned they’ll lose their jobs over the next 12 months10, fears are intensifying that consumers will have no choice but to take the hit to their credit scores.

Commenting on the troubling changes, TotallyMoney CEO, Alastair Douglas, said: 

“With so many trying to make ends meet while protecting their health, the last thing anyone needs right now is more worry about how their finances could be affected further by these drastic changes.

“That’s why it’s unfortunate that consumer credit scores will suffer for such a long time for anyone unable to keep up with their repayments. A lot has changed over the past three months, so a reassessment to see what more can be done to protect the public would be ideal.

“In the meantime, if you see any missed payments or defaults on your credit report, you can contact each credit bureau and add a notice of correction to your file. While this won’t remove the missed payments or defaults, it does give you a chance to explain any mitigating circumstances that may have led to them, such as coronavirus.

“Lenders must then take this into account when you apply for credit, which could help you get accepted in future.

“At TotallyMoney, we’re on a mission to improve the UK’s credit score, and it’s important to us that our customers’ financial futures aren’t negatively affected due to the unpredictable effects of the virus.”

October 21st, 2020 | Andrew Hagger | News

As part of a survey of more than 8,000 customers, Paragon found that 40% of savers now want to prioritise spending money on experiences they can share with loved ones over material possessions, whilst more than a quarter (27%) felt they were less materialistic as a direct result of the pandemic.

Bank of England data showed that net new household deposits soared during the lockdown period, averaging around £17.2 billion per month between March and June.

Following this period of reduced spending, Paragon found that one in seven savers (15%) now felt they could live a fulfilling life on a reduced budget and would rather prioritise savings for the long-term.

Derek Sprawling, Savings Director at Paragon Bank, said:

“The ‘experience economy’ trend was on the rise long before Covid-19, but it looks like the pandemic has certainly accelerated this. It’s no surprise that the restrictions around socialising have made people value time with loved ones more, with 60% of our savers seeing their priorities change.

“This preference for spending money on experiences with our nearest and dearest over material goods is usually predominantly linked to the younger generation. Our data shows that this trend is indeed strongest amongst 18-24 years-olds, with half of young savers agreeing with the claim against an average of 40%, however it is also consistent across all age groups.”

A shift in spending priorities 

This change in attitude was reflected in spending habits across specific product categories during lockdown.

Paragon’s savers claimed to spend less on online clothes shopping now than before the pandemic, with 35% cutting down spending. The areas that people spent more money on during lockdown included groceries (42%), home improvements (33%), gardening (22%) and media entertainment (21%).

October 20th, 2020 | Andrew Hagger | News

Sainsbury’s Bank has enhanced its Nectar Credit Card  with a new, enriched Nectar offer. Sainsbury’s customers can collect 10,000 Nectar points, worth £50, when they spend over £400 in Sainsbury’s, Tu Clothing or Argos in the first two months after opening the account.

The new credit card offer ranks highest for earning rewards compared to other no-fee reward credit cards on the market, according to top personal finance expert, Andrew Hagger, from Moneycomms.co.uk. 

The boosted credit card offering also enables customers to collect up to three Nectar points per £1 spent at Sainsbury’s, Tu Clothing and now also at Argos, when they use their Sainsbury’s Bank Nectar Credit Card and swipe their Nectar card . In other retailers, customers earn one Nectar point per £5 spent.

Jason King, Customer Director at Sainsbury’s Bank said:  “We’re committed to helping Sainsbury’s customers get the best value from their credit cards. Our new Sainsbury’s Bank Nectar Credit Card offer means customers could be collecting significantly more points on their everyday shopping, whether this is buying their weekly groceries or getting ahead on the Christmas list.”

Andrew Hagger, Personal Finance Expert from Moneycomms.co.uk said: “The new Sainsbury’s Bank Nectar Credit Card deal is very competitive in the current market and ranks highest amongst the no-fee rewards based credit cards. The card offers good long term rewards value for those customers shopping with the Sainsbury’s and Argos brands.

“It’s a good all round card, not only offering generous own brand rewards value but also up to 17 months interest free on balance transfers and purchases. Unlike a growing number of rewards based credit cards, this new deal doesn’t come with a monthly or annual fee.”

To apply for a Sainsbury’s Bank Nectar Credit Card customers should visit: https://www.sainsburysbank.co.uk/credit-cards/nectar-reward

October 14th, 2020 | Andrew Hagger | News

Finance experts TotallyMoney reveal how much customers could save by avoiding finance options at car dealerships amid the Financial Conduct Authority’s (FCA) crackdown on unfair commission agreements.

• A staggering £300m is being lost every year across the UK due to commission-focused dealerships, FCA reports*
• The majority of new car registrations (9 in 10) were financed through dealerships in 2018†
• Nearly three quarters of people (68%) have accepted the first car finance deal offered to them at a dealership‡
• Customers could pay an unnecessary £1,100 extra in interest over a four-year loan*

Figures from 2018-9 report the majority of people buying a car (91%) were persuaded by car dealerships into taking out credit to help them with their purchase.†

Research by the FCA found that buyers are typically sold a finance product based on a broker’s commission, rather than the customer’s creditworthiness. Dealerships receive their commission from lenders based on the interest rate a customer gets, therefore incentivising the broker to increase the rate to earn more.

This often results in customers getting a car finance deal that costs them more than they need to pay.

As a result, the FCA estimates that a customer could end up paying an extra £1,100 in interest on a four-year £10,000 finance agreement.

In light of their findings, the FCA has now put the brakes on these practices in the car finance market. Commencing in January 2021, discretionary commission models that are not in the customer’s best interests are banned.

A steer in the right direction 

The finance experts are shifting gears on the traditional, commision-based model by allowing TotallyMoney customers to check their eligibility for more affordable finance options before they head to the dealership, and all results are based on what’s best for the customer, not best for the dealership.

Customers can see a larger and more varied range of products than they would find at a dealership.

At a time when many people’s financial situation has changed due to coronavirus, finding the cheapest option, with the easiest payment plan, can make a considerable difference.

Alastair Douglas, CEO of finance experts TotallyMoney, comments:

“A car is often a lifelong necessity and a large portion of someone’s monthly expenses. This is particularly important at the moment, as more people may be keen to avoid public transport amid the coronavirus crisis. 

“But, car dealerships can sometimes seem unfair. The industry currently lacks competition, and at the point of sale the main focus is on the broker’s commission, rather than what is right for the customer. 

“We wanted to change this. Our new car finance eligibility platform brings in creditworthiness as a top priority, so customers can get finance options that are right for their situation. We work closely with our lenders, so that customers see market-leading products that will work for them.

“At TotallyMoney, we’re on a mission to improve the UK’s credit score and help our customers move on up to a better financial future. Checking your free credit report to better understand your financial situation could help you improve your credit rating, and help you find the best deals for your next car.”

October 9th, 2020 | Andrew Hagger | News

In a survey involving more than 8,000 customers, Paragon Bank found that 21% of Gen-Z savers were spending more than before during the pandemic – this is 160% higher than the overall average of 8%.

Customers aged 18-24 years old were also twice more likely to have withdrawn money from savings to pay for essentials during lockdown, with 8% confirming they had made a withdrawal from a savings pot against an average of 4%.

However, nearly half (48%) of 18-24 year olds surveyed decreased spending during the pandemic, although this was 11 points below the average of 59%. Another 31% found their spending remained around the same as before lockdown.

Older savers were thriftier during the lockdown period, with 55-69 year olds proving to be the most cautious – 62% made an effort to spend less than before the pandemic while only 6% claimed to spend more.

This increase in spending amongst younger savers was likely facilitated by decreased outgoings during the lockdown period, with half of 18-24 year olds and 56% of 25-34 year olds agreeing that they were able to save more money as a result of the lockdown period.

In contrast, fewer than one in three amongst the over 55s felt like they were in a better position to save as a result of Covid-19, with more finding their financial position unchanged or worse off than younger age groups.

Building saving habits for the better

Despite having more of a tendency for spending, many young savers also felt that they had developed some good saving habits during lockdown that they hoped to transform into permanent behaviours.

Millennials were the most likely to learn good lessons about managing finances during the pandemic, with 43% hoping to convert lockdown saving habits into permanent behaviours, but Gen-Z savers were not far behind with 40% of 18-24 year olds surveyed also keen to do the same (against an overall average of 25%).

Younger savers were also the most likely group to build an emergency saving fund, with nearly a quarter of 18-24 year olds and 22% of 25-34 year olds building up a ‘cushion’ for the uncertain months ahead.

Derek Sprawling, Savings Director at Paragon Bank, said:

“During the lockdown period, many people will have found themselves with lower outgoings and more disposable income than usual thanks to money saved on commuting and other everyday expenses. Across all age groups, we’ve seen that most people have used this as an opportunity to save money, but for some savers, more disposable income means more money to spend!

“We know that young people are one of the groups worst impacted by the pandemic, but our survey suggests many are more resilient than people may think. It is encouraging to see that such a large portion of younger people feel like they are building positive saving habits for the long-term as a result of the pandemic. It’s also great to see young people building an emergency fund and making contingencies for the future.

“Paragon’s savers have, through their savvy financial planning to date, enabled Paragon to maintain our lending support for UK businesses and landlords. This is a great example of how our focus on attracting strong savers translates to support for the wider economy.”

October 6th, 2020 | Andrew Hagger | News

More than a quarter (28%) of all British adults believe they may have lost track of one of their pensions or let it become dormant, according to a new study by Gretel, the free online service which helps people track down lost bank accounts, investments, life insurance and pensions.

Changing jobs is a common way that consumers can become disconnected from their company pension scheme, leaving them lost or classed as dormant.  When a worker moves from one company to another, they do not generally take their pension with them.

Gretel’s research has found that one in four (26%) of Brits have changed jobs 4-7 times in their adult life and a further 8% have changed jobs more than eight times.

The government is due to report back shortly on the dormant asset consultation which includes proposals to expand the dormant assets scheme to include new financial assets such as insurance, pensions and shares.  This would mean financial companies could channel funds from dormant savings and investments which meet the required level of customer inactivity (currently 15 years for banks)  towards good causes through an authorised reclaim fund (ARF).

Gretel estimates that 19.6 million people in the UK have become disconnected from financial services products and are sitting on dormant or unclaimed money with a collective value of over £50 billion¹.  Lost or dormant pensions make up the greatest value with approximately £37 billion in total languishing in over 1.6 million lost or dormant pension accounts worth on average £23,125 per policy.

Duncan Stevens, Chief Executive of Gretel said: “Unfortunately it’s all too easy to become disconnected from a pension scheme.  For many workers it is something they don’t need to worry about until nearing retirement.  But few of us have a job for life now; our research shows that many of us change jobs multiple times during our working lives. Unless we actively consolidate our pension with each job move, our pension pots can quickly become lost or classed as dormant.  We estimate that there are over 1.6 million pension pots sat dormant with an average value of £23,125 – a sum that could have a huge financial impact on the retirements of the average person.”

In terms of those who believe they may have lost a pension or let one become dormant, Gretel’s research also found that:

• four in 10 (42%) were aged 18-34 years
• a third (32%) were aged 35-54 years
• just 14% of those were aged 55 years
• two-fifths (42%) are Londoners (the biggest by region)

Duncan Stevens continued: “At Gretel, we want to get dormant, lost and unclaimed money from savings, investments and pensions back into the hands of the consumer, where it belongs. Our belief is that consumers are entitled to receive all the money due to them and should not have to pay to get their own money back, nor face numerous complex barriers to access it. We are opening pre-registration now because this is a time of financial uncertainty for many and being reunited with forgotten money could make all the difference to some people.”

While many financial services companies have an obligation to reunite customers with their lost money, many only have part of a customer’s financial picture. The launch of Gretel reflects the recommendations of the Government’s Independent Commission on Dormant Assets which called for the extension of the scheme beyond banking to include the rest of the financial services industry and made it a priority for firms to attempt to reunify dormant assets with their rightful owners.

Once Gretel is fully launched consumers will be able to identify lost pots of money in old financial accounts in less than three minutes. Once lost accounts are flagged to the customer, Gretel provides an easy path for them to reclaim it.  Uniquely, once a customer has signed up with Gretel, the service will keep working for them to constantly look for lost monies and flag any new accounts as and when they are identified.

As Gretel prepares to launch and bring on banks, insurers and pension companies, consumers can log on and pre-register with Gretel by simply submitting their email address – www.gretel.co.uk.

September 29th, 2020 | Andrew Hagger | News

Online car finance purchases are expected to rise by 33%, accounting for more than half (56%) of transactions for the first time ever. The move away from the traditional dealership model comes as Brits become more open to shopping around for their own finance deals, with 60% saying searching online for car finance is their preferred option and 63% think shopping online for car finance is more convenient.

And the financial rewards of the online alternatives are clear: those who arrange car finance options online could save up to £797, according to new figures released by car finance provider Zopa.

Potential buyers are also put off by the traditional process of a car dealership offering the finance deal as half admit they’re nervous about the prospect of negotiating costs with a dealer face to face. A further 49% of Brits surveyed suggest haggling simply isn’t a part of modern life and 13% of Brits say they’ve never negotiated when buying something.

And being uncomfortable can cause people to make uninformed decisions. More than one in 10 people who bought a car in the last five years admit they accepted a deal on car finance from a dealer that they didn’t feel was good value and nearly one in five decided to avoid the process altogether and put off buying a car.

The shift online comes as more people see the benefits of organising car finance themselves, with 61% of Brits saying shopping online gives them greater control and 72% preferring to shop at their own pace. The ease comes from access to information too, with a third (36%) valuing the transparency of comparing deals online and 28% the ability to research running costs at the same time as the car finance options, allowing them to manage the financial decision better. The Coronavirus was also a consideration, with nearly half of those questioned (45%) saying they would be more likely to shop online for their finance now than before the pandemic.

In line with consumer demands to take control and avoid the hassle of added negotiations with car dealers, Zopa now offers a ‘mortgage-style’ car finance product with the loan secured against the car. Customers arrange finance on the vehicle prior to going into a dealership. Zopa’s offering puts the customer in control of financing their car as it carries out all background checks, paperwork online and contacts the dealership about the money directly. This enables the customer to have peace of mind and certainty of how much the car will cost them before stepping foot on the forecourt.

Tim Waterman from Zopa says: “For a long time, dealers had control of the customers’ finance deal, and until recent restrictions put in place by the FCA, could be incentivised to offer a higher loan APR. While of course not all dealers are the same, this situation has caused consumer mistrust. Wider availability of online finance deals such as Zopa’s has shifted the control, making it possible for consumers to find a deal that truly works for them.

“A car isn’t a frequent or low value purchase, so it’s understandable that people want to take their time when finding the right deal and do it on their own terms. Zopa’s secured car finance aims to increase transparency and convenience as people can sort out their finance online before going to a dealership, putting them in complete control of how they finance their next car.”

Consumers are able to find a finance option from the comfort of their own sofa as drivers can go directly to Zopa’s website and apply for a Hire Purchase car loan in as little as 3 minutes. The customer also has certainty of price as Zopa provides them with a guaranteed loan rate and monthly breakdown before a full application is submitted. These personalised pre-approved details are provided on a soft search without marking the customer’s credit file, giving them added certainty and the ability to continue to shop around.

Zopa shares its tips for how to secure a good deal on a second-hand car and car finance: 

1. Start by exploring all your options – with the range of different options available to customers, it can often feel overwhelming. Make sure to explore all options available to you via soft search and opt for one which offers complete transparency and aligns with your financial situation. Not all providers offer soft search, so you’ll need to check before you get a quotation.
2. Get a pre-approved loan sorted – this allows you to know what options are open to you and you can be confident you’re getting the best deal available. Look at providers that do an initial soft search to give you confidence on approval and the rate you’ll receive.
3. Think about timing – March and September see new cars released, which are often bought through part-exchange deals. This means dealers will have lots of cars to sell, which puts the consumer in a strong bargaining position.
4. Research costs and see how much the vehicle you want is going for elsewhere – you will know what a good deal is if you’ve been able to compare costs yourself, so make sure you look around and see what other dealers are offering on similar vehicles to make sure you’re happy with the price that is being offered.
5. If you want to go direct to a dealer, do your homework – it’s important to remember that not all dealers are the same. Ask friends and family for their recommendations or check out reviews online via Autotrader or Trustpilot.

September 25th, 2020 | Andrew Hagger | News

Aldermore bank has today increased the rates on a range of its fixed rate business savings products.

The following business savings rates will be available immediately:

• 6 Month Fixed Rate – increase from 0.55% to 0.75%
• 1 Year Fixed Rate – increase from 0.75% to 1.00%

Ewan Edwards, director of savings, Aldermore comments: “We’re committed to offering competitive rates to savers and are pleased to be able to increase interest rates across our fixed rate business savings offering. Running a business comes with many different challenges at the moment, so it’s vital business owners get the most out of any surplus cash.

“Fixed rate accounts can be particularly useful as they enable businesses to get their money working harder for them until it is time to be used. For example, for new IT equipment in six months time, or to put towards those bigger costs you know are coming further down the line.”

September 22nd, 2020 | Andrew Hagger | News

Finance experts TotallyMoney have warned that consumers could be unwittingly losing hundreds of pounds by using certain financial products against their advantage. Research reveals:

A massive 20% drop in income and 10 million people on the furlough scheme during coronavirus has seen many turn to credit to get by.│

However, TotallyMoney has warned that with interest-free overdrafts and payment holidays coming to an end, recovering from the financial effects of coronavirus may be costlier than many realise.

True cost of borrowing exposed

The finance experts have said that increased awareness of more expensive types of borrowing could allow customers to find cheaper alternatives, which can help prevent them from spending more than they need to.

For example, some of the 27 million people offered an interest-free overdraft when the coronavirus pandemic started could soon face higher interest rates than before it began, with many reaching highs of 40%.

Furthermore, despite credit cards often being a cheaper alternative, many don’t realise the majority will accrue an average of £445 in interest due to not having a interest-free promotional offer.

Credit card fees further soar when a card is used for a cash advance transaction, which not only incurs a withdrawal fee, but also starts  accumulating interest the moment the transaction is complete.

Shining a light on borrowing blind spots 

TotallyMoney has launched a free and exclusive app-first feature to give customers an overview of how they use credit, including flagging types of borrowing that could be expensive, such as frequently using an overdraft, using a credit card for cash advance transactions, and carrying a balance on a card with no promotional rate.

Credit Assistant summarises why these could be expensive ways to borrow, so consumers can better understand how to use their credit and get more money in their pocket.

Alastair Douglas, CEO of TotallyMoney, comments:

“For millions of people in the UK right now, finance is a real struggle. The uncertainty of coronavirus is still present and many people may have taken out extra credit products, or taken payment holidays, to help manage spending.

“However, credit can be confusing, and it’s not surprising that consumers don’t know what classifies as a cash transaction, what their interest rate is, or even how often they use their overdraft. With greater transparency about these types of borrowing, consumers can avoid unnecessarily paying out extra. 

“Looking at debt and borrowing habits can be daunting, though. With Credit Assistant, we’ve enabled customers to see their credit and how they’ve used it over time in a clear and meaningful way.

“At TotallyMoney, we’re on a mission to improve the UK’s credit score. Credit Assistant can help people look at all their borrowing behaviour, understand how they can make better decisions, and move on up to a better financial future.”