Welcome to Sarah Pennells’ personal finance column
Sarah Pennells is a personal finance journalist and the face behind SavvyWoman.co.uk. We think she does a great job at explaining financial subjects in a very clear and accessible manner. You can find her column below where she writes about the latest financial news, and helps you get more from your money.
Student bank accounts
‘A’ level results are due out this week and thousands of students will find out whether or not they’ll be going to their first choice university (or going at all…). If you’re in Scotland, you’ll have already had your ‘Higher’ results and will probably be wondering what all the fuss is about!
Either way, if you haven’t yet opened a student bank account, it’s probably time to do it. So what should you look for? Here are my six tips.
- Find out how much you can go overdrawn by without paying interest. The amounts vary between £1,500 and £3,000.
- Ask if there is a guaranteed overdraft on opening the account? You may be able to borrow up to £500 straightaway.
- Check if there is a set amount you can apply for or is it on an ‘as you need it’ basis? Some banks will let you borrow a certain amount in year one, more in year two and the upper limit in year three. If you’re doing a longer course, check whether the limit rises in years four and five.
- Find out how much you will be charged if you go over your overdraft limit. Some banks don’t charge anything, others charge interest and some have a daily charge of £1 a day or more.
- Look at what else is on offer. Some banks have eye-catching freebies, such as a free student rail card or an Amazon voucher.
- Ask if you will receive interest while you’re in credit? For most students, this isn’t going to be a priority, but if you are likely to have money in the bank, find out what it will earn. Some banks pay up to 5% either for the first year or on limited amounts.
Hiring a car? Check the cost
I’ve warned in the past about the dangers of getting ripped off when you hire a car. Well, now the European Commission has done some research that shows exactly what a lottery hiring a car can be. It found that people hiring a car could be charged a different price for the same car, picked up from the same location on the same day – from the same hire company!
The difference in price came down to whereabouts in Europe the person was based when they made the booking. But that’s not the only pricing problem. Here are three catches to watch out for:
- Some hire companies expect you to bring back the car with a full tank of fuel, others with the tank completely empty (try doing that and not adding to your stress levels!).
- Don’t buy ‘collision damage waiver’ (sometimes called ‘excess insurance’) from the hire company’s desk as it will be much more expensive. Instead, get a standalone policy before you go.
- Make sure you take photos of the car when you pick it up and when you return it (especially if it’s not checked at the time) so you have evidence of any scratches or bumps.
SAVVYWOMAN/ SAVVY TIP: If you are charged for something you didn’t agree to, ask your bank or credit card company to refund the money if the hire car company won’t. If you didn’t agree to the charge, it’s what’s called an ‘unauthorised transaction’ and the bank must give you your money back. Be aware that not all bank staff seem to know about this one, so you may have to be persistent!
Missed the tax credit deadline? Don’t panic!
If you claim tax credits but didn’t renew your claim on time, it’s not too late to do something. The deadline for renewing your tax credit claim was August 6th (extended from the end of July because of strike action). If you missed that deadline you should be sent a summary statement that tells you about tax credits you’ve claimed.
As long as you get in touch with HM Revenue and Customs within 30 days of getting this statement, and send back your renewal form if asked, you won’t lose out.
Taken out an ISA? Check the interest rate
Last month, super ISAs or NISAs were launched, letting people save up to £15,000 a year and pay no extra tax. The interest rates on offer on cash ISAs weren’t exactly impressive, but – unbelievably – they’ve been reduced since!
Research by a savings comparison website found that almost half a dozen banks and building societies had either reduced the interest rate on easy access cash ISAs already or were planning to do so.
Even worse, separate research has found that over a hundred cash ISA accounts that aren’t open to new customers pay 0.5% interest or less. So if you opened a cash ISA a few years ago and have stopped paying into it, it could be earning next to nothing.
SAVVYWOMAN/ SAVVY TIP: You can switch your cash ISA to another provider, even if you’ve only opened it since April 6th (ie in the current tax year). Just make sure you contact the bank or building society you want to move your money to first and get them to sort out the transfer, rather than closing your ISA account. If you close your existing ISA first and put the cash in your bank, you’ll lose the tax-free benefit.