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.
Supermarkets’ bamboozling price offers
Fed up with supermarket offers that don’t actually save you any money? You’re not the only one! This week the consumer organisation Which? submitted what’s called a ‘supercomplaint’ about the supermarkets’ misleading prices.
It wants the Competition and Markets Authority (CMA), which sets the rules on competition, to investigate supermarkets’ price discounts. Which? says that 40% of grocery sales are made on a promotional price, but some price cuts aren’t worth the label they’re written on. Which? found:
- Offers where the item was at the original price for a short time (such as an Easter egg sold at the full price for 10 days in January and the ‘reduced’ price for 51 days).
- Multi buys where the price was increased (such as a pizza costing £1.50 being increased to £2 while a ‘buy two for £3 offer’ was introduced – with the price going back down to £1.50 the second the multi-buy offer ended).
- Larger pack offers not being better value (such as a pack of six cans of sweetcorn with a ‘special value’ sticker being more expensive per can than buying four).
SAVVY TIP: If you don’t want to take a calculator with you when you go shopping, look at the unit price (it’s normally in eye-strainingly small print on the price label). That way you can compare prices on a like-for-like basis.
First time buyers
There’s no doubt that housing is going to be one of the big general election issues, but we all know that politicians’ promises aren’t always followed by action. So if you’re looking to buy somewhere and you’re a first time buyer, what are your options?
- Shared ownership: This is where you buy a percentage of the property and rent the rest. It can be a more affordable option, but you’ll be responsible for paying a service charge (for things like insurance and electricity in communal areas, cleaning and gardening services). It can be expensive to increase your stake in the property and there are normally some restrictions when you come to sell.
- Help from parents/grandparents. Nice if you can get it! Most mortgage lenders won’t take money you’ve been lent into account, only money that’s been given to you. Some banks will let parents ‘park’ some of their savings in an account linked to the mortgage if the buyer only has a small deposit. The idea is that the money stays in that account for – typically – three years, by which time the property should have risen in value.
- Help from a government scheme. There are various schemes, such as Help to Buy. There are two versions of this – one lets you take out a loan of 20% of the value of a new build property if you have a 5% deposit. You don’t pay interest for five years but you’ll have to repay 20% of whatever the property is worth then. The other is a mortgage guarantee scheme, available on new and existing properties, where the government protects the lender against any losses on Help to Buy mortgages of up to 95%.
- Buying with someone else. This can work, and you can buy with up to three others, but don’t forget that your credit file will be linked to the person/people you have a mortgage with. Some mortgage lenders take a higher level of income into account than others when there are several buyers involved. Make sure you’ve agreed what happens if one of you wants to sell or can’t keep up the mortgage payments.
Fancy some financial advice but don’t know where to start or are worried it will cost too much? You could get some financial questions answered for free. This week it’s ‘Moneyfit’ week (described as personal training for your finances…).
The website unbiased.co.uk, which exists to promote independent financial advice, is hosting free live Q and As every day between 12 midday and 3pm. You can also sign up on the website for a free review of your pension, mortgage, investments or general financial health.
Don’t delay on your tax return
You might be wondering why I’m writing about tax return deadlines in April, when the deadline for filing your self assessment return was January 31st. But almost 900,000 people didn’t send in their tax return on time, and you’re one of them and you don’t file it by April 30th, you could be charged a daily fine of £10. You could also be fined 5% of the tax you owe, or £300 (whichever is more) warns the Institute of Chartered Accountants in England and Wales.
Fees that make you see red..
According to a recent survey, high car parking charges, cash machine fees and surcharges for paying for something by credit or debit card are the top three most annoying fees, according to one insurance company.
Also in its list are charges to use a public toilet, ticket booking fees (Grr, I find being charged to print out the ticket in the comfort of my own home annoying!), a service charge being added to a restaurant bill (especially when the service is terrible or non-existent) and bank overdraft fees. So here’s my guide to avoiding bank overdraft fees:
- Arrange an overdraft if you think you’ll go into the red. Most banks charge a lot more if you go overdrawn without permission. Of course it’s best not to overdrawn (but that’s kind of obvious…!) but avoid an unarranged overdraft if you can.
- Consider switching bank accounts. Some banks have much lower interest rates and charges on arranged overdrafts than others. Don’t assume that you won’t be able to switch if you have an arranged overdraft.
- Check the charges. Several banks have introduced daily charges for going into the red. These tend to be more expensive for people who only go overdrawn by a small amount at the end of the month. A straightforward interest rate may be cheaper.
- Find out if a ‘buffer’ is on offer. Some banks offer an interest-free overdraft, which could be as little as £10 and as much as £200.