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 fraud alert
If you’re a student looking for somewhere to live during the holidays, watch out as it’s a prime time for scammers. Action Fraud, the UK’s national reporting centre for fraud and cyber crime, says there’s a spike in the number of students reporting letting frauds in the summer. In fact, over a quarter of all rental frauds reported during the year come in during July and August.
Fraudsters target students looking for a rental over the summer with fake ads, tricking them into paying an upfront deposit. It can be for a property that doesn’t exist, one that’s already been rented out or one that’s been ‘rented’ to several different student groups at the same time. The average amount that students lose in this type of rental fraud is almost £1,400 – with some being scammed for over £5,000 each.
Action Fraud says that if you want to avoid becoming a victim of fraud, you should take the following steps:
- Watch out for listings with no or few photos and make sure you visit the property before you hand over any money.
- Be careful about how you pay the deposit. You’ll normally be asked to pay a deposit of a month’s rent (sometimes more), plus a month’s rent in advance.
SAVVY TIP: If you pay by credit or debit card at the letting agent’s office, you have some protection if it turns out you’ve paid a fraudster. But if you pay the landlord or agent by direct payment from your bank account (for example, using your bank’s mobile banking app, or online or phone banking), you’re not protected. That’s because it’s the electronic version of paying by cash. So if you’ve been scammed you’re unlikely to get your money back. Be wary if you’re asked to pay your deposit by a money transfer service, as that can be the sign of a scam.
Do some research into the landlord and agent. Most universities and colleges have approved housing lists with a register of landlords.
Banks may have to pay a minimum rate of interest
If you’ve got savings and you haven’t checked the interest rate you’re getting recently, it’s worth doing so. Some banks pay as little as 0.05% interest on their ‘closed accounts’. These are savings accounts that the banks aren’t actively selling to new customers.
The city watchdog, the Financial Conduct Authority (FCA), says it’s considering forcing banks to pay a minimum rate of interest on old savings accounts. It’s been concerned that millions of savers, who are loyal to their bank, are losing out.
The FCA has already named and shamed banks paying the lowest rates and it’s piloted a scheme that would give people more information about the benefits of switching savings. But so far, neither of these has worked. Research shows that only around one in ten people have switched their easy access savings in the last three years.
Here are my tips on getting the most from your savings:
- Check the interest rate you’re getting. It sounds obvious but it’s easy to lose track of savings accounts you don’t use regularly. The information should be on your bank or building society’s website, but if you can’t find it, contact them.
- Find out how much more you could get by switching. You’ll find that the so-called ‘challenger banks’ pay the best interest rates. These may be unfamiliar names, but your savings will be protected up to a limit of £85,000 if they’re covered by the UK’s savings compensation scheme. This means that if the bank goes bust, you’ll get back your savings – up to these limits.
SAVVY TIP: By law, any bank or building society that takes customers’ money has to sign up to the UK’s Financial Services Compensation Scheme. The only exception is if its head office is in a European Union country, in which case it can choose to be covered by its own country’s savings compensation scheme. This means your savings are covered up to a limit of €100,000 (under existing EU rules).
Check the terms and conditions of any new account before you switch. Some banks pay a great headline rate on savings accounts, but the rate drops after a year or you only get that rate if you don’t take any money out of your account for a year.
SAVVY TIP: If you’re switching a cash ISA, the process is different to switching an ordinary savings account. With a cash ISA, in order to keep the tax benefits, you must open a new ISA with the bank or building society you’re switching to and then ask them to transfer money from your old ISA. If you close your old ISA first, you won’t get the interest tax free.
Cash, card or mobile?
When was the last time you paid for something using cash? Cash is still incredibly popular, but the rise of contactless card payments, and payments by mobile or smart watch, mean that cash is no longer the most popular method of paying for something.
Official figures show that in 2017 payment by debit cards pushed cash into second place for the first time. The main reason for this is that we’re using debit cards for much smaller payments with contactless. Currently, contactless payments account for 15% of all transactions, but that’s predicted to rise to over a third (36%) by 2027 – less than ten years’ time.
Contactless payments are quick and convenient but, while fraud figures are low, they are rising. So I’d always recommend checking the amount you’re being charged before you tap your card and getting a receipt (especially if you don’t check your bank transactions every day). Without a receipt it could be harder to challenge any mistakes or when you’ve been overcharged – or to work out exactly what you were paying for in the first place.
What happens when energy firms go bust?
The energy supplier Iresa went bust last month, after it was inundated with complaints from unhappy customers. Earlier this year, the regulator Ofgem stopped Iresa from taking on new customers, increasing direct debits from existing customers or taking one-off payments after it failed to sort out its outstanding customer complaints.
Iresa was a small supplier with fewer than 100,000 customers, but it’s not the first energy company to stop trading. So, what should you do if your energy company goes bust? Here’s the advice from Ofgem:
- Don’t worry that your energy supply will stop. Your gas and electricity supply are protected and you’ll still get your energy as normal.
- Take a meter reading, but don’t switch supplier. Why shouldn’t you switch? Well, one reason is that if you’re in credit in your energy bill, it’s better not to switch until you’ve been told what you have to do to claim a refund.
- Look out for a letter telling you who your new supplier will be. Under the rules, the regulator appoints a new energy company to supply gas and electricity if a firm goes bust. The new supplier doesn’t have to offer the same tariff as the old firm, but if it’s going to charge customers more, you’re are allowed to switch without having to pay an exit fee.
- Don’t cancel your Direct Debit. Money won’t be taken by the firm that’s gone bust but it will be paid, instead, to the new supplier.
- If you’re in credit, that money is protected. You won’t get it back from Iresa but that money will either be used to credit your account, if you stay with the new supplier, or you can get a refund from them.
SAVVY TIP: If you were partway through switching from Iresa when it stopped trading, that switch should still go through.