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.
Better deal on car hire
Have you ever hired a car for your holiday, only to find out when you hand it back that you’ve been charged hundreds of pounds for a tiny scratch or scrape? Or perhaps you’ve been offered expensive ‘super collision damage waiver’ when you’ve picked the car up?
Hopefully those nasty shocks will disappear as five of the biggest hire car companies have said they’ll improve their practices after a Europe-wide review into the sector.
The five companies, Avis Budget, Enterprise Rent a Car, Europcar Hertz and Sixt, will make the changes over the next six months. It will mean you should be given more information when you go on their websites about what you’ll actually pay when you hire the car (not the display price, which doesn’t always include the extras). There’s also a new dispute service if you don’t agree with the rental car company’s assessment of damage you’ve caused.
SAVVY TIP: If you’re hiring a car, always buy excess insurance cover (sometimes called ‘super collision damage waiver’). It means you won’t have to pay the excess if you have an accident. The excess is the first part of any claim and, on car hire insurance, it can be hundreds of pounds. Don’t buy your excess insurance policy from the hire car company as you can get it cheaper as a standalone policy.
British Gas cuts gas prices
If you’re a British Gas customer, your energy bill should will fall from the end of August. British Gas announced it’s cutting gas prices for customers who are on its standard and ‘fix and fall’ tariffs by 5% – or £35 for the average bill. But, if you’re with one of the Big Six energy companies, you’ll have been paying too much for your energy.
An investigation by the Competition and Markets Authority (which is a government regulator that ensures consumers get a fair deal), found that the big energy companies have been overcharging their customers by an average of £50 a year. It also found that 70% of customers are on the standard tariff – which is never the cheapest. Eek!
So, if you’ve stuck with the same energy company, here’s my quick guide to save you cash:
- Find out which tariff you’re on. You can do this by checking your bill or ringing the energy company.
- Ask your energy company if you’re on the cheapest tariff. They have to tell you if you could be on a better deal with them.
- Get hold of your bills for the last year, or your annual statement, so you know exactly how much energy you’ve used. There’s no point in trying to find the best deal without knowing exactly how much gas or electricity you use.
- Consider one of the independent suppliers as they’re often cheaper than the Big Six and come out top in customer service surveys as well!
- You can still switch if you’re in a rented property unless you pay for your gas and electricity as part of your rent.
Brits wasting holiday money!
Be honest, what do you do with any leftover holiday money? Do you save it for your next holiday or do you go on a mad spending spree at the airport?
Research from the Money Advice Service found that we spend almost £1 billion at the airport (not each, thankfully!) just to get rid of holiday money. This works out at over £14 each. Even worse, we’d have to have £52 leftover before we think it’s worthwhile keeping the money rather than splurging it at the airport shops.
Pension freedoms – 100 days on
It’s 100 days (or just over 100 days, depending on when you’re reading this!) since people aged 55 or over have been able to take money out of their pension pot. And figures show that over a 60,000 people have taken quarter of a million payments from their pensions.
These pension flexibilities are great in principle, but it doesn’t mean that you should take cash out of your pension just because you can. Here’s my guide:
- You can’t take money out of a final salary pension, such as a public sector one. And even if you could, in most cases it would be bonkers to do this. That’s because final salary pensions promise to pay you a regular pension and it will usually rise in line with the cost of living as well.
- If you have a pension ‘pot’ type of pension, where you’ve paid into a fund while you’ve been working, you can take as much or as little from your pension as you like once you’ve reached 55. Well, that’s the theory. The reality is that your pension provider may not let you take small amounts out of your pot, or may charge you an exit fee if you’re taking money before your planned retirement date.
- Before you dash to raid your pension pot, be aware that you’ll pay tax on all but 25% of it. If you’re taking out cash from your pension in the same year you’ve been earning, you could end up paying tax at 40%.
- Take free guidance from the government-funded Pension Wise service before you do anything. It’s not the same as financial advice, but they’ll be able to talk you through your options.
- Think about what you’ll live on in retirement. This sounds blindingly obvious, but I’m afraid that many of us underestimate how long we’ll live for. If you take money out of your pension at 55, what will you live on when you’re 75?
What does your attitude to money say about you?
All this week I’ve been involved in a new BBC1 programme called ‘Right On the Money’, which is aimed at helping people spend less, get more for the money they spend and pay off their debts. As part of the show, the BBC has been running a test which is designed to reveal your attitude to money.
What’s yours? (I was a secure saver..). You can take the test on the BBC website http://www.bbc.co.uk/guides/zqkjmnb
Whatever your money personality, there are some quick and easy steps you can take to improve your financial position.
- Find out what you spend now. Look at your bank statements, add up your cash spending and keep a spending diary (as it sounds, you write down what you spend) so you know where every penny goes.
- Don’t spend more than you have coming in.