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.
It’s estimated that over one and a half million people only pay the minimum amount on their credit card, and that could mean it will take decades to clear their debt.
The minimum payment is the amount that you must pay your credit card company every month in order to stay within the terms of the agreement. If you don’t pay it, you could face charges and even find your credit card account is closed.
But you may not realise how much interest you’ll be charged if you only pay the minimum, or how long it will take you to pay off your debt. For example (and I hope you’re sitting down when you read this!), if you owe £1,000 on a card charging 18.9% interest and only pay the minimum (typically around £25 a month at the start), it could take you over 18 years to pay off your debt and you’d pay almost £1,000 extra in interest. Blimey!
The good news is that if you double that payment to £50 a month, you’d clear the debt in less than three years. The financial regulator, the FCA, is looking at ways of encouraging people who currently make the minimum payment to pay a bit more.
SAVVY TIP: There are lots of credit card calculators online (there’s one at Cardcosts.org.uk). If you put in your details you can work out how quickly you could pay off your credit card debt, just by paying a little more each month.
Could you work flexibly?
It’s been two years since employees have been given the right to work flexibly, but many people are being turned down – and others don’t even realise they have this right.
The rules say that you can ask your employer if you can work flexibly (working different hours, fewer hours, from home or sharing your job) as long as you’ve been working for the company for six months without a break. You can’t ask for flexible working if you work through an agency or you’re self employed.
Your boss doesn’t have to agree to your request, but there are rules that say why they can turn you down (they can’t just refuse because they don’t feel like agreeing to your request!).
You can be turned down if, for example, it would be too expensive or it would affect the work of the business or if there wasn’t enough for you to do in the hours you’d like to work.
SAVVY TIP: If your request to work part-time is refused, you can appeal if you don’t think your employer handled you asking to work flexibly fairly.
Banks may charge to hold cash
This week NatWest/RBS wrote to its business customers and said that terms and conditions were being charged so they could be charged, rather than paid interest, to keep their money with the bank.
As I write this, no other banks have followed suit and this move, if the bank decided to go ahead, would only affect business customers, not individuals. But the news that a major banking group is preparing for a world where Bank of England interest rates fall further comes a couple of weeks after it emerged that some banks are paying their personal customers absolutely nothing in interest on certain savings accounts.
SAVVY TIP: Although interest rates on savings accounts are, frankly, appalling at the moment, don’t use that as a reason not to save. It’s still a good idea to have some money for emergencies and to give you options (such as going on holiday without having to rely on your credit card).
Solo first time buyers halved
A government report into housing and house buying shows that more first time buyers are relying on family members to provide or help them with their deposit. It also found that the average age of a first time buyer increased from 30 to 33 years in the 20 years between 1994/95 and 2014/15.
But the biggest change was the drop in the number of people buying on their own. The research found that only 14% of first time buyers were solo buyers in 2014/15, compared to almost a third (29%) in 1994/95.
SAVVY TIP: If you’re considering buying your first home with someone else, be aware of your responsibilities and what could go wrong (sorry to be negative). If you take out a mortgage with someone else, you’re what’s called ‘jointly and severally liable’, this means that you’re each responsible for the whole debt. If one of you puts up more money for a deposit, you may want to own the property in unequal shares. Take legal advice.
Contactless card use up
How do you pay for coffees, sandwiches and everyday shopping? If you wave your contactless card at the card reader, you’re part of a growing band. Figures from the British Bankers’ Association show that contactless card use increased by 250% last year, but research from security firm Defender Note found that almost one in five people with a contactless card (18%) have been a victim of fraud; double the number of people who don’t have a contactless card.
Its research also showed that almost one in five people don’t use contactless cards because they’re worried about fraud and one in four (24%) say they make fraud too easy.
SAVVY TIP: If you’re a victim of fraud, your card company should refund the money unless you’ve been grossly negligent. Check your statements or your online account carefully to make sure you’re not being charged for things you’ve not bought.
Pets at home while you’re away
Do you have a pet? Do you know what they get up to when you’re not around? One pet insurer found that almost two thirds of visits to the vet were a result of an accident or mishap in the house, such as eating string or wool (a vet friend of mine once had to unravel a large ball of string from a dog’s stomach..eww!). It gives these tips:
- Don’t leave leftovers lying around. Chocolate is poisonous to dogs, and onions, garlic, grapes and raisins are toxic to both dogs and cats. Macadamia nuts are also very poisonous to dogs.
- Bin the plants! Some plants, including poinsettia, azalea and lilies don’t agree with pets (lilies are particularly poisonous to cats). Roses and orchids (or artificial plants, of course!) are safer options.
- String, shoe laces, plastic bags and wool can all end up where they shouldn’t and may need an operation to retrieve them.
- Pain killers, vitamins, anti-depressants and diet pills can all be toxic to animals, so keep them out of reach.
- E-cigarette cartridges can be eaten (vets are seeing a growing number of nicotine poisoned pets as a result of e-cigarettes). Make sure you don’t leave them at pet height.