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.
Rising £ means more € for your holiday
If you’re off on your holidays in Europe, you’ll have more money to spend thanks to the rising value of the pound. The pound has reached a seven-year high against the euro and as I write this, a pound is worth €1.40.
We’ve not had those levels since 2007 and it means your holiday money will go further if you’re travelling to a Eurozone country. If you want to make sure you get the best exchange rate, it’s well worth shopping around. Here are my tips:
- Order online in advance for the cheapest deal. Depending on how much you’re ordering, you may not have to pay extra for delivery (typically orders over £500 include free delivery).
- Compare travel money costs online. Just because there’s no commission doesn’t mean there aren’t costs to pay.
- Take a credit card that won’t charge you if you use it abroad. It’s good to have a credit card with you on holiday (for unexpected expenses if nothing else), but some charge extra fees if you use them in shops or restaurants.
SAVVY TIP: Never use a credit card to take out cash, especially abroad as you will pay interest from day one (even if you pay off your credit card bill in full) and will pay extra fees as well.
Don’t just pay the minimum on your credit card
If you have a credit card you probably know that it’s best to pay it off in full each month. If you don’t clear the whole balance, you get charged interest on everything you’ve spent (and not just on the part you haven’t paid off). The only way you won’t get charged interest is if you have a credit card that charges 0% interest.
But if you can’t pay the whole bill in full every month, make sure you don’t just pay the minimum amount. A recent survey found that almost one in five (17%) pay the minimum, but it can mean you rack up interest charges.
Here’s the maths to show you why this is such a bad idea: if you have a credit card charging 18% interest and you’ve spent £1,000 on it and pay the minimum (3% or around £30 a month at the beginning) it would take you 13 years to pay it off. Yes, that’s right, 13 years!
If you can pay just an extra tenner a month, you’ll cut the repayment time from 13 years to less than five years. And if you can pay an extra £30, you’ll clear the debt in just over two years. That’s still a long time, but it’s a lot better than 13 years…
The end of the road for clocked cars
Clocked cars could be a thing of the past, thanks to European Union legislation that will make ‘mileage correction’ firms illegal. These firms ‘clock’ (reduce) a car’s mileage to make it more valuable when it’s sold, but the EU legislation will mean that they will be outlawed. The bad news is that this change won’t come in until May 2018. So what can you do to protect yourself if you’re buying a second-hand car?
- Get information about the car free of charge from the DVLA. You can do this at vehicleenquiry.service.gov.uk. All you do is type in the make and number plate of the car you’re thinking of buying and you can find out basic information (such as when it was manufactured etc).
- If you can get the car’s MOT test number, you can also find out its MOT history via the gov.uk website, which should include mileage information as well. You don’t have to pay for this.
- Pay for a car check. There are several companies that will check a car you’re thinking of buying for outstanding finance, whether it’s been written off and whether the quoted mileage doesn’t look right.
Make more money in minutes
It’s just a few weeks until the end of the tax year. It’s not something we all get excited about (although accountants normally do!). But it is a good time to think about your finances. This year you can pay up to £15,000 into a cash or stocks and shares ISA (or mix and match them) – but you lose this allowance on April 5th. If you don’t have cash to spare, there are still things you can do:
- Checking the interest rate that any existing cash ISAs are earning. If you’ve been saving money in cash ISAs over the years, you could find they’re earning a very paltry rate (less than 0.2%, in some cases). The rules let you transfer your cash ISA to a different bank or building society to get a better rate of interest (you can also move it into a stocks and shares ISA, if you prefer).
- The important thing is not to close your existing cash ISA account or you’ll lose the tax-free benefit. Instead you should choose a new ISA provider, contact them and fill in an ISA transfer form. That way the money will be transferred directly from your existing ISA provider to the new one.
- The rules say you can transfer some or all of the money that you have in ISAs from previous tax years, but money you’ve saved in the current tax year (up until April 5th this year) has to be moved in one go or not at all.
From April 6th, if you receive less than £15,600 a year in income, you may be able to get interest paid on your savings without tax being taken off. At the moment, people who earn a little more than the personal tax allowance (which is currently £10,000 a year) can pay tax on their savings at a lower rate of 10%, compared to the basic rate of tax which is 20%. From April 6th, you can earn up to £10,600 tax free and up to £5,000 from interest on savings and you’ll be able to get interest from your savings accounts or from money you have in a current account, paid tax free.
This process won’t happen automatically as you’ll have to fill in a form called R85, which is available from banks and building societies, or downloadable from the GOV.UK website. This form tells the bank to pay interest without taking tax off. Register now so you don’t miss out.
Driving ban to force exes to pay up?
New proposals say the government should consider a driving ban for ex husbands or wives who don’t pay maintenance – or make other financial payments they’re meant to make – when they get divorced.
Under the current system, many couples agree how they’ll split money and property they own but may get a legal document called a ‘court order’ so it becomes legally binding, while others who can’t agree end up going to court. But that may not be the end of it as an ex could simply refuse to pay. And although there are steps you can take currently to force them to pay, they can be hard to take.
The new proposals suggest banning exes from travelling abroad, imposing a curfew or banning them from driving, if they refuse to pay. These suggestions only apply to England and Wales, as there are different rules on divorce in Scotland and Northern Ireland.