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.
0% balance transfer card fees
New research shows that only one in 20 people can work out the real cost of a 0% credit card balance transfer deal. The consumer organisation Which? says that most people thought that 0% balance transfer credit card deals were free, even when they were told they’d be charged a balance transfer fee.
Most credit card companies charge a balance transfer fee of between 1.75% and 3.5%. So, if you were to transfer a balance of £1,000, you’d pay a balance transfer fee of between £17.50 and £35, depending on the deal you chose.
Even with the balance transfer fee, you’ll still save money on interest if you owe money on your card and you’re currently paying the average credit card interest rate (of around 18%) and you switch to a 0% balance transfer deal. As ever, you’ll get the best deals if you have a good credit rating.
SAVVY TIP: Some credit card providers charge a lower balance transfer fee if you move your balance from your credit card within the first 60 or 90 days after taking out the card.
New consumer rights regulations
It’s all change on October 1st when new consumer rights regulations come into force. These will mean it’s easier to understand what your rights are and, for the first time, you’ll get better protection if you buy digital content, such as music or books. So, what are the main changes?
- If you buy something, you’ll get 30 days to ‘reject’ it if a fault develops. The shop should give you your money back, although you can have a replacement or repair if you want to. If it’s repaired and it doesn’t sort out the problem, the new rules give you better rights. It’s designed to avoid the problem of consumers being fobbed off with shoddy repairs.
- If a fault develops in the first six months and you’re offered a refund, the shop must give you a full refund. But if you’re given a refund after six months, the shop can take some money off for the fact you’ve been able to use the item since you bought it.
- Digital content must be up to the job. If it isn’t, you can get a replacement, repair or refund. And if you tell the salesperson that you want the software (or whatever you’re buying) for a particular tablet or PC, it should be compatible. If it isn’t, you can get a replacement or your money back.
- You also get better protection if you buy something like a kitchen. Your rights don’t just cover the kitchen but whether it’s been installed correctly.
- Your rights to a repair, refund or replacement also cover things you buy on hire purchase, hire and even something that’s free if it’s part of a package that you pay for. For example, if you buy a computer that has free anti-virus software, that you’d normally be charged for, you can complain about it if it doesn’t work properly.
- There are clearer rules about what makes a contract unfair. Companies can’t hide sneaky clauses in the small print.
Have you been enrolled?
Have you joined your workplace pension scheme? If you work for a bigger company it’s likely you’ll have been put in your employer’s pension, without you doing anything. That’s because since 1st October 2012, thanks to a government initiative, companies have to offer their employees a pension and put them in it without them having to fill in any paperwork.
The initiative is called automatic enrolment and, by October 2018, all businesses – big and small – will have to set up a pension scheme for their workers, put them into it and pay into the pension on their behalf. Here are the basic rules about automatic enrolment:
- Not everyone qualifies to be automatically enrolled. You’ll only be covered by this if you are aged between 22 and state pension age and if you earn £10,000 a year or more and if you work or mainly work in the UK.
SAVVY TIP: If you earn between £5,824 and £10,000 or if you’re aged under 22 or over state pension age, you can ask your employer to put you into a workplace pension, and in that case, they’ll have to pay into it for you as well. If you earn less than £5,824 a year and you want to join your employer’s pension scheme, your employer doesn’t have to pay into it for you.
- You’ll have to pay into your pension, so will your employer and you’ll get money from the government in the form of tax relief. Tax relief means that some of the money you normally pay in tax goes into your pension instead.
- The amount that pays into your pension will rise between now and 2018. In the early years, you’ll pay 0.8%, your employer will pay 1% and you’ll get 0.2% in the form of tax relief. Once the scheme is fully up and running, you’ll pay 4% into your pension, your employer will pay 3% and you’ll get 1% in tax relief.
- If you opt out of your workplace pension in the first month, you won’t have any money taken towards your pension. You can choose to leave the scheme whenever you want to, but if it’s after the first month, you can’t get at the money you’ve paid into your pension until you reach 55.
SAVVY TIP: If you opt out of the pension, make sure you think about how else you’d save for your retirement. Retirement may seem a long way away, depending on how young you are, but it will sneak up on you faster than you think!
Minimum wage rises
Next month sees the minimum wage rising to £6.70 an hour for adults aged 21 and over (up from £6.50). It will also rise to £5.30 an hour for people aged 18 – 20 (up by 27p), and to £3.87 an hour for anyone aged 16 or 17. Apprentices will get a bigger rise, to £3.30 an hour from £2.73.
Meanwhile, Lidl has become the first supermarket to say it will pay the living wage as recommended by the Living Wage Foundation. It will start paying its workers across England, Scotland and Wales £8.20 an hour, with those in London earning £9.35 an hour. Workers in Northern Ireland aren’t covered by this change.
Confusingly, this living wage isn’t the same as the living wage announced by the Chancellor in his July budget. That is due to be £7.20 an hour from April next year, for people aged 25 and over.