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From time to time we will provide you with some handy tips and suggestions to help you to make the most of your money!
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Payday Loans - What they don't tell you
Most of you will have heard about Payday loans by now. Payday loans are seen as a quick and easy solution, when in fact for most they are actually quite the opposite.
What are Payday loans?
They are short term loans which you take out with the intention of repaying in full with your next wage. They are quick and easy to obtain, sometimes asking for little or no ID. The interest rates on these types of loans are by far a lot higher than your average personal loan. Still sounds ok to you? Let’s weigh up the pros and cons of Payday loans:
No credit checks in most cases, fast receipt of funds, and a quick fix.
High interest rates - This makes it difficult to pay the loan back. You not only have to pay back what you owe, but a lot more on top of that. One example:
- Take up a loan of £400 (at 5853% APR) over 30 days and you pay back £527.15. This means you are paying back an extra £127.15! Some charge a lot more than this too.
Continuous payment authorities - This is the type of payment that will be placed on your bank account once you take out a payday loan. This means that the company can take out a payment whenever they feel it is necessary; any time, any day, any amount; whatever is suitable to them. This can cause a great deal of stress.
The vicious cycle begins - It is hard to stick to as using as a one off. In many cases you would pay the loan back, leaving you with hardly any wages left over. Most people would need to take out yet another payday loan to live on before their next wage arrives. This could continue endlessly as part of a routine that someone can't get out of.
No credit checks – Although you may think it is a good thing that no credit checks are done, there is a reason that most lenders do undertake credit checks. If somebody already has a lot of loans or credit, this might mean that it is irresponsible to lend the person further monies.
Little or no ID required – Not having enough official information on you could mean that the company could be accused of lending irresponsibly.
Quick fix – It is exactly that. In most cases, taking up a Payday loan will not solve the problem in the long run.
Impulsive decision - Due to the ease of application, there could be little thought put into alternative solutions.
Remember there are other options. One of these options could include applying for one of our low cost loans. We are The Fairer Alternative.
How to Report a Loan Shark
Loan sharks, who operate illegally, prey on vulnerable people, causing them to live in fear and misery.
For those who don't already know, there's a national Stop Loan Shark Project led by Illegal Money Lending Teams working in partnership with local Trading Standards Authorities. These teams consist of specialist officers who investigate and prosecute illegal money lending and related activity, and LIAISE officers who support victims and raise awareness of the dangers of borrowing from illegal money lenders.
Many people don’t know that you can report a loan shark in confidence:
|Call 24/7 hotline 0300 555 2222|
|Text ‘loan shark + your message’ to 60003|
|Private message facebook.com/stoploansharksproject|
The Stop Loan Shark Project has helped over 20,000 victims. They have:
• secured 235 prosecutions for illegal money lending and related activity;
• reached more than 157 years worth of custodial sentences;
• written off £40.3 million worth of illegal debt.
Remember – you can report a loan shark in confidence
Giving Children a Good Financial Education
Learning about money from a young age helps children to make better financial choices when they are older. These simple tips will give your child a more realistic attitude towards money when they grow up:
- Explain - sit down and show your child the different coins and notes. Give examples of what each is worth.
- Encourage - get your child to put some of their pocket money in a container so they can see the coins build up.
- Plan - get your child to save up for something they are passionate about such as a pair of new football boots. This could be saved in a jar or even their own savings account. Let them see the balance build up as their goal gets closer.
- Shield - don't let your child hear you talk about impulse buys, or guilty spending. Instead, talk to them about things you are saving up for, such as an holiday.
- Involve - let your child help you plan the meals for a week. Show them how much you have to spend and take them to the supermarket with you. Set the challenge of staying within the budget, comparing brands for best value and buying the right amount to avoid waste.
- Timing - If your child gets pocket money, be exact with the timing and amount. This will get them used to managing their income, as they will need to later on when they have a job.
A lot of you will be thinking about taking a holiday round about now. We have put together some useful tips for you to think about.
- Research the best deals - sometimes it can be cheaper to buy flights and accommodation separately
- Keep your cards safe - only take the ones you need
- Tell your bank before you go - your bank may block your card for suspected fraud if it is suddenly used in another country without notice
- Don’t buy cash at the airport - this is very costly
- Withdrawing money abroad - be aware of any charges that may be applied
- Using your phone abroad - you could incur massive charges. Check this with your mobile provider first
- Insure yourself - if you receive an injury or become ill while abroad, it can cost thousands to see a doctor. Be prepared and hunt down the best deals
- Avoid scams - tourists who are not familiar with the area are perfect targets for scam artists. Stay aware and take care!
If you do go on holiday – enjoy!
Quick Review of Your Finances
Spending a few hours reviewing your finances could leave you better off. Imagine being able to save for things you want, it may be possible!
Step 1 Check what benefits you are entitled to – Remember, even if you are working you may still be entitled to receive some benefits. Useful websites to check: http://www.turn2us.org.uk/benefits_search.aspx http://www.moneysavingexpert.com/family/benefits-check
Step 2 Keep track of what you spend – Once on paper you can evaluate where spending could be nipped back. You may find that you could be spending more than you think on unnecessary items.
Step 3 Create a budget plan – Try not to spend on a whim. Allocate a set amount for shopping, clothes, etc and stick to it.
Step 4 Shopping – Consider buying cheaper alternatives or supermarkets own brand products. Most items are just as good quality as the expensive stuff! Posh branding can bump costs up. Writing up a shopping list beforehand can help you to stick to your budget too.
Step 5 Save the spare cash or even use it to clear a debt.
Saving on Energy Costs
Gas and electricity costs don’t seem to be getting any lower. Some people just accept this as a fact, but a bit of research could make a massive difference to their income. This is where we come into it. Find some of our wonderful tips and information below:
- Don’t rely on word of mouth - Your friend or neighbour may be very happy with their fuel supplier and recommend them to you. This doesn’t necessarily mean that they are right for you.
- Explore your options - Dual fuel products aren’t always the cheapest. Explore all options including using separate companies for each fuel. To save hours of research, there are comparison websites that will do it all for you. Use a few different sites as they don’t all have the same deals available (as a bonus some will even offer you gifts for going through them to switch!). Remember to check regularly too as deals can change from week to week. Some popular sites are: www.energyhelpline.com, www.moneysupermarket.com, www.uswitch.com
- Grants available – There may be grants available to you that you have never even heard of. Visit - http://www.energysavingtrust.org.uk/Take-action/Grants-and-Discounts-Database to find out.
- Boiler cover – Imagine your boiler packing up right in the middle of winter and having to folk out a huge cost to repair it? Consider taking up boiler care – it could become a life saver. Bear in mind that you don’t have to go with the company who provides your fuel. As above, you can search comparison sites to get the best deals tailored to your needs.
- Free insulation - There are a lot of companies currently offering free cavity wall and loft insulation to customer’s properties. This can save you approx £300 in bills per year! Get in touch with your current provider to find out if they can offer you this. If not, a quick search on Google should crop up with some suggestions.
- Read your meters regularly – supplier estimates can be way off the mark. You could be paying too little and end up with a huge bill at the end of the year, or the opposite.
- Upgrade your boiler - This option can cost a lot up front, yet it could save you big amounts of money in the long run (usually a few hundred a year!)
- Don’t be scared to question your bill – If you find that your bill is shockingly higher than anticipated, you should always question your energy supplier as there are occasions when these errors can be made, only to be discovered upon reassessment.
- Pay by Direct Debit – most companies offer a discount on your bill if you pay by this method.
Budgeting and Cutting Down
Why not make it your resolution by doing things a little differently to help you manage your money?
- Create a budget - Ever wondered where your money has gone? You thought you had enough to keep you going for the month, but now your pockets are empty. A good way to spot the areas where your money is being eaten up is to put everything you spend down on ‘paper’. There are many online calculators which are very helpful, such as www.goodwithmoney.co.uk/budget-calculator or if you want a more in detail and fun calculator to use, there is the ever reliable Money Saving Expert Budget Planner - www.moneysavingexpert.com/banking/Budget-planning.
- Review your regular bill payments - Use comparison websites to see if you could pay less for your utilities. Even if you only save a few pounds, it is worth it.
- Check for any benefits you may be entitled to - Some people don’t realise that there may be benefits available that they could be claiming. Call the HM Revenue and Customs or check online at www.direct.gov.uk. You could also use www.turn2us.org.
- Negotiating with creditors - If you are struggling with payments for bills, etc, don’t ignore the problem. The best thing you can do this year is to ask for some help. Speak to the companies in question first and if you find they aren’t overly helpful, don’t think it is the end of the world as you CAN go further. The Citizens Advice Bureau are there to help you for free, as are the Consumer Credit Counselling Service, National Debtline and various other organisations. Avoid paying anyone for advice. Advice is available to the same standards for free.
- Shop around before committing - Always compare prices for things before making your final purchase. This could be applied to anything – clothes, insurances, electricals, etc. If you have access to the internet, apply this theory to websites. You could save a large amount of money.
- Use your car as little as possible - A tough one to stick to but now the petrol prices have risen, there’s even more of a reason to cut down. If you have a bike – use this where you can. Walk where you can – this will double up as a bit of exercise too and make you feel good!
- Be more energy efficient - Reduce your fuel bills by making small changes. Use energy efficient light bulbs. Turn your appliances off at the socket. Don’t leave anything on standby. You could even purchase a plug-in meter so that you can get an idea of how much energy will cost you when you switch on an appliance (It may help to steer you away from leaving your mobile charger in the socket overnight!).
- Open a savings account! - Every little saving you make can be put somewhere out of reach of temptation – a savings account. Don’t forget the various savings accounts we offer!
- The fun bit at the end - There are little tips that people follow, which really do save those pennies, such as; Do your food shopping on a full stomach – there’s nothing worse than shopping when you feel like you could eat everything in sight!, Every time you purchase something and receive change, round the number up to the nearest pound and then pop the difference into a jar. For example; Spend £5.62 - round this up to the nearest pound - £6. The difference = £0.38p.
Credit Building and Repairing
Turned down by lenders when applying for credit and unsure why? Below are a few tips on how you can repair and build a good credit history.
- Keep a regular check on your credit report – There is a lot of fraudulent activity happening on all types of credit accounts, no matter how small. Anyone can be targeted, no matter how careful you think you have been. So do check your credit record from time to time. The most popular credit reference agencies are www.experian.co.uk and www.equifax.co.uk. There will be a small charge to check your reports, but most of the time there are offers to sign up for a free months trial.
- Any errors on your credit file need to be corrected - The smallest of errors can ruin your credit rating. If you spot anything that looks wrong on your file, you need to contact the credit reference agency (they may ask that you contact the lender first if you haven’t already). If the ‘error’ is still not corrected because the lender refuses, you can in a worst case scenario add a ‘notice of correction’ to your file. This is basically a note which goes next to the item of credit on your report, for future potential lenders to see when making decisions. The notice of correction does not affect your credit score but also it is not guaranteed that it will be taken into account when credit decisions are made. If you are 100% sure that the ‘error’ on your report is not your doing, and they refuse to amend it, then you could take it further with the Financial Ombudsman, Office of Fair Trading and the Trading Standards Department of your Council.
- Get yourself on the electoral roll – Being on the electoral roll (also known as the voters roll) does not only mean that you can vote, but many lenders these days do not offer credit if you are not registered. As the electoral roll is a legal requirement, it is seen by lenders as a safeguard. Also, it is a good idea to get yourself on the register even if you do not want to apply for credit. If you do not respond to requests to register, or if you provide false information you could receive a £1,000 fine. For further information on how to go about registering, go to www.aboutmyvote.co.uk.
- Try not to apply for too much credit – When you apply for credit, the lender will undertake a search on your credit report. This will show on your report as a ‘search’. They stay on your report for a year. Leave as much space as possible in between applications. The more searches that show on your report, the less attractive you will be to potential future lenders.
- Pre-paid credit cards – Do you feel like you have done everything you can to repair your credit and want to build up your score? Still find that no one will give you a chance? That’s one of the reasons why pre-paid credit cards exist. The gist of these cards is that you ‘top up’ them up with money and use them as you would use a credit card. As it is your own money, there is no risk to the issuer, so they do not need to do a credit check. The majority of the companies that offer these services do charge a small monthly fee however, and you must also run the card for a minimum of one year. In return, the benefit is that they will update your credit report monthly, showing that you are making regular payments and gaining some credit history (this includes the fee, and/or money loaded onto the card).
- Ensure that any unused credit is closed – Many people have old credit cards, etc that they no longer use but have not officially closed the account with the lender. If you have credit limit amounts on these accounts that are not being used, this can affect the amount that a future potential lender would grant you, as they would include it as an item of expenditure. Also, if old addresses are shown on these accounts that have been long forgotten about, this can show inconsistency in ID checks and cause problems.
- Joint finances and break ups – Are you are ‘financially linked’ to somebody with a poor credit score? Have you previously had joint credit, such as bills, mortgages, bank accounts with them? Well, this could have an impact on your credit score. If you are no longer associated with this person, write to the credit reference agencies and ask for a notice of ‘diassociation’ to ensure you are no longer shown as linked to them.