January, aka the ‘Monday’ of the year, is over and February is well and truly here! While it may seem like a slow start to the year for many, lots has been happening in the world of debt and personal finance.
Bankruptcy thresholds are set to increase and it might be time to break up with that old phone contract you’ve been overpaying for.
There’s good news as well: people are looking out for each other with support for unemployed job seekers, and it could be the end of rail ticket rip offs (sort of).
Universal Credit rolls in
We’ve talked in the past about the new Universal Credit benefit system. It’s now being rolled out to more centres. The Department for Work and Pensions has released a list of local authorities and job centres that will begin using it.
To note, this only applies to claims from single people at present. Claims by couples and families will follow, with the aim for all centres to be using the system by 2016.
As you may know, Universal Credit is a new type of financial support for people of working age that are looking for work or are on a low income. It’ll replace certain benefits like Jobseekers Allowance, Child Tax Credit and Income Support.
Universal Credit will be a one-off payment to an account of your choice. So if you receive Child Tax Credit and also get help paying your rent, this will be included in a single payment and you’ll need to pay your landlord directly from this. When the system is rolled out to couples and families, if you and your partner are both eligible for Universal Credit, you’ll receive one monthly payment per household.
If you receive Universal Credit, there are no limits to the number of hours you can work each week, however as you earn more the credits will be reduced.
If you’re currently receiving one of the benefits that Universal Credit will replace, you’ll be told when you need to start doing things differently.
Bankruptcy & DRO thresholds increase
The government has recently announced plans to improve the help available for people struggling with debt. The proposed changes include:
- Raising the minimum bankruptcy limit from £750.00 to £5,000 for a creditor to be able to make someone bankrupt
- Increasing the maximum amount of debt covered by debt relief orders (DRO) to £20,000 from £15,000
These changes could mean that around 3,600 more people a year will be able to enter into a DRO, a cheaper alternative to bankruptcy.
The news also brings more options to people who previously thought their only choice to deal with a debt was to declare bankruptcy.
The changes will be run through Parliament before coming into effect in October.
Cold weather payment
There’s no denying it, we’ve had some seriously cold spells so far this winter. If you’re receiving certain benefits you may be eligible for a cold weather payment. That doesn’t mean you should ditch the hot water bottles just yet though.
Cold weather payments are made when the temperature drops below zero degrees or lower for 7 days in a row. A £25 payment will be received for each 7-day period that this applies to between November 1 2014 and 31 March 2015.
You can enter your address details to check to see if your postcode is eligible for the payments. If you receive the benefits listed and your postcode qualifies, you don’t need to apply for a payment, it’ll automatically be added into the bank account that you receive your benefits through.
Rail ticket rip-off
Ticket machines in rail stations are supposed to be a handy, quick way for travellers to purchase tickets, saving them from queuing at a ticket desk. The trouble is the machines don’t always provide you with the cheapest ticket options, often causing unnecessary over-payments.
The reason behind this is that staff at the ticket office have access to a wider database of fares and discounts. Ticket machines however, have been known to hide discounts and in some cases promote pricier fares. I always knew ‘robots’ couldn’t be trusted!
New changes, hopefully being implemented in March, mean that rail bosses will have to show passengers how to get the cheapest fares. The first step will be to add labels to machines warning customers that counter fares could be cheaper. Eventually all ticket machines will need to promote all available fares.
Until then, allowing some extra time at the station to queue for a ticket or booking in advance online might still be the best option.
Energy switching speeds up
Switching energy supplier can be a great way to save money, but the switch alone can take up to 5 weeks. This is set to change as many of the major UK energy companies have reduced this time to 17 days. The switch itself would take three days, followed by a 14 day ‘cooling off’ period just in case you change your mind.
The government aim is for this time to be cut down even more eventually, encouraging competition and more savings for consumers. Smaller companies will hopefully follow the same route this year, for now these major suppliers are offering 17 day switching.
Phone contracts: time to downgrade?
Have you ever suspected your phone contract wasn’t right for you? I’m not saying I’m useless when it comes to technology… but when it comes to data allowance and usage charges (is that a thing?) I’ve no idea what kind of contract suits me.
Apparently, I’m not alone. Reports from Which? found that 7 in 10 mobile customers are on the wrong contract. This means they’re either overpaying for services they don’t use, or on a cheaper contact but being charged extra for going over their allowance.
42% of us suspect there’s a better contract out there for us, but only around half of that number actually do something about it. Making the change could save us up to £52 a year. That’s 5,200 penny sweets! (Don’t tell me I’m the only person who still counts in penny sweets? Anyway, moving on…)
Which? have called for mobile phone companies to do more to make it easier to get a deal to suit you as well as simplifying billing too. Hopefully saving us some cash. Hooray!
Rent-to-own firms investigated
You may remember us talking about rent-to-own stores a while back and the proposed plans for MPs to investigate the industry. Rent-to-own stores, including companies like BrightHouse and PerfectHome, use a system in which customers can take out an agreement to buy a product and then pay weekly installments until they own it.
Well, the results of the inquiry are back and, as suspected, they show that many customers are being charged interest rates of up to 94% on rent-to-own goods. On top of that there are insurance packages (often compulsory) and warranties that can end up almost doubling the overall cost of the purchase.
In some cases, insurance is being sold unnecessarily as many households are already covered by existing home insurance. As a result of this, MPs involved in the inquiry have called for the Financial Conduct Authority (FCA) to investigate the high charges and possibility of insurance being mis-sold.
Our chief executive Mike O’Connor shared his thoughts on the inquiry:
“This report throws much needed light on a dark corner of the credit industry which exploits some of the most vulnerable people in our society. People who are already struggling should not have to pay a ‘poverty premium’ and end up paying much more for basic goods than those of us who are more fortunate.”
Money money money…. statistics
The Money Charity has released its February money statistics highlighting average UK figures for a variety of areas including debt, pensions and loans. Here are a few that stood out to us:
- £29.91 – the average cost per day of raising a child until the age of 21
- 401 purchases were made every second on credit or debit cards in November
- 270 people a day are declared insolvent or bankrupt in the UK
The average total debt per household was £54,915 in December, including mortgages.
Police Scotland write off unpaid debts
Police Scotland have written off up to £236,000 in unpaid debts dating from 2011-14. The decision comes as figures show that they’d failed to collect invoices for things like ‘securing premises’. Police Scotland decided to write off the debt after realising that some of the unpaid bills would be hard to collect.
Some instances include when a property is broken into and the occupants don’t have enough money to pay for a new lock, so the Police foot the bill. Another example is when occupants are on holiday, and someone causes damage to their property. Often the occupants believe they shouldn’t be responsible for paying for damages to their home made through no fault of their own. I must say, I think I’d feel the same.
It’s always nice to see people lending a helping hand. So we were pleased to hear about Timpson offering to dry clean suits and clothes for unemployed folk who’d secured a job interview. The poster displayed in their windows states “when times are tough, we will help you look your best.”
Dry cleaning a suit can cost up to £10 and for someone who’s currently out of work that added expense may be unrealistic. Luckily, Timpson are on hand with their cleaning skills, making sure you look smart and feel confident for the big day.
Isn’t the world a nicer place when we all just get along?
See you next month for more debt news!