What a month it’s been!
The media has been buzzing with big stories throughout May; from the 24-hour European election coverage and the tense Champions League final to the story about an unlikely feline hero.
So in case you’ve missed some of the debt news among all of that, here’s your monthly round up.
Billions of pounds to be claimed back!
Let’s start with the good news; according to research by GoCompare.com, energy companies are profiting from a whopping £1.2 billion in overpaid bills each year. ‘Why is that a good thing?!’ I hear you ask. Well, the average customer is owed £90.20 by their energy supplier, and you may be one of them.
GoCompare.com energy spokesperson Jeremy Cryer is encouraging customers who have credit on their accounts to contact their energy provider and ask for their money back. Jeremy also said this could mean you save money in the future, too: “It’s likely that your Direct Debit payment has been set too high, so give a current meter reading and ask for your future Direct Debit payments to be reduced if possible”.
Why not also take a look to see if you could save money by switching your utility supplier?
Raising awareness of ‘The Debt Trap’
Earlier this month StepChange Debt Charity hit the headlines alongside The Children’s Society, following the publication of our joint report “The Debt Trap”, which highlights the impact of debt on families with children.
The findings show the psychological damage debt can inflict on children, such as bullying and anxiety. According to our CEO Mike O’Connor the report is a “stark warning to policymakers, creditors and the wider society of the devastating effects of debt on children”.
If you’re interested in finding out more, take a look at this video of actor Brian Cox talking about the impact debt had on his childhood and why he’s supporting The Debt Trap campaign.
Changes to the statutory child maintenance service
The Department for Work and Pensions recently sent out letters to single parents to let them know about changes to the statutory child maintenance service.
Under the new rules, which come into effect later in the year, separated parents who can’t come to an amicable agreement over child maintenance will both have to pay a charge. The parent making the payments will have a 20% fee added to the maintenance payment, while the parent receiving it will pay 4% to access the money.
It is hoped the changes will reduce the cost of running the service, but not everyone’s in favour. Critics argue that the charges may pressure parents into making unstable arrangements, and that children could be the ones to lose out in the long term. Take a listen to the debate and decide for yourself.
Payday loan posers
Our friends at MoneySavingExpert.com have noticed a rising trend in the number of payday loan brokers posing as credit unions in online adverts. These ads aren’t owned or controlled by genuine credit unions, and they’re designed to catch people out by offering loans at much higher interest rates than a legitimate credit union would.
One of the ways you can tell whether you are on a genuine site is to look in the small print. Credit unions can only offer loans at rates up to 42.6% APR , whereas the payday loan brokers in these adverts are offering loans at up to 3,350% APR. If you’re not sure if you’re on a genuine site, you can check by finding your local credit union.
Before you take out a loan, take our Debt Danger Signs test; it just takes a few seconds to see which signs apply to you, how to avoid others and where to get free help.
Cold caller alert
Here’s another story about a wolf in sheep’s clothing that we thought you should be aware of. The Financial Conduct Authority (FCA) is urging people to be wary if they are contacted out of the blue by cold callers offering a “free pension review”.
Tracey McDermott, director of enforcement and financial crime at the FCA, said that most of the companies offering the service are not authorised by the FCA.
It’s worth noting that if people invest with an unregulated provider, they’re unlikely to have any safety nets if something went wrong. That means no right to complain to the financial ombudsman or to claim their money back from the Financial Services Compensation Scheme (FSCS). So keep an eye out!
Warning – zombies!
Consumer group Which? launched its campaign against zombies this month. Yes, that’s right!
Which? estimates that savers are losing £4.3bn each year by keeping their money in poor-value ‘zombie’ bank accounts which used to pay good interest but now pay next to nothing.
Okay, it doesn’t have much to do with the living dead, but it’s almost as scary that 41% of us are putting our savings in accounts that pay us just 0.1% interest. Which?’s campaign is lobbying to make it easier for customers to switch ISAs and for banks to improve the way they let customers know about the end of bonus rates or fixed terms.
We’ll be back next month with more debt news – be sure to watch out for those zombies in the meantime!