Choosing an online current account
Banking over the Internet has transformed the way many people deal with their personal finances. Online current accounts mean people have access to their cash 24 hours a day, seven days a week, 365 days a year. They can also move money around and pay bills however they choose. All this means people are potentially more in touch and in control with their money than ever before. But the virtual high street is now as competitive as the one in the real world, and it can be difficult to know which bank to choose.
Applying for online current accounts is done in much the same way as regular banking. If you have a current account with an offline bank the chances are they will already be able to offer you Internet banking free of charge. Some banks exist only on the internet, or are internet versions of big high street names.
Running an account online has posed security questions, and fraudsters have attempted to break into people’s accounts by sending them emails pretending to be from their bank. This is sometimes known as phishing - remember your bank will never send you and email asking you to confirm your security details. If you get one like this, the general advice is to ignore it, or contact your bank via phone if you are unsure about its authenticity. Banks also keep records of the various ways people try to commit fraud, so reporting phishing is important for prevention.
Banks will provide various ways of protecting online current accounts. Your security is also their security, so you will normally be provided with a unique serial number or user name and password. This is normally just one level of protection, and an account can also involve second passwords with drop down menus so you can select the characters rather than type them. Some providers even supply code generators to customers, which someone uses to get a digit based password, which must match up with the one active on the account at that time.
One of the main benefits of online accounts is that firms have found running a bank over the Internet can reduce costs. Its usability and smoothness means customers can do many things they would previously have had to go to a branch or ring a phone line for. This means banks have tried to tempt customers with attractive initial interest rates.
Not only can you see an up to date version of your bank statement, potentially eliminating the need for paperwork, online current accounts can offer many extras including text message updates and even SMS warnings when you are about to go over your overdraft limit. Some will issue a charge for this rather than providing it for free, and people who like to be as in touch as possible with their finances might want to check what is included with each potential package. Once it is set up however, a bank account online can reduce the need to join frustrating queues at the branch, and waiting on the end of the phone listening to a banal hold tone can also become a thing of the past.
The Importance of Life Insurance
With the credit crunch raging around the globe, it’s hard to turn on the TV or pick up a paper without being told we need to be preparing for the future right now, and making sure that our families are protected financially in these turbulent times.
A lot of people have taken that to mean reducing expenditure wherever possible, cutting back on all manner of financial services – often including life insurance.
Unfortunately, this can be seen as a major example of false economy. While it can be tempting to save every last penny for a rainy day (especially giving the recently-shaky state of world finance), one of the major downsides of a global slowdown is that it becomes much harder to cope if half of your household income were to suddenly disappear – as would happen should you or your spouse pass away suddenly.
While such a situation is usually a strain on your finances (quite beyond the terrible emotional stresses that come with a recent bereavement), the credit crunch can make these strains much worse. A small premium per month can provide a cash lump sum that will help keep your family afloat should the worst happen.
Although it’s easy to dismiss this as something that won’t happen to you – after all, isn’t everyone secretly convinced they’re going to live to be a hundred? – a look at the statistics shows that dying can be an expensive business. The cost of a funeral alone can be staggering.
A recent survey from AXA Sun Life Direct indicated that the average expenditure on a funeral had risen 6.6% in the last year, going up to £2,549 – £2,287 for cremations, with an average burial cost of £2,811. Add onto that other possible expenses – medical care, for example, mortgage payments, repayments on loans, or even having to support children on a dramatically reduced household income – and it’s not difficult to see why so many people elect to pay into a life insurance scheme.
There are many different options available, tailored to your individual needs, so it shouldn’t be at all difficult for you to find a payment plan that meets both the amount you’d want to pay in each month and what you deem to be a large enough payout to cover your loves ones in case tragedy struck. Yes, it’s a hassle – more so than most insurances, as the majority of providers require you to have a physical examination before they’ll insure you – but for the peace of mind you can get as a result, it’s often worth it.
While most people understand that it’s vitally important to prepare for the future, no one likes to talk about death – especially their own. However, life insurance can be a very worthwhile investment, and – for what usually amounts to a relatively small premium – can provide your family with a real safety net should you pass away, helping to reduce their financial pressures and allowing them to grieve without worrying about funeral expenses and other pressing outgoings.
Remortgages explained
Most people find that the single biggest expense of their life is a mortgage. After all it is a giant loan taken out to buy a house, which involves borrowing, say, £100,000. Some people wrongly believe that once you are on a mortgage it’s impossible to change it, but the reality is you are free to switch to remortgages supplied by different providers if you feel you are losing out with your current deal. A few simple adjustments can even make someone over £100 a month better off.
Remortgages can be quite difficult to understand however, and this can put some people off researching the process properly. But to give an example if someone has a repayment mortgage of £100,000 pounds and is paying six per cent interest, switching halfway through a 25 year deal to a five per cent interest mortgage could save somebody a tidy sum of money. There is also nothing to stop someone switching more frequently, perhaps even every two or three years.
Not only can remortgages save you money they can also help to raise cash if your house has risen in value. Jumps in prices in the last decade mean people’s houses are still worth more than what they paid for them. So, remortgaging essentially involves putting the difference in your pocket.
Remortgaging can also be used by people whose circumstances have improved. Someone might be on a much better salary that when they took out the home loan, or may have inherited a large amount of cash. Maybe they want to increase their repayments but their current deal does not allow them to. Changing to a new home loan may help them do this.
A catch with remortgaging is that you will probably have to pay costs when you break off from your loan provider. Remember it is important to work out your figures and to make sure your new deal you will end up saving you more than you spend on changing it, otherwise there’s no point in the switch. In simple terms you are likely to have to pay a first fee to leave your existing provider, and also a fee for joining the new one.
Those on certain deals will have to pay early repayment charges, and may also have to pay a kind of release charge or mortgage exit administration fee. These are designed to cover administration costs, and have come under some scrutiny from the Financial Services Authority (FSA) - remember to check that what you are quoted to leave is the same as in the small print of your original mortgage wording.
Finally the arrangement fee for your new provider can vary from a few hundred pounds up to over £1,000. Some will let you incorporate the charges into the home loan, but remember this will also incur interest. Another thing to look out for with remortgages is whether or not your new provider will be prepared to pay your legal fees, which will apply even if someone doesn’t want to move house when setting up new product.
Save Money on Your Insurance Premiums
Insurance premiums can be one of your major annual outgoings, but they don’t have to eat up quite so much of your yearly earnings. Here are six ways to reduce the amount of money you spend protecting things you already own:
1. Make sure you know what you need.
Why is your non-existent bicycle covered against theft? It’s easy to get caught out by insurance packages that include things you’re never going to claim on in a million years, and many of these can be removed. There’s no point in paying money for things that go too far above and beyond your requirements, and so you need to sit down and make sure you know exactly what you’re looking for before you even start searching for a package. It might take an extra ten minutes or so, but it could save you a fortune.
2. Don’t be afraid to switch.
Whenever your premiums are coming up for renewal, it’s good practice to have a quick look around the marketplace to see if there are any introductory offers with competing firms that might offer you a better deal. While you can lose out by switching – if, for example, you have a non-transferable no claims bonus on your car insurance – but the money you can save is often enough to offset this and make it worthwhile. And so what if the rates increase next year? You can always switch your provider again. It can be a lot of work, but it’s often worth the money.
3. Look for package deals.
Buying house, car and pet insurance? See if you can get a bundle deal from one company. In exchange for taking out several policies, a lot of companies will offer you not-insubstantial discounts that might make it worthwhile. It’s certainly worth asking about, if you have several policies that need renewing.
4. Buy online.
While a considerable number of people in this digital age use the internet to streamline their search for better insurance deals, there are still some who prefer the old-fashioned route. Unfortunately, it may be time for these individuals to get online, as several big-name insurance providers (are offering hefty discounts for doing nothing more complex than ordering online – often as much as 10%. They can save on personnel costs, and they pass the savings onto you: everyone wins, and it’s remarkably simple to do.
5. Save up throughout the year.
When your insurance payment is due, it’s common practice for you to be sent a quote for the full amount payable. This is often a substantial amount of money, and one that you might not have ready to pay at that specific date. If you fall into this category, it’s possible make arrangements to settle up in instalments… but of course, this will incur finance fees that you wouldn’t otherwise have to pay. One of the easiest ways to cut this out is by saving throughout the year, making sure you have enough money ready to pay your insurance premium in full. Why pay more than you have to when a little planning can save you money?
6. Change your lifestyle.
Sometimes, a few simple changes can make a large amount of difference to the cost of your insurance. Fitting fire extinguishers, driving to work, and parking your car in a garage have all been known to lower your risk rating, and make the insurance companies view you more favourably. Ask when you’re looking for the policy to see if there’s any minor alterations you can make that would lower the cost.
What are homeowner loans?
Homeowner loans, as the title suggests, can be applied for by people who actually own their home, ie they are not renting where they live and have a mortgage on the house, or they own it outright. These loans can usually be applied for quite large amounts, in the tens of thousands of pounds, so they can be useful for big projects or outlays on expensive items like cars.
A homeowner loan can sometimes also be known as a secured loan. This type of borrowing is literally secured against a property, ie your home is offered as collateral or as a guarantee that you will pay the money back. If you can’t pay back the cash and struggle to keep up with repayments, the provider can repossess the home or part of it in order to get back what they have lent you.
Secured loans do not always just apply to houses, occasionally other things like cars can be used, particularly if the money itself has been used to purchase the vehicle.
Secured or homeowner loans can sometimes be used for debt consolidation, meaning someone can get quite a large amount from the provider, use this money to pay off a number of debts they might be having difficulty with, and then have the benefit of being able to concentrate on one large loan. Because a home is used as a security in the deal, lenders are usually quite prepared to offer larger amounts, up to around 25,000 pounds, for example.
As with all types of borrowing your provider will expect to receive interest. This is also known as APR or annual percentage rate. This rate will vary depending on the market in general, the value of the actual home being offered as security, the individual company’s attitudes towards the applicants, and also a straightforward credit rating. Some consumers may have noticed that there is a small print catch attached to advertised APR rates, saying ‘typical’ or ‘variable’. The typical part applies to the fact that rates can go down and up and one which is on all the promotional material might apply to the average consumer and not to every individual who applies.
Although you can compare quite a large range of secured loans quite quickly through websites and brokers, sometimes the best way to shop around and find out what is out there is to apply for a number and look at different rates that different providers are prepared to give you.
It is also worth bearing in mind that homeowner loans availability can change depending on the financial climate, and house prices can sometimes dictate how much is available and at what rate. The lower someone’s house falls in value, effectively the less security someone is offering when they apply for such a loan. However, this form of secured loan remains one of the most effective ways to borrow a large amount of money, and finding the best rate over the best payment period is usually the most effective way of getting a good value one.
Six Simple Ways to Ease the Credit Crunch
Like it or not, the country – and indeed, most of the world – is in the icy grip of the credit crunch. However, there are ways to help make these financial straits a little easier to bear. Here are six tips to help you weather the current monetary storm:
1. Set a budget (and stick to it).
This is really the golden rule of personal finance. Make sure you know exactly how much you have, exactly how much you need, and exactly how much you have left over at the end of the month. If you do this, and make sure you always have a little bit extra tucked away in case of an unforeseen emergency – a boiler breakdown in the middle of January, or your car’s engine finally giving up the ghost and needing a trip to the garage – the credit crunch won’t cause you too many problems. Aim for three months’ typical expenditure (six months’ worth, if you’re self-employed), and you’ll find a lot of worries disappear from your shoulders.
2. Pay off your debts.
Just because money’s tight, it doesn’t mean that you can afford to forget about your debts. The more you can pay off and still live comfortably, the better you’ll be in the long run, as you’ll end up paying back less interest. Try and put as much as possible towards your repayments, and avoid only paying back the monthly minimum if you can at all avoid it.
3. Try second-hand.
If you absolutely have to make a big purchase – furniture, for example, or white goods and electrical products – you might want to consider trying second-hand shops and other non-new retail outlets. It’s possible to pick up some real bargains… and besides, does it really matter if your washing machine isn’t fresh out of the showroom?
4. Don’t be afraid to haggle.
If you’re making a big purchase and second-hand doesn’t really work for you, don’t be afraid to haggle. Most major retail outlets (especially for larger items) have some degree of flexibility with prices, and may be able to make you an offer. While it might not amount to much, you don’t get anything if you don’t ask. What have you got to lose?
5. Use your loyalty points.
The vast majority of people have loyalty cards tucked away in their purse or wallet, slowly accumulating points that can be redeemed for store credit, special offers, or reduced prices on getaways or other out-of-store treats. Now’s the time to cash them in, and get back some of the (often surprisingly large amount) of money that you’ve got saved up on your plastic. After all, it’s not gaining interest, and it’s tied up in a very specific place. If you’re going to be making a purchase at a shop you’re in a points-scheme with already, it should help to keep a few more pennies about your person – and every little helps.
6. Keep looking.
Even if you think you’re pretty well bunkered-in as far riding out the credit crunch goes, there are always savings to be made – especially in uncertain times like these, where the financial playing field can shift rapidly. If you pride yourself on being financially savvy, it doesn’t hurt to keep a lookout for new offers and deals coming up that could save you considerable amounts of money.
Choosing your car breakdown cover
Standing by the side of the road with a mobile phone glued to one ear and steam coming from underneath the bonnet is every motorist’s nightmare. But breakdown cover can help you get back on the road quickly in the event of a problem, and some companies will even ensure you have accommodation for the night if you are away from home. Many services now go way beyond a straightforward mechanic and van, and it can pay to compare what different companies are providing at what price.
Policies generally come in different forms and will protect either a person, no matter what they are driving, their own car or someone else’s, or a car itself. Policies which protect people across any vehicle can be helpful for large families who like to share and swap cars, whereas a scheme which only protects a single vehicle is handy or for someone who always expects to be in the same car.
Prices are often worked out differently from one provider to the next. Some people charge their breakdown cover according to the type of car and others go by the age of the car, someone’s average annual mileage, and how old the person driving the vehicle is. People who are seen as driving a car with a high likelihood of breakdown may find that their regular charges are higher and might want to go for a fixed price system. This thinking works both ways in that people who drive a very new and reliable car may want something more risk based.
Many of the larger providers will send out a patrol vehicle when you call a hotline, and some can even locate you with your mobile phone signal. The mechanic will then either fix your vehicle by the road or tow it to the nearest garage for repair. This may mean you are seen to quicker and your car is back on the road faster, but accordingly this type of service tends to be more expensive.
Other firms allow someone to use a local recovery firm to pick you up, invite you to pay for any repairs as necessary, and then request that you fill in a claim form to get the money back. This may involve more legwork when dealing with a breakdown, but may save you money on a cover premium.
Some firms operate an insurance type system where people who do not make a claim or call out can expect their premium to go down over time. Others may provide special offers to people who drive very new cars.
People who travel abroad regularly may also want to look at European breakdown cover. Although you may not want one start with, it can be worth asking your potential provider how much they would charge for this extra. Ending up with a breakdown while abroad can be more expensive than at home, and car insurance and travel insurance firms rarely cover someone for such an instance. Getting a vehicle home if it cannot be fixed abroad can be a particular expense someone may want to find out if they are covered for.
Protect your four legged friend with dog insurance
A pet dog can sometimes need a trip to the vets and run up to considerable bills. Some major accidents can end up with surgery, and thousands of pounds to pay if someone does not have the right dog insurance policy in place. Cover is not terribly dissimilar from human health insurance, and does not need to be massively expensive.
Policies are available from a wide number of providers and therefore there is competition between quotes. Typical things to look for might be the limits on policies and what exactly is included.
Most dog insurance policies can reasonably be expected to cover things like any treatment needed after having an accident or illnesses. Some common handy extras include cash towards advertising in the local press if an animal goes missing or is stolen.
Most policies will not only payout to cover large vet fees, up to set limits, but will also provide someone with a cash lump sum in the event of the dog’s death. Dogs cannot time when they get ill, and this means sometimes they need treatment just before someone goes on holiday. If someone needs to cancel their break, many policies will provide a cash lump sum by way of compensation.
Many pet care centres are now open and run along the same lines as a GP’s surgery. Dogs can expect a high standard of care and can also usually be seen to promptly. Of course, all this costs cash, and it is important to make sure that a policy goes high enough. If it does not cover the costs of a major stomach operation, for example, it may be worth getting a quote for something a little more expensive.
As with humans, companies do not usually pay out for existing conditions. This means you can expect not to be able to claim if a dog has to go to the vets for a condition which was diagnosed before the policy was taken out. As with people, younger dogs usually attract lower premiums than older ones.
When comparing dog insurance policies it is also worth looking out for any regular kind of treatment that may or may not be included. Things like worming and flea treatments can add up over time, and what is known as a routine care plan can be included in a policy to help pay for these. It’s also worth taking a close look at exactly the kind of problems a policy covers. This normally should include emergency treatment after a road accident, bites, treatment if they have swallowed something inappropriate, ear infections, gastroenteritis, and cuts, plus growths and abscesses.
A dog insurance policy normally involves someone paying for the treatment themselves and then filling out an application form in order to claim the money back. Therefore someone also needs look at their own finances to make sure they have the least some means to pay for an expensive procedure in the short-term until they can claim that the money from an insurer.
Debt Consolidation Loans
Debt consolidation loans are often considered to be the bogeyman of personal finance. Wherever you go, you hear horror stories of people who have been burned by high interest rates, foreclosures and repossessions after turning to consolidation companies in their greatest time of need. However, while it is possible to get stung pretty badly by some unscrupulous companies, consolidating your loans needn’t be the end of the line for your finances.
So, why consolidate? There are several reasons. It’s often done as an attempt to capitalise on introductory offers with a loan company (such as a lower interest rate, rather than the higher rates you might be paying on often-extortionate store and credit cards), to get a fixed rate of interest for your debts, or even just as a means of keeping your bills under control: the now-infamous ‘one simple monthly payment’ that is so often used in advertising campaigns. These are all valid excuses to see about getting a debt consolidation loan, but it’s important to note that it’s not a magic-bullet solution to debt; you might only have one creditor to pay back, but it still needs paying. Additionally, many such loans offer a longer repayment time, meaning that – while you’re paying back less each month – the total amount repayable may be considerably higher.
Similarly, although it is possible to get a debt consolidation loan that merely merges a number of unsecured loans into one unsecured loan, you’ll generally find it’s easier to get a more favourable interest rate should you agree to secure your loan with some form of collateral (usually a house). In this case, the bank or other lending institution can write off a lot of the risk associated with the loan – if you default they can foreclose on your property, and so can recoup much of their losses – and as a result are able to offer you a lower interest rate. Once again, though, it’s important to note that these loans can come with a longer repayment period, and so may cost more in the long run. If you don’t have anything to use as collateral (if, for example, you’re a student, or someone who’s yet to get a foot on the property ladder), it should still be possible to consolidate your debts, but you may end up paying more per month for the privilege.
Debt consolidation isn’t for everyone – and there are some people who may find themselves considerably worse off as a result – but there are much fewer examples of so-called ‘predatory lending’ (that is, when unscrupulous institutions actively seek out people who are near bankruptcy in order to charge them higher prices for what amounts to a riskier loan) than the media would have you believe. The usual rules for finance apply here the same as everywhere else: shop around, make sure you’re getting the best deal, don’t overreach your repayment capacity, and don’t be afraid to talk to a financial advisor if you’re really struggling.
Similarly, don’t feel as though debt consolidation is your only option, especially if you’re worried about credit cards or loan repayments; there are many alternative methods (including the much-lauded ‘debt snowball’) that may be more suited to your personal circumstances. However, debt consolidation loans are a useful tool for a fair percentage of debt holders, and so it’s crucial that you don’t write them off as a result of bad press or unfair media reporting.
ASU Insurance explained
It is a sad fact that anyone can find themselves without income for reasons that are entirely beyond their control. Whether this is due to redundancy, long-term illness or an accident, the problems arising can prove to be a major cause of stress.
Accident Sickness and Unemployment insurance ( or “ASU” ) may provide cover against loss of income due to prolonged illness, accidents (occupational or otherwise) and traditional redundancy.
ASU policies will a tax free regular monthly income payments for up to 12-24 months, depending on the individual provider’s policy terms and conditions in the event of the policyholder becoming unable to work due to unemployment or incapacity.
These policies may offer significant peace of mind for many people, particularly those who have a total family income based heavily upon one person’s salary. If that person’s income is suddenly lost, then for some an ASU policy could make the difference between ‘coping’ and disaster.
As is frequently the case with insurance policies, the broadness and depth of the cover provided is often directly related to the cost of the premiums and there are large numbers of products and variations of cover available in the marketplace. In addition, as income payment protection policies can be high risk for insurance companies, they typically can be selective about who they sell these policies to and at what cost.
The combinations of circumstances here are too many to outline in detail but in general it may prove difficult to obtain these sorts of policies if there is
- An existing serious medical condition
- Participation in dangerous sports or pastimes
- Occupational work within a high-risk of injury environment
- A fragmented or incomplete work history
In such circumstances it may be possible to take out the policy but usually at the cost of significantly higher premiums, a reduction in the amount payable in the event of a claim, or the exclusion of certain aspects of the cover.
Most insurers will not accept claims in the event that the loss of income was intentional such as through resignation etc.
Typically with these types of policies, a claimant should anticipate a delay of some months before the first payment is made, typically 30-90 days after the covered event happens
As always, the policy details should be checked thoroughly before purchase to avoid surprises in the hopefully unlikely event of a claim.
It is also important to note that ASU policies should be kept up-to-date if circumstances change. A claim for loss of income due to (e.g.) a broken leg may not be well received if it transpires the accident occurred while parachuting – unless this had been originally declared when the policy was opened. Also with these policies it may well be obligatory to notify the insurance company should the nature of the policyholder’s occupation change.
In summary, ASU policies may be invaluable in helping protect an individual and their family against the unforeseen though care must be taken to ensure that the policy and cover selected is fit for purpose.
ASU policies may offer cover against loss of income due to a number of factors including sickness and accidents
- They can offer significant peace of mind
- The Insurance companies may impose some restraints on who can purchase an ASU policy or higher premiums for people in certain higher-risk circumstances.
- There may be a period of some months after a claim is lodged before any benefits are payable.