Weekly Money: Round-up of the personal finance stories you may have missed 17-21 November

 

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The Independent Online

Unclaimed Premium Bonds; problems with energy bills and tariffs; current account battle heats up; inflation rise hits savings; high investment charges leave us out of pocket; the stories we noticed this week.

21November

There are close to a million Premium Bonds prizes remaining unclaimed, reports National Savings & Investments. Across the country there are more than 928,000 unclaimed prizes worth more than £41m. A woman from London who has £25-worth of Premium Bonds won £100,000 in February 2007 but has yet to claim her prize. Meanwhile a Manchester woman with £280 invested hasn’t claimed £100,000 she won in September 2010.

With so many prizes still up for grabs, it may be a good time to check whether you have a prize owing to you. You can do so by putting your Premium Bond number in at the home page of the NS&I website at nsandi.com.

It’s a good idea to sign-up to have winnings paid directly into your bank accounts to reduce the chances of prizes going unclaimed in future if you move home, for instance.

* * *

Millions of people are still struggling to understand electricity and gas bills. That’s according to research from GoCompare which revealed people complaining about “Overly complicated calculations and terminology”.

That’s despite the introduction in the Spring of new rules from energy regulator Ofgem requiring energy companies to simplify bills.

* * *

The cost of a home phone has increased by more than a quarter since 2011 says uSwitch. The latest wave of price hikes will see both BT and Virgin increase the monthly cost of renting a landline to £16.99.  It means consumers will pay an extra £42 per year on average.

Ewan Taylor-Gibson of uSwitch, says: “Landlines are, in most cases, a requirement for home broadband, so many of us have little choice but to pay the increase.”

20 November

Buying a home typically becomes more cost-effective than renting after five years, reckons property website Zoopla. It has calculated that the cost of a repayment mortgage for someone with 10 per cent equity in their home is around £316 a month more expensive than renting an equivalent property.

But home owners become better off than renters within five years because the equity in their home rises as they pay off their mortgage while at the same time, a property’s value can rise.

* * *

Property values have climbed 12.1 per cent in the last year marking the fastest annual rise since July 2007, according to the latest index from the Office for National Statistics.

It means the average house price is now £273,000 – up almost £30,000 from the £245,000 recorded in September 2013.

* * *

One in five people say they can’t afford to celebrate Christmas this year because of the cost. Meanwhile, one in three dread the yuletide season because they can’t afford it, according to the Debt Advisory Centre.

It warns that many of those borrowing to cover Christmas this year will simply be adding new debts on top of existing ones. But the best thing to do is budget and stick to it, and start saving now for next Christmas. To help, I’ve made a video explaining how to avoid going into the red this Christmas. You can watch it at ind.pn/1xUJ9jl

* * *

Energy watchdog Ofgem has begun publishing customer complaint handling figures so you can compare how the six largest gas and electricity companies have done. To check how well or badly your supplier has performed go to bit.ly/1Hlg7hp

19 November

Energy suppliers are failing to provide customers with enough information to accurately compare tariffs. That’s according to a Which? investigation which put gas and electricity firms to the test by asking them about the Tariff Comparison Rate – the regulator’s new price comparison tool for consumers.

On just four calls, 5 per cent of those made, was accurate information given. Which? executive director, Richard Lloyd, said: “If the energy companies can’t even explain how to accurately compare tariffs then their customers stand no chance.”

An Ofgem spokesperson said: “Suppliers must also provide tariff comparison rates on all communications which are regularly sent to customers, such as bills and annual statements. We are monitoring compliance with these reforms closely.”

* * *

The current account battle has been joined by Yorkshire Bank (and Clydesdale Bank) with a market-leading £150 switching handout.

Halifax, First Direct and The Co-operative Bank already offer a £100 to new customers with the Co-op also giving £25 to charity when you switch.

“As much as a cash incentive may sound appealing, it shouldn’t be the basis on which you choose your current account,” warns Andrew Hagger of Moneycomms.

If you want credit interest, TSB pays 5 per cent upto £2,000 but if a low-cost overdraft is your priority then beware banks charging daily or monthly fees including Halifax, Barclays, Santander, Lloyds, NatWest and TSB, he says.

***

Inflation climbed to 1.3 per cent last month putting millions of savers at risk of losing money in real terms on their nest egg.

That’s because inflation erodes the value of your cash and the only way to make it grow is to keep it in an account that pays more than inflation.

A standard deposit account paying 1.4 per cent just won’t do that. That’s because you pay tax on the interest, unless you’re a non-taxpayer.

In fact if you’re a basic rate taxpayer at 20 per cent you’ll need to find a savings account paying at least 1.63 per cent.

If you’re a higher rate taxpayer at 40 per cent the situation is even worse and you’ll need an account that pays at least 2.17 per cent to beat inflation.

Moneyfacts reckons that of the 619 non-Isa accounts on the market right now, just 137 negate the effects of tax and inflation for a basic-rate taxpayer.

***

One in three of us will pay for Christmas on credit.

Why do so many of us struggle to pay for seasonal delights? Well, the average cost of Christmas per person is expected to be £508 this year.

So that means many of those enjoying the festivities will wake up in the New Year with a financial hangover.

The simplest way to avoid getting into a New Year financial mess is not to spend more than you can afford.

To do that you need to budget carefully: make a list of all the people you’re buying presents for and how much money you have available. Then allocate a set amount to each person.

If you are determined to borrow to pay for Christmas then don’t be tempted by expensive payday loans or store cards.

Use an overdraft if you need to – but tell your bank first and agree a limit.

Or you could get a credit card that charges 0 per cent on purchases. Right now you can get 20 months interest free with the Halifax.

The best thing to do is Budget and stick to it, and start saving now for next Christmas.

18 November

Worried about relatives or friends struggling to pay energy bills? The Surviving Winter appeal launched yesterday to raise cash for people facing fuel poverty in the colder months.

The appeal, run by UK Community Foundations, began as a way to recycle Winter Fuel Payments that people didn’t feel that they needed.

Now it’s expanded to take in donations from all and the cash is used pay for individual bursaries for fuel bills and hot water bottles through to lunch clubs for older people and boiler repairs.

It’s supported by charity Turn2us, whose director Alison Taylor said: “We hear daily from people struggling to pay their energy bills and the devastating impact this has on their lives.

“Two-fifths of people affected by fuel poverty have been forced to cut back on food or skip meals and over two-thirds have experienced stress.” For information about the campaign go to www.survivingwinter.org.uk

* * *

High charges on Isas, investment funds and pensions are leaving millions of savers out of pocket, reckons the Financial Service Consumer Panel, In a report published this week it has asked for investment managers to be required to quote a single and comprehensive annual charge. The FSCP said: “It is unacceptable that consumers do not know what firms are charging them to manage money on their behalf, and cannot compare different offers.”

The Investment Management Association has developed a measure that tells consumers, in pounds and pence, how much a unit in a fund grew and how much it cost to achieve that growth. But chief executive Daniel Godfrey admitted: “There is more to do.”

17 November

Bills cost a lot more than most of us think. A study published today suggests that on average we underestimate regular outgoings by as much as £770.

Not having knowledge of household costs means it’s almost impossible to budget properly, as we’ll end up with less money than we thought.

Bill payers underestimate spending on gas by £279 a year, electricity by £91, council tax by £721 and water by £65, reckons Santander. However we overestimate the cost of TV, phone and broadband bills by £386.

David Mann, head of money at uSwitch.com, said: “Consumers are in a lose-lose situation with everything shooting up except for their income. It’s time to start paying serious attention to managing household bills. By cutting the amount you spend on the essentials, you’ll have more money to spend on the non-essentials, which is welcome news at this time of year.”

***

Did you know that quoted broadband speeds only need to apply to 10 per cent of customers to meet advertising guidelines? It means the chance of you getting the speed your broadband supplier offers, are one in 10.

That’s not good enough, reckons Which? after its research showed that consumers consider speed to be the second most important factor when choosing broadband, beaten only by price.

Which? executive director, Richard Lloyd, said: “Internet connection is now an essential part of modern life so it beggars belief that providers can sell people short by advertising speeds that only 10 per cent of customers could receive.

“We want advertising watchdogs to pull the plug on confusing adverts and ensure broadband providers show the speeds the majority of customers will actually get.”

***

Soaring rent rises are likely to leave nearly 6 million private renters living in poverty by 2040, warns the Joseph Rowntree Foundation.

Forecasts by experts at Heriot-Watt University suggest that private rents will rise twice as fast as incomes and by 2040 10.6 million people will be living in private rented homes, up from 7.2 million today. Half will be in poverty, a rise of 2.6 million.

Julia Unwin, Chief Executive at JRF, said: “After decades of failing to build enough, those in power have a responsibility to act now to build more genuinely affordable homes. Without that we are storing up trouble for the future.”

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