Weekly Money: Round-up of the personal finance stories you may have missed 12-16 January

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The stories we noticed this week: bankruptcy limits changed; misleading mobile phone contracts cost us £5.42bn; Pensioner Bonds go on sale; one in six people hides money worries; inflation falls to 0.5%; tax return deadline warning

16 January

There’s good news for people struggling in debt - the minimum amount for which you can be forced into bankruptcy is being raised from £750 to £5,000. The limit was last set in 1986 and the new rules will come into effect in October, Business Minister Jo Swinson announced yesterday.

At the same time the maximum amount of debt that can be covered by Debt Relief Orders – the low-cost alternative to bankruptcy - will increase from £15,000 to £20,000.

The move marks the culmination of a long campaign by debt charities and insolvency firms and follows a call for evidence launched by the Minister last August.

Matt Barlow, CEO of debt charity Christians Against Poverty, said: “We had campaigned for the DRO limit to rise to £30,000 which would have seen more than half of our clients able to afford this debt solution. However, the line had to be drawn somewhere and £20,000 is a good start.”

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Mobile phone customers are losing out on billions of pounds by being on the wrong contract, new research published today reveals.

The study by Which? suggests that mobile users lose out £5.42bn a year by paying for texts, minutes and data they don’t use or through paying extra charges because their phone package is too small.

Some seven in 10 people could save an average £159 a year by switching to a better contract the consumer group reckons. “It’s shocking that consumers are overpaying by billions of pounds for mobile phone contracts that just don’t suit their needs,” said Richard Lloyd of Which? :

“Mobile phone companies must do more to help people get the best deal, making switching hassle-free and ensuring that pricing is transparent. If we don’t see mobile firms making voluntary improvements then we will ask the regulator Ofcom to step in.”

An Ofcom spokesman said: “We want consumers to take advantage of competition and shop around to choose the service which best meets their needs and budget.”

15 January

The Government’s eagerly-awaited market-leading Pensioner Bonds went on sale today - with high demand creating problems on the National Savings and Investments website.

Their popularity came as no surprise - the one-year bond pays 2.8 per cent while the return on the three-year bond is 4 per cent.

“The rates are head and shoulders above the nearest competition, paying 51 per cent more than the average 'top five' one-year fixed rate, and 61 per cent more than the average 'top five' three-year fixed rate,” said Anna Bowes of Savingschampion.co.uk.

Only those aged 65 and over are allowed to invest in the bonds. And then the most you'll be allowed to save will be £10,000 in each bond. But you can put that sum into both of the bonds, meaning pensioners can stash away £20,000 each in the high-paying accounts and couples can put £40,000 in between them.

The Government has set a £10bn limit on the bonds, which means, in effect, that if everyone invested the maximum £20,000, only half a million pensioners would get their hands on a bond. If the issue is over-subscribed then the bonds could be handed out on a first-come, first-served basis. If that happens, anyone applying by post could miss out as online and telephone applications would beat them to the punch. In theory, therefore, online is likely to be the best way to apply.

However with worried pensioners unable to apply online or by phone because of the high demand trying a postal application instead may be a good idea.

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Do you tell loved ones about your financial woes? One in six people have kept secrets by hiding or lying about rent or mortgage troubles, reckons Shelter in a report published today.

People admitted secretly taking out loans, selling items such as jewellery, and even shredding bills to keep their problems hidden. But secret strugglers are losing sleep and heading for relationship problems by bottling up their money troubles.

A quarter of people are losing sleep because they are worried about paying their rent or mortgage while Shelter has had hundreds of thousands of visits to its website during the night from people looking for advice on housing problems.

Shelter’s helpline adviser, Danielle Goodwin said: “We all understand how isolated financial troubles can make you feel, but no-one has to struggle with housing worries alone.”

Talking over money worries with family and friends can help ease the pressure on you. Meanwhile there’s free advice from Shelter on 0808 800 4444.

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First Utility has launched a new iSave Fixed v44 March 2016 dual-fuel tariff which at just £919 a year becomes the cheapest gas and electricity deal on the market.

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Lack of trust in the big banks is leading to children turning their back on them and consequently losing out on interest on their savings, reckons financial education charity MyBnk.

Its research suggests that three-quarters of 11 to 16-year-olds save an average £3.41-a-week - roughly half the average teenager’s pocket money - but the majority of them choose to keep their cash at home.

14 January

Inflation hit 0.5 per cent last month, its lowest level since 2000. Falling petrol prices, as well as lower gas and electricity costs drove the decline, according to the ONS.

That should be good news for savers as accounts now just need to pay 0.63 per cent to beat inflation, for standard-rate taxpayers. But only around half of 634 accounts do, reckons Moneyfacts. Of the 634 non-ISA accounts in the market today, just 331 negate the effects of tax and inflation.

However tax-free Isas offer a much more positive picture with 179 out of 200 with rates that beat inflation.

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Time is running out to complete your self-assessment tax return for the 2013-14 year. The deadline is 31 January. Miss it and you’ll automatically be fined £100.

According to HMRC, 6 per cent of all tax returns were sent in on deadline day last year – which works out at more than half a million. Avoid the stress of last-minute filing by sorting it out this week.

If can’t face it, bear in mind that you can complete your tax return online in small chunks. That means you can do it over several days if you need to make the process less arduous.

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Four out of five DIY wills cause loved ones costly probate fees, reckons the Co-op. It warns that poorly-drafted wills will leave 40,000 estates hit by probate fees this year while more than 2 million UK wills currently in circulation are likely to cause problems when sorting out an estate.

13 January

A record number of people will apply to transfer their credit card between 9pm and 10pm this evening, reckons Confused, after analysing three years of credit card data.

The spike will follow a wave of overspending at Christmas with some 15 per cent of credit card holders sticking more than £1,000 on their credit card in the run-up to the festivities while 22 per cent spent more than they planned. On average, they over-spent by £548.56.

So it’s no surprise that millions are looking for ways to ease their debt burden now. Switching to a lower rate card is a good idea but those that do need to check transfer charges. With fees up to as much as 3 per cent, a transfer could actually add to your debt in the long-term rather than reducing it.

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Around 2 million retiring pensioners will miss out on getting the full new state pension, a freedom of information request has revealed.

Worryingly, under the new pension freedoms due to take effect from April, many may have already spent any private pension savings they have before they find out how much they can expect from their state pension.

Tom McPhail, head of pensions research at Hargreaves Lansdown said: “The new state pension will be complicated in the short -term and many people are likely to get less than they may expect. It is imperative they receive a proper state pension forecast. Without it, they could get a nasty shock when they reach pension age.”

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Leeds Building Society has launched a new 18 month fixed rate cash Isa paying 1.65 per cent tax-free. Transfers in of Isa subscriptions from previous years are allowed as is penalty-free access of up to 25 per cent of the initial investment.

12 January

A new government-backed pensions guidance service to help people sort out their retirement cash in light of new financial freedoms being launched in April will be known as Pension Wise, Andrea Leadsom, economic secretary to the Treasury reveals today.

“It will be a first port of call for people with a defined contribution pension who are approaching retirement,” she said.

From April, more than 300,000 people a year with defined contribution pension savings will be able to do what they want with the cash when they turn 55. The move has attracted much criticism with warnings that it could lead to many people making the wrong decision.

The Age UK charity warned on Saturday that the change could lead to significant numbers of older people running out of money, unless stronger safeguards are put in place.

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Unsecured debt among older homeowners aged 65 or more has jumped 16 per cent in the last year. Retirees are being forced to turn to credit cards, personal loans and overdrafts to make ends meet, according to the Pensioner Debt Index published today by the Equity Release Council.

Total average unsecured debt among retirees jumped from £1,336 a person in December 2013 to £1,546 in December 2014.

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Green energy company Ecotricity has almost doubled in size in just 12 months, founder Dale Vince says today.

“People have been fed up with the Big Six for a long time, that’s not new – it’s just that more people than ever are doing something about it and changing supplier,” he says.

The secret to the company’s success? An ethical pricing policy that means every customer gets the latest best price, regardless of how they pay or when they join, Mr Vince says.

The company topped the 2014 Which? energy customer satisfaction survey and received the lowest number of complaints in the energy industry last year, with only 0.86 complaints per 1000 customers.