Weekly Money: the essential stories we noticed 12 to 16 October

The personal finance news you may have missed this week

Don't be pushed into taking the wrong deal (Reuters)

16 October

If your home or car insurance is due for renewal before 12 November you could be end better off cancelling the existing policy and starting a new one on 31 October. That’s because insurance premium tax is climbing from 6 per cent to 9.5 per cent on 1 November.

The move, announced by the Chancellor in the summer Budget, will see insurance prices rising. The Association of British Insurers has warned that the new rate could add £9.48 to the average home policy and £12.25 to the average car cover. But young drivers will be especially hit by the increase and facing average policy increases of £40, warns uSwitch.

The comparison site has calculated that if a policy is due for renewal in the first 12 days of November, it could make sense to cancel it and take out a new policy on 31 October, even though you won’t get any money back for the remaining days of cover.

However, it’s important that you look at your policy carefully to see how long is left and if you’ll face any exit fees before deciding to cancel – as well as ensuring you’re not double covered.

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Billions of pounds worth of consumer loyalty points that could otherwise be spent on flights, holidays, days out, or groceries are sitting unclaimed in the cards of British wallets, according to new research. It suggests that 8 million haven’t redeemed their points in the past year, with 3 million having never cashed them in.

Part of the problem is that people don’t know their balances and have no idea of what points are worth or what they could get with them. But a new free app allows savvy shoppers to store cards, collect points, view balances, and check for rewards from their smartphone. Loyalive can be downloaded through iTunes or Google Play.

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Britain’s biggest challenger banks have called on the competition watchdog to shake up the current accounts market to let them compete fairly with the big high-street banks. “The industry portrays the myth that current account banking is free,” said Paul Pester, chief executive of TSB. “But we reckon [it] makes £7bn to £8bn a year from current accounts.”

The Competition and Markets Authority is due to publish its details of progress on its investigation into the banking market next week. Challenger banks have asked for changes to make it easier for them to compete with the big institutions.

Jayne-Anne Gadhia, Virgin Money’s chief, said: “The CMA should make banks pay the going rate of interest on current account balances, as we do, which would make more banks think about starting to charge for current accounts.”

15 October

Pre-pay energy provider Utilita has been fined £560,000 after it was caught blocking customers from switching to rivals. It wrongly stopped 40,000 people from switching between June 2010 and May 2015.

Customers were incorrectly blocked in a variety of ways, including automatically blocking those on fixed term contracts. It also failed to explain to customers why their switch had been blocked. Utilita will pay £450,000 to the debt help charity StepChange and is also working to refund £110,000 to customers who lost out financially.

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Millions of people could have benefited from money advice at key times of their lives but failed to get it. In a damning criticism of the way financial advice is handed to consumers, Citizens Advice found that around half would have taken financial advice about when they were going through big life changes if they had been offered it.

Having advice at key times - such as when they have a baby, buy a house, get divorced or fall ill - could help people avoid financial problems in the future, the charity said.

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Three credit unions have linked to offer simple savings accounts and loans to the Armed Forces and their families. The new service means military will be able to save regularly or repay loans via payroll deduction. Family members and retired personnel are also eligible. It’s being launched today to mark International Credit Union Day.

The government has selected three of Britain’s most successful credit unions – Plane Saver, Police Union and London Mutual – to offer the service to Forces personnel. You can get full details at www.joiningforcescu.co.uk

14 October

Would you be able to rustle up £200 in a hurry? One in three of us couldn’t find the cash in an emergency. A fifth admit they would have to borrow the money or sell a personal possession to fund such a one-off expense, with a further one in 10 saying they simply could not pay, according to the University of Birmingham.

Its latest Financial Inclusion report reveals that the majority of the population is still cutting back on spending – and those at the bottom are struggling ever more. “The welfare cuts from 2010 onwards are starting to bite, which we can see in various indicators – not least the increase in possession orders granted to landlords, from 95,000 in 2010 to more than 120,000 in 2014,” said Karen Rowlingson, professor of social policy at the University. “An increasing number of people are at risk of losing the roof over their heads.”

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A quarter of adults hasn’t saved a penny in the last year. According to Post Office Money’s Future of Savings study 13 million adults saved nothing in the last 12 months while, worryingly more than eight million have never saved at all.

That raises fears of a savings ‘black spot’ with millions of people unprepared for a rainy day when they would need savings for unforeseen circumstances that may arise, such as a broken boiler or car, for instance. “A particular cause for concern is the eight million adults who have never saved at all, and are unlikely to have a safety net should they need one,” warned Nick Kennett of Post Office Money.

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If you live on Kirkwall, in the Orkney Islands, you’re likely to have the best credit score in the country. Analysis of almost 10 million Brits suggests someone on the Scottish island would score 454, a fifth higher than the national average of 380, according to ClearScore. At the other end of the scale, the worst average credit score of 361 is found in south-east London. followed closely by east London.

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The cost of handing over wealth to descendants has climbed 3 per cent as Brits are forced to hand-over £3bn a year to the government in inheritance tax. The average death tax bill rose almost £5,000 in a year to £170,000, according to analysis of HM Revenue and Customs data. But only a tiny minority of people fall foul of the tax laws when they die as their estates are too small.

HMRC reviewed nearly 280,000 estates in the 2012-2013 tax year, the latest year for which information is available, but inheritance tax was paid by just six per cent – 17,900 estates.

13 October

Struggling households could be missing out on savings on water bills. Most water companies in England and Wales now offer reduced ‘social tariffs’ for customers on lower incomes, points out the Consumer Council for Water.

Meanwhile if you’re on a water meter but have high usage needs due to a large family or a medical condition, and you also receive income-related benefits, then the WaterSure limits the amount you are charged each year. For details of help go online to ccwater.org.uk/savewaterandmoney/

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Good news for credit card borrowers: the number of low rate cards - that charge 12 per cent or less - has grown by a third in the past two years. The cheapest purchase card now on offer from Bank of Scotland charges just 6.4 per cent APR and is the lowest rate card on the market since 2006, reports Moneyfacts.

But it warns that borrowers should be wary of making cash withdrawals on the cards as costs can be much higher. For instance, MBNA charges a whopping 27.9 per cent on its Low Rate card, four-times the interest it charges for purchases. “In addition, cash withdrawals can also incur a separate fee, often around 3 per cent,” warns Rachel Springall of Moneyfacts.

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Here’s a sobering figure for new parents to consider: if you’re hoping to send your baby to university for a three-year course in 18 years’ time, you need to invest up to £228.17 per month now to cover the cost.

The numbers have been crunched by Rplan, which reckons the amount needed in 2033 will be £74,307.08. (And that’s based on the current fee level of £9,000, while £8,000 annual living expenses have been adjusted for 2 per cent yearly inflation!)

12 October

If you’re going to reach state pension age by 6 April 2016, from today, you can buy additional state pension to boost your retirement income. In return for a lump sum, you can lock-in a guaranteed inflation-protected income for the rest of your life. The maximum you can buy is £25 per week, which for a 65 year old would mean paying out £22,250. If you have those sort of savings to hand, is it worth it?

“The price compares favourably with what it would cost someone in good health to buy a private pension annuity but if you value flexibility over how much income to take, paying more into a private pension instead is worth considering,” says Steven Cameron of Aegon.

There is another alternative – deferring taking the state pension – that would achieve much the same result but cost up to 59 per cent less for higher-rate taxpayers, 45 per cent less for standard-rate payers and nearly 30 per cent less for non-taxpayers.

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The Treasury and the Financial Conduct Authority has today launched an investigation on how to improve consumer’s access to financial advice. The study will examine the kind of financial advice that consumers want and ask whether there are gaps between what we want, and what we can access and afford.

It will also be asking if there is an advice gap – which there certainly appears to be - how can it be closed? And could technology, such as robo-advice – help? Tracey McDermott, acting CEO at the FCA said: “The financial decisions people make can have long reaching effects. It is important that the market provides accessible and affordable advice when people need it.”

What’s your view? Do you know where to go for advice? Could you afford it? Does it matter? Get in touch with your views and we’ll pass them onto the authorities before their consultation closes on 22 December. Email me at s.read@independent.co.uk