Monthly Archives: January 2015

Know Your Financial Terminology

One of the biggest problems people have with their finances in todays economy, is their lack of understanding of the subject. Financial terminology is designed to be confusing, and bank employees speak in their monetary argot, just so they get the sale that suits them, not the product or service that suits you.

Okay, maybe it is not that cynical, but we can agree that there are far too many terms, variations and categories of finances to fully understand. It can be helpful to your financial security if you took the time to obtain a better understanding of what your bank account or your savings account entails exactly.

Here is a quick breakdown of some of the more common occurrences that you may come across.

Standing Order

One of the terms that you are likely to hear in a bank, particularly if you are paying bills. A standing order is a way in which you can regularly pay companies etc. that will be requiring payment from you on a weekly/monthly basis.

It is very similar to a direct debit, but you set up a Standing Order yourself, and it works on your terms. You control how much will be paid, when it will be paid and when it should finish. Though, as with a direct debit, you are also responsible of making sure there is enough money in the account to pay the recipient.

Credit Rating

Something that is going to be with you the rest of your life is your Credit Rating or Credit Score. You will need to know what this is and how it works particularly if you are looking to borrow money or take out a line of credit.

Fundamentally, your credit rating is a score based on your ability to meet your financial obligations. It is derived from your previous dealings and other factors such as your employment status.

Banks used to work in the way of personal relationships or reputations was enough to take out a loan, but no longer. If you want a loan, a credit card, a mortgage, anything along these lines, you’re going to have to have a polished credit rating, otherwise, you may be turned away.

Compound Interest

If you’ve got a savings account or an existing loan for example, you’ve probably heard the term compound interest – it’s what increases your savings, or increases your loan.

For a savings account, it is calculated by finding the sum of all the money you have paid into your account (your capital) year on year (usually.) So, interest for year 1 is based on the running total for year 1. Year 2, the interest is based on the running total of years 1 and 2, and so on.

It works the same for credit. It takes what you owe, applies the interest, then the next period it is added to the sum of those two.

It can be difficult to grasp, and there are formulas used to calculate these totals, which you might want to take a closer look at.

Secured & Unsecured

You might hear these if you’ve applied for a loan, but you might not have known the difference, which is understandable.

When borrowing money, there are two options, you guessed it, secured and unsecured. So, a secured loan is when you are a homeowner and the loan is put against your house, ie it is used as collateral. An unsecured loan is when you are not a homeowner and this is where the credit rating we talked about earlier will come into play.

This is of course a straight forward explanation, but there is more out there explaining the differences between secured loans and unsecured loans.

 

These are just some of the more common terms that you may encounter on your fiscal journeys, but as I said, there are many more out there. It really is worth familiarising yourself with the ones that you feel you may come into contact with at any point in the future.

Smart Money Saving

Just because we’re well into the first month of the year doesn’t mean we can’t make some changes in how you spend and save money in 2015. Getting over the festive season is always a painful experience but maybe now that you’re in the throes of it, you can think of creative and effective ways to spend your money so that you’re not in the same position 12 months from now.

52 Week Saving Challenge

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This challenge is supposed to last over 52 weeks but of course, you can alter it to your own timeframe and even the amount of money you’re putting away at a time – this can be the money to tide you through Christmas this year (so you don’t need to touch your wages) or to tide you through January so that you can spend in Christmas without worrying. As well as this, it encourages smart, affordable and step-by-step saving to ease you into what could potentially be a habit of a lifetime.

Coupons, coupons, coupons!

It’s a tried and tested way of saving money and, if you have the patience and know-how, it can be highly effective. Coupon websites, cut outs from magazines and newspapers and money-off codes seem like pennies but pennies add up to pounds and very fast! There are plenty of sources out there and, as a bonus, always keep notes of how much you’ve saved and see how that could be spent far more efficiently!

Get a cash ISA 

Cash ISA’s are a great way of saving money and when there’s a 40 day notice required for access, you may second-guess whether you really need the money you’ve put away. As well as this, the interest that can be gathered within ISA’s can go towards the big things like mortgages, cars and dream holidays.

Enter competitions

This sounds a little wacky but it’s actually becoming a very popular and interesting way to make money! A lot of the competitions you can find online offer small things like beauty essentials right up to £1000’s in cash and holidays. It takes a little perseverance but it’s usually very easy to do and could end up making a huge difference to your life.

Ditch the mobile phone contract

Way back when, phone contracts were a better investment solution than pay-as-you-go deals. However, as time has passed, phones have gotten far more advanced and intelligent leading to far more expensive phone contracts. The average contract is over £30 a month, phone inclusive and over a 24 month period, that’s a hell of a lot of money. Usually more than the phone would have cost in the first place! With rival prepay companies like GiffGaff offering more affordable payment plans with no ties. Their most expensive deal is £18 p/month for a 1,000 minutes, unlimited UK texts & 5GB of data. Similar to GiffGaff are Lebara who offer cheap international calls.

Finally…

Whatever you decide to do, make sure it’s something you can actually achieve. Changing the way you spend and save money is a constant work in progress and there’s no use in jumping in at the deep end- start small, work your way up. You’ll soon find that looking for bargains, corners that can be cut and cheaper ways to do the things you love will become second nature to you.

The Ongoing Payment Protection Insurance Scandal & You

As the ongoing payment protection insurance (PPI) scandal leads to more and more people claiming back the fees on policies they have been mis sold, so the lenders in the UK continue to suffer. Indeed, the collected lenders involved in the scandal have had to set aside many billions of pounds to cover the cost of repaying mis-sold fees, and many in the industry believe the eventual cost of the PPI saga will be colossal.

Payment Protection Insurance and You

The payment protection insurance scandal came about when a number of allegations of mis-selling were investigated by the powers that be. This uncovered widespread mis-selling within the industry, and a full revision of the regulations was deemed to be necessary. Fines were also levied on the main protagonists, and the High Court eventually ruled that fees on mis-sold policies must be repaid. The regulations regarding PPI are now geared towards protecting the consumer, and if you think you have a valid claim you should consider getting things underway as soon as possible.

Can I Make a PPI claim?

If you have taken out a mortgage, loan, credit card, car finance or other type of credit in the past few years, it is very possible that you have a PPI policy (whether you already know about it or not!).

PPI is also known as Loan or Credit Protection Cover, or ASU (Accident, Sickness and Unemployment Cover).  Essentially its an insurance policy designed to cover the repayments in the event you are not able to pay due to sickness, injury or loss of job.  In itself, the policy is not problematic, it’s the way it was mis-sold that is the scandal.

People were automatically opted in to the policy, with or without their knowledge, and some were told it was mandatory.  Others had it sold to them despite their employment status (of self-employed or retired) meaning that they are not eligible or suitable for PPI, and therefore it was a complete waste of their money.  Legally, at point of sale, customers should also have been given the option of looking at other PPI deals, not only having to take the one offered by the lender.  These are just some of the examples of the mis-selling that was common.

You should check your original paperwork for PPI, though if you don’t have that to hand you can check over your credit file for details of all your previous credit agreements.  If you suspect you had PPI and think it was mis-sold, you should seek advice to see if you can claim.

How to Make a PPI Reclaim

You may wish to make your payment protection insurance claim with the help of a claims handling company such as ours at www.haveigotppi.org.uk.  Our team of experienced advisers and claims handlers are waiting to help you in any way we can. We can handle your claim on a no win no fee* basis so you won’t pay if you are not successful, and we give every case the individual attention it deserves. With an industry average repayment of £2750 per policy it is certainly worth getting things underway, so get in touch if you want to claim back your mis sold PPI charges.

We have already helped lots of people make successful claims and we are confident that, with our experienced team of claims handlers, we can help you, too.