It was revealed recently that you can become a millionaire by the time you retire just by saving £18 a week from the age of 22. And actually, it’s entirely true. Compound interest is being branded as ‘the intelligent way of saving’ and is making it’s prominence into the financial world as time goes on. But what is compound interest, and more importantly – how can you make use of it?
Ever on the lookout for savings and deals, at Moneybright we recently decided to focus on car insurance, or rather how you can save money on your car insurance. If you’re a driver, you’ll know just how expensive not only to buy, but running and maintaining a car can be. From regular services and MOTs, to car tax and insurance – there are a lot of costs that contribute to owning a car and if you’re not a little frugal about it, the costs can really begin to add up. So, we tested the Aviva Drive App, which monitors your driving and if it’s happy with your performance, it will lower your insurance. Here’s what Rick, who tried out the app, had to say.
Using The Aviva Drive App
“Having driven a company car for 9 years, my premium last year included a discount from Aviva for the first year. However, at renewal, my premium had gone up significantly, and as usual I put my details into a couple of comparison sites. I called Aviva to see if there was anything that could be done to reduce the price. I actually managed to get a small loyalty discount as I have multiple policies with them… Proving that it’s well worth asking.”
“Not satisfied with simply the loyalty discount, I asked if there was anything else that could be done, and explained again prior to taking the policy I had 10 years in a company car hence my 1 years no claims discount. The customer advisor then asked if I had used the Aviva Drive App. He went on to explain that if I downloaded it and let it assess my driving over 200 miles I could be eligible for a further discount of up to 28%.”
“I must admit I was suspicious and a little sceptical. Did I really want my insurer monitoring my driving style? Nevertheless, my curiosity got the better of me and I downloaded the app and here is my review.”
What Potential Insurance Savings Are There To Be Had?
The discount level is dependent on both your score and the price of your premium. No discount is available for policies under £200 or for drivers that achieve a score of less than 3.1. Here is a breakdown of the discounts available:
Aviva Drive score
|Discount on policy between £200-£399||Discount on policy over £400|
|5.1 – 7||7%||14%|
|7.1 – 10||14%||28%|
How Easy Is It To Set Up The Aviva Drive App?
Installing and setting up the Aviva Drive App was easy as expected. As I already have an Aviva login, the app prompted me to either login or to set up an Aviva account for a new customer.
Once logged in the interface was very simple with a big start button and just a few menu options to view journeys, and any badges earned. It asked me to allow it to have access to my location, and I initially only granted permission to access my location when using the app and it failed to work. You must grant full access to your location at all times and once I did this it worked. Click the large start button to begin, which then turns into a stop button to end each journey.
The app also has a dash cam, but I didn’t use this as I was concerned it would drain my battery too quickly.
Aviva recommends that it is placed in a cradle which I thought was sensible as its safer, and your score could be affected if it is not stable in your vehicle.
H2: What Was It Like Using The Aviva Drive App On The Road?
As soon as I pushed the start button I became aware of my every action behind the wheel and questioned everything. Was I accelerating or braking too hard? What was my speed? Was I driving smoothly? I then wondered how my phone could actually judge my driving ability at all.
Day one was tough. I was anxious as I approached the first roundabout and was concerned it would think I was moving too quickly. I noticed how rushed everyone else was and bad driving stood out more than ever. I worried someone cutting me up may result in me suffering a penalty of some kind. I can honestly say I have not felt as uncomfortable behind the wheel since I passed my test.
I really felt like this was going to be a waste of my time and there is no chance I will get a discount. After all, Aviva had already quoted my renewal. I really wondered if this was going to impact my score as I would have thought this was only to attract new customers.
Day one ended with 36 miles covered and I got my first three badges one for my first drive, one for accelerating and one for braking. So far so good… My driving style was more cautious than usual. I accelerated very gradually and slowed down well in advance of braking so stopping was smooth.
I drive into Manchester city centre each day to my office, so it usually involves a lot of traffic and stopping and starting.
Over the next week, I noticed how different I was driving due to being monitored, it really highlighted a few bad habits I had got into like breaking too fast and driving a little too close to the car in front. While using the app I rectified these issues as I was concerned I may be forced into breaking sharply. It also highlighted how impatient everyone is!
One downside was accessing motorways and roundabouts, I was much more nervous as sometimes accelerating hard is the only way you can keep moving.
Within the week I completed the 200 miles and achieved a score of 9.4 out of 10 which meant the full discount of 28%. I did feel a huge sense of achievement and called immediately to check that this could be applied.
As my premium was well over £400 the full discount of 28% was applied without any problem. Aviva was then just over £200 cheaper than any of the alternatives.
I would recommend giving this a go as it is a genuine money saving opportunity and it may just improve your driving. You can find out more about the Aviva Drive app here if you’re interested.
What Is Hire Purchase?
Hire Purchase (HP) is a method of finance when buying a car. Typically, if you’re using Hire Purchase for either a new or used car you would need to pay an upfront deposit, and then pay off the value of the car in monthly instalments. This means you would not own the car until the full payment is made. Most of the time, you’ll be required to put down a deposit of around 10% of the vehicle’s value. Then, the rest of the car price will be paid off in instalments that can last for anything from less than 1 to over 5 years.
Hire Purchase can be arranged by car dealerships or brokers and the rates will vary depending on your credit score, along with the type of car you’re looking at. Rates tend to be competitive for new cars, but not so much for those that are second hand.
Once you’ve paid off all instalments of the Hire Purchase loan, you’ll typically be asked to pay an ‘Option To Purchase’ fee, once this – along with the rest of the payments – have been made, you’ll legally own the car.
What Is PCP Finance?
Personal Contract Purchase (PCP finance) is another loan-type method of acquiring a car. Unlike a normal loan, (and unlike Hire Purchase) you’ll typically never pay off the full value and won’t ever own the car.
Similarly to Hire Purchase, you’ll be required to pay a deposit of around 10% when you opt to ‘loan’ a car through PCP. You’ll then pay instalments of a loan which is assessed on how much the car is likely to be valued over the term of the deal, which can be anything from 24 months to 36 months. The payments you make will chip away at this loan and will carry added interest.
Most of those who use PCP opt to upgrade to another model of car once their lease is up, but if you’re wanting to keep the car you’ll usually be able to purchase it under what’s called a Guaranteed Minimum Future Value (GMFV) – which is basically how much the dealer expects the car to be worth once your finance lease has ended. Alternatively, providing there’s no damage, you can hand the car back and walk away at the end of your contract – or open a new PCP agreement for a different car with your dealer.
Hire Purchase Advantages And Disadvantages
As with any methods of finance, Hire Purchase agreements have their pros and their cons. The advantages and disadvantages of this method of leasing and buying a car are below.
PCP Advantages And Disadvantages
So what about the advantages and disadvantages of PCP? You can find them below.
So What’s The Difference Between Hire Purchase And PCP?
The main difference between Hire Purchase and PCP is that with Hire Purchase, you finance the total cost of the car (minus deposit or part-exchange allowance). With PCP, you finance the depreciation. PCP and Hire Purchase work in the same way on paper, but what is financed through the scheme varies.
With PCP, you can either pay off the remaining value (a balloon payment), hand the car back or enter a new PCP agreement once your lease has ended. With Hire Purchase, at the end of your agreement – you’d have paid off the full value of the car and will own it (after a one-off ‘Option To Purchase’ fee is paid).
At first glance, PCP certainly seems like the cheaper option – as your instalment payments will be much less than Hire Purchase. However, in the long run, Hire Purchase works out cheaper as you’re paying for the whole asset – and won’t have a big lump sum outstanding at the end of the agreement should you wish to keep the vehicle.
What Is A Section 75 Refund?
A Section 75 refund is applicable to those who may find themselves in a situation where they’ve used their credit card and paid for an item that was faulty, or used it for a service transaction, only for the company to go into administration before they’ve received their product.
Even if the product or service provider has refused a refund, under the Consumer Credit Act 1974 – you’re entitled to one from your credit card company. They consider the organisation equally as liable if you suffer a breach in contract.
Is There A Time Limit On Section 75 Refunds?
While there is no time limit for making a claim under Section 75, the statute of limitations in the UK is six years (and is five in Scotland). Meaning if you were to pursue a Section 75 refund through the courts, this is the amount of time you would have to do so.
What Protection Does A Section 75 Refund Give You?
Section 75 refunds apply to products or services that are valued between £100 and £30,000 of which part of the purchase has been made with a credit card – this includes deposits. According to the Consumer Credit Act 1974 – any purchases that aren’t confined within this remit cannot be considered for a Section 75 refund.
For example, if you make a purchase of a TV and you pay a £50 deposit on your credit card, you would be protected under the act. If you purchased, say, a microwave for £90 and paid a £30 deposit – you wouldn’t be eligible as the full item value doesn’t fall between £100 and £30,000.
These rules only apply to single transactions. So, if you were to buy two items for £90 each at the same time, they would not be eligible for a Section 75 refund – despite the total transaction price being over £100. The only exception to this would be if the product was bought as a bundle, or a 2-for-1 deal.
You will also not be covered if additional fees, such as delivery and process charges, took the cost over £100. For example, if you purchase a concert ticket for £95, but website fees and delivery of the ticket made the total cost £115, you would still not be applicable for a Section 75 refund as the original price of the item was below the £100 threshold.
Do Section 75 Refunds Include Debit Cards And Other Payments?
Unfortunately, under the Consumer Credit Act 1974, Section 75 refunds only apply to purchases made on a credit card.
On What Grounds Can I Make A Section 75 Claim?
There are two grounds on which you can apply for a Section 75 refund, and those are…
- Breach of contract – meaning you did not get what you paid for. Such as an item not being delivered, or a service provider going bust.
- Misrepresentation – meaning you were given the wrong information, which persuaded you to buy a product. E.g. paying for a mobile phone accessory – only to find out it isn’t compatible with your smartphone as described.
How Do I Make A Section 75 Claim?
You should initially try and resolve the issue with your service or product provider, they should be your first point of contact. However, if your matter is not resolved by the organisation directly, then it can be raised with your credit card provider.
You should contact your provider only when you have been refused a refund, or ignored. And in this instance, you should provide the following information:
- What was purchased
- Where it was purchased
- How much you paid
- How you brought the item or service
- A copy of the receipt(s)
- Details of how you believe your contract has been breached
- Examples of you trying to make contact with the provider
- An explanation of what you’re seeing from your credit card company
If you are rejected for a Section 75 refund, yet you believe you are still eligible – you can escalate the case by making a complaint to the Financial Ombudsman Service.
For more money saving tips and advice, head to our site.
If you’re travelling abroad, and especially outside of Europe to the likes of Asia, it can be confusing to know which bank accounts to make use of. With the risk of steep card charges and accounts being blocked while travelling – it’s crucial you do the right kind of research before you set off to avoid any tricky financial blocks further down the line. Because let’s face it, travelling is a once in a lifetime experience that could easily take a turn for the worst should something such as your finances fall out of order.
Asia, which includes amazingly stunning places like Thailand, Vietnam, Indonesia, Malaysia and Cambodia, is a true backpacker hotspot. Tens of thousands of tourists head South East every year to explore the continent’s beautiful offerings. But, with some heading out for months at a time, it’s fundamental that they have sound finances before making the trip. Good money management is crucial.
Why Do You Need To Review Your Bank Account Before Travelling?
It’s a good idea to have a dedicated bank account for when you head out travelling. It’s far more secure than carrying cash, and means you can track your finances in real time and manage your spending. But why can’t you just head out with your standard bank account and use it as normal while abroad, and especially in Asia?
Well, for one – you can incur pretty steep charges if you opt to use your debit or credit card abroad. Even more so when travelling outside of Europe. This includes both withdrawal and transaction fees, so you can rack up an extra cost when taking out currency or just paying for something on your card. If you’re heading overseas for a longer period whilst travelling, this is something you’ll want to avoid.
Do You Still Need To Tell Your Bank You’re Travelling Abroad?
Another historic rule of thumb when travelling abroad was that you’d need to inform your bank or building society on your plans to head out of the country. Apparently, you no longer have to inform your bank when you’re abroad, whether that be on a short holiday or travelling for a longer period. However, many have reported stories of having cards blocked while in another country, which has left them without access to their finances and incurring steep call fees when trying to get the issue sorted too. So in short, it’s well worth setting up a dedicated bank account for travelling, especially in Asia, before you jet off.
Things To Mind When Opening A Travel Bank Account
When choosing a dedicated travelling bank account, you should take into consideration…
- Whether the provider requires a minimum balance
- Any monthly or annual service fees
- It’s exchange rates
- Any overseas card transaction fees
- Ease of sending and receiving money through international bank transfers
- Monthly or annual service fees, the minimum balance required on opening, the exchange rate offered, mobile banking apps and transfer fees. You should also pick an account that makes sending and receiving international payments a breeze.
What Are The Best Banks For Travelling To Asia?
To avoid bank charges abroad, and to circumvent any frustrating card blocks before travelling to Asia, it’s a good idea to research some banks that are good for backpackers. Luckily for you, we’ve omitted the hard work, and have listed our suggestions below for the best banks for travelling to Asia in 2019.
Credited as one of the biggest challenger banks, Starling is a prime choice bank account for backpackers. They don’t charge you to use your debit card, and like other providers, they maintain you don’t have to contact them before leaving the country. Unlike other banks and building societies though, if you do incur a problem during your travels – you can contact them directly through the app.
TransferWise offers a ‘borderless account’ which allows you to operate in over 40 currencies in your account in the mid-market rate. It’s free to pay for goods overseas with the currencies you hold in your account, and you can also withdraw up to £200 a month fee free. Unlike most banks that’ll charge you a going rate for transactions and withdrawals overseas (and especially in Asia) – TransferWise won’t, and is, therefore, a sound choice for backpackers and travellers.
If you’re looking for an abundance of cashpoints while travelling in Asia – then HSBC is the bank for you. In fact, HSBC was the first commercial bank in Thailand, which was established as far back as 1888. They charge a transaction fee, though, unlike Starling and TransferWise so it’s worth noting that to make use of the wealth of places to withdraw money, you’ll also incur a small fee.
Another digital bank with an appeal to those travelling to Asia is Monzo. They offer free cash withdrawals up to the value of £200 a month. After that, it’s a 3% charge. Monzo bank accounts are quick and simple to open and are easy to maintain too – as you can do all of your banking through your mobile whilst on the go.
For more on travel and finance, head here.
Saving for your first home is tough, but the government’s ‘Help To Buy ISA’ scheme aims to make it easier for individuals trying to get on the property ladder. Continue Reading…
We get plenty of deals submitted to us at Moneybright week on week, and as such – it’s always our pleasure to pick our favourite from the bunch to share with our readers. This week, we’re bringing to you a free delivery offer you won’t be able to refuse, especially for the home-decor enthusiasts amongst us.
For as long as there have been banks, there have been established names in the industry of which everybody uses one or the other of. Halifax, Lloyds, Natwest and Santander are just a few of these big corporations, which when asked ‘which bank or building society are you with?’, will likely be your answer. But, as the term ‘challenger bank account’ has become more prevalent over the past few years – it’s time to question the possible benefits of these digital banking competitors, and whether you should be using them instead?
The rise of challenger bank accounts
The idea of app-based banking isn’t necessarily new, though. Just a few years ago, the big player in the online-only banking industry was PayPal. But now, names such as Starling and Monzo are hot on the tails of this corporate giant and are winning more and more customers from both PayPal itself, and the other ‘big four’ than perhaps initially expected.
So, is what we’re seeing basically just a glorified PayPal?
Well, no. The big difference between the two is that, although having many innovative features, PayPal is primarily a money transfer software tool only. Most business operations include the sending and requesting of money digitally, and individuals; between family and friends. Though you can pay for more and more with PayPal (including offline transactions), it doesn’t classify as a ‘bank’ as it does not possess all the features needed to be categorised as one.
Challenger banks do. And (the clue’s in the name) they’re getting well up to speed with the UK’s most well-known businesses and hold the potential to even overrule them in the market.
But what is a challenger bank account?
Technically, the term challenger bank is used to describe any bank that’s looking to challenge the big four in Britain: Barclays, Lloyds Banking Group (which includes Halifax, Lloyds Bank and Bank of Scotland), HSBC and RBS (which includes NatWest and Ulster Bank).
Established players, such as TSB, Virgin Money and Metro Bank, do actually fall into this bracket, but are not necessarily seen or known as ‘challenger banks’ as they’re pretty widely recognised already. The colloquial term has only recently come into play, and is largely used to describe banks that operate solely online – the two biggest names are ‘Starling’ and ‘Monzo’.
These two UK challenger banks, amongst other names in their industry, focus on modern design, personalisation, low fees and convenient customer service to tempt people in. Tried and tested in real life by our team, to apply for a bank account with Starling, all you need to do is send over some details, a snapshot of ID and a very short video confirming that it is in fact you applying – and you’re done. No back and forth trips to the bank with lengthy meetings to get started.
With e-banking and mobile banking at the forefront of their business, UK challenger banks like these operate solely online (even at the sign-up stage), setting them apart from their traditional competitors.
They also feature real-time payment notifications, meaning you receive an alert every time there is any activity on your account. This, as credited by users of the challenger banks, makes it easier to keep track of your spending, but also helps you to instantly spot any anomalies – meaning preventing fraudulent activity is far easier.
Is it worth opening a challenger bank?
There are many reasons that more and more are choosing to open a bank with one of these nifty alternatives as opposed to the big players, mainly because of how easy they are to use. With real-time control over your spending, impressive user experience and there-when-you-need-it customer service, these challenger banks play on the frustrations that customers have with the ‘top 4’ and use them to their advantage.
But, as with anything, there are always drawbacks to bog down the positives. And challenger banks, though largely popular now more than ever, are not free from ‘cons’ either. To help you decide whether they’d be right for you, we’ve put together a quick table of advantages and disadvantages to help steer your decision.
As with anything, there are certain ‘pros’ and ‘cons’ to challenger banks, so your decision depends on what you want out of a bank. If you’re open to new ideas and like the thought of managing your finances online, then the likes of Monzo or Starling will certainly offer you an abundance of helpful features in exchange for you opening an account with them. But on the flip side, if you prefer the security of a traditional and reputable bank, then you may be better off keeping your money where it is.
Do you have an account with a challenger bank, or are you considering opening one? We’d love to hear your thoughts. Tweet us at @moneybright, or with the hashtag #MoneyBrightAdvice and let us know today.
We get plenty of deals submitted to us at Moneybright week on week, and as such – it’s always our pleasure to pick our favourite from the bunch to share with our readers. This week, as January’s ‘new year, new me’ attitude is in full swing, our deal of the week presents an offer you won’t be able to resist on a product that’ll give you all the workout-motivation you could ever need.
- The UK’s PPI deadline is 29th August 2019
- After this cut-off date, you will not be able to make any PPI claims or receive any compensation
- PPI is short for Payment Protection Insurance, which was a policy that was widely missold in the UK by banks, mostly between 1990 and 2010, to people who did not need it
- Over £29 billion has been paid out to individuals since the scandal was unearthed
- PPI complaints rose by a massive 40% last year, seeing firms forced to pay £415.8m out in reparations
When is the cut-off date, and what does this mean?
The UK 2019 PPI deadline is fast approaching – in fact, there are just months to go with the final UK cut-off date being 29th August 2019. After this, you will not be able to make a PPI claim nor receive any compensation.
What is PPI, and how were policies mis-sold?
PPI stands for Payment Protection Insurance which is a legitimate policy that was unfortunately largely mis-sold across the UK. With some cases dating back to 1990.
PPI was designed to cover repayments in certain circumstances where you couldn’t make them yourself. For example, if you were made redundant or could not work due to an accident or illness.
As many as 64 million PPI policies have been sold in the UK, and a huge part of this figure includes schemes that were wrongly sold by banks to customers who did not need them, or who were put under pressure to sign up. In some cases, it has been recorded that agents selling the scheme even enrolled people without their permission.
As the deceptions were outed, the ability to be able to make a claim if you believe you fell victim to a PPI wrongdoing came about. An initiative which has cost banks over £29 billion collectively already (and there’s still seven months left until the deadline to make a claim). Lloyds Bank plc have paid the most so far, forking out almost £19 billion in claim money for their mis-selling of the insurance.
Source: Moneybright (Flickr)
There are plenty of ways you can check if you were mis-sold PPI. And you could very well be sitting on a gold mine, with many who’re owed thousands being completely unaware that they were even eligible to make a claim. Some, in fact, don’t even know that they were enrolled in the scheme in the first place.
Which is why, of course, it’s important to find out whether you fell victim to the PPI scandal – you could be rightfully entitled to a large sum of money and you may not even know it.
How to check if you were mis-sold PPI – and make a claim before the deadline
For a more in-depth explanation to finding out if you’re entitled to a PPI payout, check out our article. There’s a lot of information online, much of which becomes very confusing and complex but fear not – we’re here to explain the easiest way to check if you can make a PPI claim, in the most simple way possible.
Source: One Click Group (Flickr)
How to check if you were mis-sold PPI under 6 years ago
If you believe you may have been mis-sold PPI recently (within the last 6 years), we would recommend the following tips.
- Check through your loan payment statements
- If you don’t have your bank loan statements, contact your bank and ask them to check if you have a loan with PPI
- Alternatively, check your credit report and look for repaid loans. It won’t show you right away if your loan was covered by PPI, but does mean you can contact the right bank to enquire and take it from there
- If your bank for whatever reason refuses to make a payout, you can take the matter up with the Financial Ombudsman Service – but be mindful of the PPI deadline
How to check if you were mis-sold PPI over 6 years ago
If you believe you may have been involved with PPI at an earlier date, here’s our advice.
- After 6 years, the lender will not be required to keep any documents – so you’ll need to gather evidence yourself.
- Realising this can be a little stressful, we would suggest checking all files (online or offline) you may have relating to the following: credit cards, personal loans, mortgages, secured loans, dealership car finance, store cards, catalogue credit, monthly-paid insurance and overdrafts.
- Check out our advice for further guidance on filing a claim that involves a PPI policy from over 6 years ago
If you believe you were mis-sold Payment Protection Insurance and have the necessary documents to make a claim, remember you have until the 29th August 2019 to do so before the PPI cut-off date.
Remember you ONLY have until the 29th August 2019 to do so before the #PPI cut-off date.Click To Tweet