Category: User Stories

Bank of England Rate Rise: Will it Help Save More or Cost You?

In November 2017, the Bank of England announced that it was raising its base interest rate for the first time in a decade, from the record low 0.25% to 0.5%.
Will it help you save more?

When it comes to savings, you’re not going to see a massive influx of extra savings interest, but anything extra always helps. With most ISA interest rates hovering around the 2% mark, we’ll probably see an extra 0.25% return – another £2.50 per £1,000 each year, or £22.50 instead of £20.

How Will It Cost You Money?

This depends on the type of credit you already have and whether you have a fixed or variable return rate.
Most common, smaller types of debt – such as credit cards, store cards, and unsecured personal loans – have fixed terms for repayments set out when you sign up, which won’t be affected by the new base rate. If there are going to be interest rate changes, the company will contact you directly to make you aware of what these changes are and when they will take effect.

How Will Your Mortgage Be Affected?

With a mortgage being possibly the biggest monthly outgoing, this is the biggest concern for most people. How your mortgage repayments are affected depends on the type of mortgage you took out:

Fixed rates

This offers a set sum to be paid every month for a determined period (one, two, three, five, or ten years). These often have the most expensive rates and fees since they offer stability and reliability: However much the Bank of England’s base rate varies, you will never pay more (or less) than agreed.

Your fixed rate mortgage should not be affected by the base rate change. However, once the period has expired, you will be subject to the lender’s SVR (Standard Variable Rate), which is affected by the base rate, unless you take up a new mortgage deal.

Standard variable rates

These are interest rates set by the lender and are subject to change at any time. They loosely follow the Bank of England’s base rate but don’t reflect them exactly: For example, with the base rate increase of 0.25%, your lender could increase standard variable rates by 0.5%.

Tracker rates

These are directly correlated with a base rate, “tracking” at a certain level above. This is usually, but not necessarily, the Bank of England base rate.

For example, if you rate is tracked as 2% above the Bank of England base rate, it has just risen from 2.25% to 2.5%. However, some lenders use other base rates, like the LIBOR interest rate, which is higher than the Bank of England rate, due to the higher risk. Like fixed rates, tracker rates are normally only in place for a few years, and then your mortgage will revert to the (typically higher) standard variable rates.

Capped Rates

These can be either fixed, standard variable, or tracker, and react accordingly (or not) with the base rate, but they come with a guarantee that they will never exceed a certain amount. As long as this cap is not being exceeded by the 0.5% increase, then your rates will still fluctuate (or not, depending on if your rate is fixed or variable) with the base rate.

Time to start saving and reduce debts?

With savings rates back up and interest rates on the increase, and more rises expected in the future, 2018 could be the year to start saving and clear away debt before the base rate gets any higher. And if you want to get rid of all your debts, you could consolidate them and reduce your monthly payments, whilst paying into a savings account at the same time. Already debt free but want to take advantage of a savings account? Put a little aside each month straight from your salary payments and take control of your savings.

Worried about too much debt as Christmas fast approaches?

Debt and fitness are so similar, in many ways.

Almost everyone with debt – not counting mortgages – dreams of being debt free. People who want to get fitter dream of ideal goals and the time when they can walk into a shop, buy what they want and feel amazing.

Both are a lot harder to achieve than dream about.

And even when you are on the road to achieving your goals, there are some times of year when it gets considerably more difficult.

Right now, with Winter setting in and Christmas fast approaching, most people’s diets, credit limits and wallets are going to suffer.

Debt up, savings reduce

Even if you don’t have children, Christmas is an expensive time of year, with presents for families, loved ones, friends and colleagues and dozens of excuses for “treats”, trips away, work meals and parties and nights out chipping away at credit card spending limits, bank accounts and anything you’ve managed to save this year.

Almost everyone puts saving and diets and fitness plans on hold this time of year. Vowing to double-down in January and commit to what you’ve been trying to stick to since earlier this year, maybe even January 2017.

At this time of year, debt levels – which have been rising steadily all year – go up further. Savings, which have been falling all year, reduce further. Low-income families struggle even more, which can be made more difficult if anything unexpected happens, such as a surprisingly high bill or someone loses a job. We’ve seen banks, credit card companies and other lenders take out more and more county court judgements (CCJs) against customers in 2017, which we expect to get worse over the next few months and into next year.

How to start saving and reduce debts

Instead of waiting until January, start solving these problems today.

If you’re in too much debt and want to consolidate, there is a solution.

If you want a little extra money this time of year but you’re worried about your credit rating, we do have an answer.

If you want to start saving, do it now; don’t delay.

With FairQuid Credit Union financial wellbeing solutions, you can consolidate, borrow a little more if needed and start saving today. Providing you’ve been with your current employer at least one year, you can take out a loan with an automatic savings account and payments will come directly from your salary the same day you get paid.

All you need to do is ask your employer to signup to this scheme – it won’t cost them a penny – and our Credit Union partners can offer you a loan with an inbuilt savings account. Eligibility criteria apply. Find out more today.

Are you saving money for Christmas: Is there an easier way?

Let’s face it, saving money for Christmas is not easy.

And if you don’t just have the cash in the bank – who does, right? – most people need to borrow extra in the run-up to Christmas, then spend the first few months of next year paying it off. For some people – up to 11 million according to research in The Independent – Christmas 2017 could still be costing them interest charges one year later.

Between food, drink, parties, stocking filler, presents and last minute dashes to the shops, research estimates that Christmas could cost “anywhere between £750 and more than £1,500 per adult.”

No matter what you earn, that is a lot of money going on a few days worth of fun. Hence the popularity of savings clubs, where you can put money aside over the year, then spend those vouchers on food, drink and presents. Not that you won’t incur some extra expenses as the big day approaches, but at least you’ve spread the cost.

Is there another way to save for Christmas?

Some people would say setting money aside throughout the year is the most sensible option.

The problem is, we are not a nation of savers. We spend. We take out credit. We don’t pay it off; instead, it accumulates and costs us even more over the year. Statistics don’t lie, not when it comes to our national savings habits. In fact, you might be surprised to learn that 70% of adults in the UK have little to no savings.

Debt charity, StepChange, recommend having at least £1000 set aside in savings – which might just about cover the cost of Christmas. In reality, families earning less than £1,500 per month (after tax) often have less than £100 in savings, making between £750 and more than £1,500 for Christmas a huge expense.

Thankfully, there is another way – one that doesn’t involve taking money out of your account and putting it into savings after being paid. It is something your employer can help with: Employee benefits savings accounts.

Here at FairQuid, we work with Credit Unions and employers to provide savings accounts for staff. All you need to do is ask for this as an employee benefit. Once your company is signed up, you apply for a savings account. And then, every month, money goes straight from your salary – like childcare, pensions or travel to work schemes – into this savings account.

What about when you need to withdraw money?

It works exactly like any other savings account. You control it.

Our Credit Union partners will give online, phone and branch access, and most come with debit cards too so that you can withdraw funds anywhere. You can also increase or decrease the amount that goes into the savings account; just ask HR or your manager before payroll cutoff. It’s as easy as that. No need to worry whether you’ve set aside money for Christmas – it happens automatically, every month.

Start saving with a FairQuid Employee Benefit Savings Account. Find out more.

Save Money An Easier Way With Employee Benefit Savings

Saving money is not easy.

It isn’t easy during Summer, whether or not you have kids – there’s always something to spend it on. And then Winter is just as bad.

Come Spring, most people are either rebuilding what savings they had or paying down extra credit card debt after the Holidays.

Not to mention all the other expenses most people encounter throughout the year, no matter how well you budget. There is always something to spend money on. If you don’t have savings, then this is often something you know you should have, but actually saving money is a different matter entirely.

Don’t worry if you find saving money difficult. You aren’t alone. In fact, you might be surprised to learn that 70% of adults in the UK have little to no savings. For most families, even those with two paycheques and working tax credits or another government benefit for employees, getting to that £1000 in savings can be a struggle.

Debt charity, StepChange, recommend most people have at least £1000 set aside in savings. But in reality, families earning less than £1,500 per month (after tax) often have less than £100 for emergencies. Even those earning more put spending on credit cards, juggle zero percent interest offers, take out store cards and loans instead of saving than spending. We aren’t a nation of savers anymore.

Why doesn’t anyone save money?

Easy, or relatively easy – depending on credit scores – access to credit is one reason. The higher cost of living and lower real wage increases are another. Inflation is rising faster than wages, and Brexit, unfortunately, has made some imports more expensive as the value of the Pound has fallen compared to world currencies.

At the same time, the other reason most people don’t save is pretty ordinary. For most of us, when the money hits our accounts, a lot of it goes back out on bills. Then you have real or imagined pots of cash for different things that don’t all go out at once, such as food, petrol or bus fare, clothes, and some cash for treats. Everything is allocated. There usually isn’t that much set aside for savings, and if there is, chances are it gets spent on something else. You get paid again, and the cycle repeats itself for another month.

Is there a way to start saving?

Yes, yes there is. It doesn’t take a lot of effort, and it’s something your employer could help with: Employee benefits savings accounts.

We work with Credit Unions and employers to provide savings accounts for staff. All you need to do is ask for this as an employee benefit. Once your company is signed up to FairQuid, you apply for a savings account, it gets set up, and every month money goes straight from your salary – like some childcare, pensions or travel to work schemes – into this savings account. Instead of trying to take money out after getting paid, the savings automatically increase and people soon get used to budgeting a different amount every month.

What if you want to withdraw money?

It works exactly like any other savings account. You control it. Our Credit Union partners will give online, phone and branch access, and many may come with debit cards so that you can withdraw funds anywhere. You can also increase or decrease the amount that goes into the savings account; just ask HR or your manager before payroll cutoff. It’s as easy as that. No need to worry whether you’ve set aside money for savings – it happens automatically, every month.

Another benefit are the dividends. Interest charged to those who borrow from credit unions is paid back to everyone who is a member – which includes everyone with a savings account. Once the profit is calculated, that is paid out as dividends to savers.

Start saving today, with a FairQuid Employee Benefit Savings Account. Find out more.

How to Get Financially Fit and Stop Living Paycheque to Paycheque

Average weekly pay is increasing, but at the same time, so are living expenses. One of those figures, according to recent Office for National Statistics (ONS) data, is not increasing as fast as the other.

Can you guess which is rising faster: Inflation – the cost of living – or what most people are paid?

If you guessed inflation, you would be correct, according to April 2017 ONS figures.

Average regular pay (not including bonuses, etc.) – before tax and other deductions – is £472 per week, up from £464, in April 2016. However, the cost of living – inflation – keeps increasing, up 2.7% in May 2017 – from 2.6% in April, according to The Consumer Prices Index (CPIH).

Most of us are being paid slightly more – unless you have a ‘gig economy’ job – but that money isn’t stretching as far, with goods, services, food and electricity prices going up again.

At the same time, more of us are struggling with debts with fewer savings to fall back on.

The Bank of England is increasingly concerned with the surge in personal borrowing – up 10% in just over a year. No one wants to return to pre-Credit Crunch conditions (2007-08), and banks lenders are keen to prevent this – with a 24% increase in CCJs in 2016, compared to 2015 figures.

Consumers that struggle with debt, either due to an unexpected bill, changing financial circumstances or unemployment, could enter the collections process sooner than expected. With the average CCJ amount as low as £1,495 per person, this is a worrying sign that the majority of people are only a few missed payments from default and long-term credit score damage.

But that isn’t the only worrying sign.

One in four UK families are classed as low-income, according to Aviva UK, with monthly income below £1,500. High earners are those with an average monthly income above £5,000 (the top 8%). Part of this emerging crisis is that savings amongst low earners is now £95 (in February 2017), compared to £136 in the same period the previous year.

Numerous financial experts and the debt charity, StepChange, recommend a minimum savings amount of £1000 – which is simply unrealistic for most low-income families or those currently servicing a sizeable amount of debt, in relation to income.

A Real, Practical Way Forward?

Banks, credit cards, payday lenders and consumer finance partners aren’t the only ones that can lend money in the UK. Not-for-profit, Credit Unions can make responsible lending decisions, even when people have previous blots on their credit file, but a decent recent financial health; e.g. at least one year’s employment with the same employer.

FairQuid partner Credit Union loans are more affordable. Loan payments come directly from your salary, which means they take the affordability of this into consideration too. Loans through credit unions also automatically include a savings account, which means, over time, your financial health keeps getting better. Ever heard of a Personal Loan that also builds your saving account?

Don’t let your debt get the better of you: Time to get financially fit, with FairQuid: Your Money, Your Way. Find out more and apply here.

Your Money, Your Way

Wouldn’t it be great if you could apply for a loan without worrying that one mistake or debt from years ago is going to prevent you getting some extra money?

Banks and the majority of finance companies only make decisions based on your credit score. This magic number – which not enough people know, or want to know – is the only number that matters to most financial companies. We don’t think that’s right or fair.

A system where the deck is always stacked against you

Credit scores prevent too many people from accessing finance that they are perfectly able to manage and afford. In the building where we are based, there’s an entrepreneur – let’s call him Dave – running a successful company, with investors, paying customers and staff. But Dave can’t get a loan. He pays himself a decent salary – not a huge amount, but enough to live in London, and all he wants is a small loan to consolidate some debts and buy some new furniture.

Unfortunately, when Dave was a student, he got a credit card. Then another, then another. Five in total. Most students have more than one card and overdraft. Being a student is expensive, and banks advertise at them aggressively to take out as much credit as possible. Banks love students. They spend as much as they can, but rarely pay off a card or overdraft in full so that they can make money off them for years afterwards.

He was bombarded with free offers, and the credit cards were ridiculously easy to get. He did keep up all the repayments, except for one card – unfortunately forgotten in a move to London. It had a small unpaid balance – only £50.00.

It took a while for the demand letters to catch up with Dave. Once they did, he paid the balance, including the arrears, but the damage was done. The unpaid card left a black mark on his credit file for six years, making it impossible for him to access low rates in the meantime. His issue wasn’t the debt; it was that he never would have signed up for so many student cards if it wasn’t for aggressive targeting, easy applications and free offers. As a young student, he wasn’t mature enough to realise the long-term impact of these offers.

Banks stack the deck against those who need access to finance the most and credit scores are one of the main ways they screw people over.

A fairer system, with Credit Unions

Credit unions need to make responsible financial decisions, which means they need to factor in the results of a credit check. However, this isn’t the only way they judge loan applicants.

When you apply through FairQuid, they take your employment history and salary into consideration, alongside affordability. One black mark on your score from years ago isn’t going to prevent you getting a loan. Employment history – such as whether you’ve been with your current employer for a year or more. This shows positive financial behaviour, stability and your ability to earn a living. People, not algorithms decide if you can get these loans.

Loan payments come directly from your salary, which means they take the affordability of this into consideration too. No responsible lender should ever provide credit you can’t afford. Loans through credit unions also automatically include a savings account, which means, over time, your financial health keeps getting better.

Now is the time to take control of your finances, with FairQuid: Your Money, Your Way.

Find out more and apply here.

Broken Heart, Broken Credit: Making Sense of Credit Scores

Loans, store cards, credit cards and mobile phone contracts seem like a great idea when you are in a happy relationship.

But when things go wrong, which can happen at any age, monthly payments can turn into hazardous liabilities that can trip you up years later. Taking out credit – which includes phone contracts – for someone else is always risky, even when you are married.

Even if someone else is giving you the money to cover the payments, the debt is still yours. You are legally responsible. One such example is a guy who used his good credit score to get a phone for his girlfriend at university. Let’s call him Andrew. He took out a 12-month contract for her, but six months later, they broke up, and both of them moved to different flats.

A Series of Unfortunate Events

All of the bills were going to their former address. He didn’t change the billing address, and she stopped paying him. He wrongly assumed she would take over payments – which anyone can do, even without access to the account or needing to pass security questions. Maybe she did for a while, but at some point, she stopped paying, and he wasn’t paying anymore.

It took another six months for the debt to catch up with Andrew. When it did, it was over £150, including late payment charges and collection agency fees. He paid it and assumed the situation was dealt with. It was hard enough breaking up with his girlfriend, never mind the added pain of paying off her phone contract.

He was wrong to assume the debt situation was over.

Six years later, after climbing his career ladder, promotions and stable employment, Andrew’s credit has finally recovered. It has taken six years of being careful with money and not being able to get much credit for the one ‘black mark’ to stop affecting his ability to get loans, credit cards, store cards and a mortgage.

Making Sense of Credit Scores

Andrew is not alone. Millions of people – for one reason or another – have limited access to credit as a result of bad scores preventing us from accessing finance many of us can, on current salaries, easily afford.

For many people, credit scores are like a black box. Black boxes constantly record numerous data inputs on planes. In the same way, credit reports record data from numerous sources: our bank accounts, credit cards, phone companies, utility companies, store cards, mortgages, and any applications to apply for more credit.

Most of us don’t know our credit scores. However, you can find out easily enough – using ClearScore (free), Experian (free trial – but remember to cancel) and other free tools. But if you don’t know, yet want to apply for something, such as a loan or credit card, you run the risk of damaging your credit further thanks to marketing from banks and other companies that suggest you will be successful.

Aggressive tactics and offer target those most vulnerable, and more likely to need credit quickly. When people are denied, it can be tempting to try payday lenders, and others that offer money at an extortionate rate. When your credit has been damaged, but you are rebuilding, and in steady employment, payday lenders should not be your only option.

There is an alternative solution, thanks to FairQuid: Your Wages Your Way. If you’ve been employed for at least one year at your current employer, you can apply for a loan through credit unions that take employment history and salary into consideration.

We don’t base everything on credit scores. You also get an automatic saving account as part of this loan: starting from a minimum of £10 per month, with payments for both coming directly from your salary, making budgeting easier. All your employer needs to do is verify your employment and adjust your payroll if you are approved. It doesn’t cost them a penny. Find out more and apply here.

Your Wages Your Way

Worrying about money is a horrible feeling. It stops people sleeping at night. It grips you in the pit of your stomach. Money worries can get in the way of even the brightest summer day.

No one wants to worry about money, but even those who earn decent money – or at least have a stable job – can find themselves in a tricky position. In the UK, average household debt is around £13,000, and around 70% of us have no savings.

So it doesn’t take much to unsettle most people finances: A boiler breaking, car fails an MOT, an expensive month with too many Birthday’s, not to mention, for families, Christmas and the Summer Holidays.

The problem is, banks aren’t always willing to lend extra money when someone is in a tight spot. Banks assess whether they can lend based on credit scores. When applying for a loan, overdraft extension or credit card, it doesn’t really matter what you say. That is one reason you can apply online without speaking to anyone these days – people don’t decide who gets money anymore, algorithms and credit files do.

If you have a good credit rating, then getting access to a little extra money – or having that money (or credit) already available shouldn’t be an issue; but we know this isn’t always the case. Not everyone has an ‘excellent’ credit score.

Millions of people are stuck in ‘persistent debt’, paying off old credit cards, loans and overdrafts. And then there are others, whose credit files are still affected by acts of kindness that get turned into bad debts, such as when people get phones or loans out for other people who then don’t pay, or move away.

Bad credit scores still penalises people who have steady jobs and salaries that cover all their costs, except for unexpected bills and other expenses. You shouldn’t have to turn to payday lenders to rescue you from a tight spot.

There is another way. For anyone who’s been employed at least one year with their current employer, you can – through credit unions – get a loan that should pay off any current debts and help you start to build up some savings.

All you need is your employer to verify your employment. If you are accepted for the loan (which comes with an automatic savings account – starting from a minimum of £10 per month). People, not algorithms decide if you can get these loans. Loan and savings payment come straight from your salary every month, just like Ride to Work schemes, travel and childcare schemes and other salary deductibles (council tax).
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All your employer needs to do is verify your employment and adjust your payroll if you are approved. It doesn’t cost them a penny. Find out more and apply here

FairQuid: Your Wages, Your Way.

Stuck in Persistent Debt: Want a Way Out?

More people than perhaps anyone realises is stuck in “persistent debt”, according to the financial watchdog. Around 3.3 million people are stuck in a cycle of only ever paying the minimum on credit cards and loans, with more money being paid out on interest and charges than the amount borrowed over 18 months.

If this sounds familiar, then don’t worry: You are not alone. The Financial Conduct Authority (FCA) has undertaken a thorough review of financial products and found that these 3.3 million customers are paying £2.50 for every £1.00 borrowed.

Clearly, this isn’t sustainable. The debt won’t reduce when only the minimum is paid, and this cycle of bad debt is forcing people to turn to payday lenders if an unexpected bill lands on the doormat. Not only that, but there are times when someone may have a CCJ they may not be aware of, which in turn is making it difficult to consolidate debt and start saving.

Apart from winning the Lottery, there are solutions that can turn things around for anyone stuck in debt and keen to find a long-term way out.

#1: Manage your credit score

For most people, borrowing is done through high street banks, which means knowing what they know – the information on your credit file – is part of the key to unlocking how to manage your money better. There are several useful free tools around, such as ClearScore, Noddle and Experian.

Having a clear idea what is on your credit file, including any forgotten old debts or CCJs is an important first step. Next, make a plan for how you can consolidate the debts.

#2: Debt consolidation

One of the main reasons people get stuck in persistent debt is that they can’t consolidate what they owe and reduce the monthly payments. Unfortunately, trying to consolidate debts involves applying for a new loan, which normally isn’t an option when credit ratings knock people back.

However, employee benefits loans are available for anyone who has worked for their current employer for more than one year. All you have to do is ask your manager, or HR manager if they will provide these as an employee benefit. It won’t cost your employer a penny. Not one penny.

Loans are arranged through ethical lenders, for fair rates, and deducted straight from your paycheck. A small savings account is also set up, as part of the terms of getting a loan, and most people who have taken out loans are still saving, even after the loans are fully paid. Best of all, even those with bad debts or CCJs are considered. With an employee benefit loan, you aren’t just a set of numbers on a credit file. You would not need to hide having a CCJ. The lenders consider everything, including how you are performing at work and how long you’ve been with your current employer.

#3: FCA Intervention

In time, the FCA – now they understand the extent of the issue with persistent debt – might be able to help those in that situation. But we can’t hold our breath. It may take some time. Right now, they are doing a consultation paper with financial sector companies to understand how to tackle the issue, which means it could be 2018 before they have a working solution.

Want a solution this year? Debts you want to consolidate? Or are you looking for an easy way to start saving?

FairQuid is here to help. Our loans have already made debts more affordable for hundreds of people across the UK who want to reduce their debts and start saving. Fill out the form on this page so you can ask your employer to offer this as a completely free benefit to all staff.

Things that make you go Yay!

When you start a new business typically you are focussing on idea validation, market validation, product validation to begin with. Very soon you move on to market sizing, revenue and expense forecasting, cash flow models to ensure you can not just grow fast, but survive too. Go-to-market plan execution then consumes you.

In all of this the thing that makes it all worthwhile and gives you the stamp of approval, is feedback on how you have actually made a difference in someone’s life.

Feedback like this (reproduced below) is what makes us go Yayyyyyy!!!

“Just a quick mail to say thank you for helping me out with this work based loan!

This has helped me out massively. Trying to look after three kids and day to day bills I found myself in a hole and felt I had nowhere to turn. I was maxed out on two credit cards, one with a limit of £3500 and the other £1000. My Vanquis card had an interest rate of 39.9% APR and the Halifax had a 18.9% APR. Some months my outgoings on these credit cards amounted to around £200 and this was just in interest alone! At this point no matter how hard I tried I felt this was never going to be paid. I tried looking into other loans to pay these off in full but was declined.

Thanks to this scheme I have been able to borrow £4000 and with some help from my first wage I have manage to pay both credit cards off in full. Both of these cards have now been cut up and cancelled to avoid falling back into the same situation. I now have one manageable payment of £280 for the next 24 months. The fact this comes straight out of my wages on payday makes it so much better for me as I don’t miss it. Knowing in 24 months I will be debt free and also will have accumulated £240 in savings is a huge weight lifted from my shoulders and for that I thank you!” a FairQuid user