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Banking With Challenger Banks

Accounts with so-called “challenger banks” are becoming increasingly popular as a way to procure the best rates, as savers strive to get higher returns in a continued low interest rate environment. But what exactly are challenger banks, what should you be aware of before banking with them, and are there any catches to choosing these niche names in banking?

What Are Challenger Banks

The term “challenger banks” is one that is applied to any less mainstream bank in the UK market that is “challenging” the bigger banks by offering competitive products, most notably savings accounts and bonds. Often, these are simply smaller and therefore more obscure banks that have few high street branches or operate entirely online. However, these may also be foreign banks that have limited, less well-known operations in the UK or large organisations that are well-known for something other than banking but also offer a small selection of financial products.

Why are People Choosing Challenger Banks?

The simplest yet most important answer to that question is this: to get more interest. A lot of savers have refused to take the recent low interest rates sitting down, and after six years of a record low base rate and accordingly disappointing savings products more and more people are going the extra mile to get the best deal they can. This means looking at the full market, including more obscure providers who they would have previously overlooked in favour of more familiar names. What’s more, it is now very often these challenger banks that do offer the best rates, and naturally this is leading a lot of new customers to choose them after a thorough look over the market.

Are There Any Disadvantages?

There are likely to be some disadvantages if you prefer to bank the old-fashioned way in a branch rather than online or over the phone, as challenger banks have few or no actual branches. Many, especially those that offer current accounts, mitigate this by allowing you to make deposits and the like through any branch of a nominated major banking chain. Others require you to manage your account entirely online. For many, this will be no problem at all, but for some this may be something of a disappointment.

Is Your Money Safe?

Another thing that worries a lot of people when considering challenger banks is whether it is safe to entrust their savings to a small company they may never have heard of before. However, these fears are likely to be unfounded. Challenger banks will handle and manage your money in much the same way as their larger counterparts, and they will still be covered by the Financial Services Compensation Scheme (FSCS) in case anything does go wrong. There are technically a couple of exceptions – some of the foreign banks with limited UK operations such as Dutch firm Triodos or German bank Fidor – but these offer very similar protection under the equivalent schemes in their home countries so there is little practical difference.

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Part-time Jobs for Teenagers

Once they are old enough, many teenagers decide they would like to get a part time job after school or at weekends. This may well be something that their parents want as well, whether because they would like their sons and daughters to pay their keep and contribute to the household finances or just because they would like them to experience the responsibilities of work and learn how to manage an income.

However, the world of work has changed in recent years and there are arguably fewer opportunities for young people to find part-time work. Nonetheless, a few different types of work stand out as particularly suitable and accessible to teenagers.

retail workRetail Work

The old standby of 16-year-olds looking for after school work is retail, and this sector is still probably the main employer of the UK’s teenage workforce. Local supermarkets, corner shops and small independent stores likely owe a large part of their workforce to the local schools and sixth forms. While these jobs can be fewer and more competitive than in years gone by, when shops do start hiring they are often more willing to consider teenagers than most other businesses. However, it is likely that those teenagers will have to be over 16.

Dog Walking/Dog Sitting

Teenagers who are good with animals may well want to consider dog walking or dog sitting. This is a simple, undemanding yet very pleasant area of work, and there may well be demand from local pet owners who need to spend time away from home or aren’t always around when walkies are required. This kind of work also tends to be flexible, and as pet owners are most likely to be away during school holidays the timing can be convenient for young people in education. There may not be as many hours available as there would be in other jobs, but for the time it takes dog walking and sitting tends to pay fairly well.

Babysitting

Babysiting is also a good way for young people to get their first experience of work, earn some extra pocket money, and show their reliability as workers. Hardworking parents rarely find that their work hours line up neatly with their childcare needs, and many also appreciate the occasional evening out without worrying about the kids. All this helps create demand for babysitters, and this is a niche which is traditionally filled by teenagers. There is no legal minimum age for babysitting, though parents are advised by the NSPCC to “think carefully about using anyone under 16.”

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Which Home Improvements Will Really Save You Money?

There are a number of reasons you might consider home improvements, but often financial benefits are at least a contributing factor. Some improvements promise to add value to your home, helping partially offset or even outweigh the initial cost. Other improvements are specifically designed to save you money, such as those aimed at improving energy efficiency and so reducing bills.

However, it can be very hard to work out which home improvements will actually bring a financial benefit. If you are looking into home improvements, the following are most likely to be beneficial.

Insulation

If your home currently lacks insulation, it makes a lot of financial sense to have it installed. Loft insulation, in particular, will quickly pay for itself. This will probably do more than any other home improvement to not only leave you noticeably better off and to do so in cash. Loft insulation, once installed, should last for at least a few decades. The reduction in your energy bills, meanwhile, will mean you recoup the cost of installation in just the first couple of years. After that, you will be better off and, unlike money tied up in the value of your home, the difference will be readily available in your bank account.

Adding Space

In terms of home improvements designed to boost the value of your home, the most effective are those that add extra living space. Even a summerhouse in the garden could increase the value of your property. Conservatories are another useful example. However, increasing the size of the main body of your home is the most effective tactic. This could be done through building an extension, or through carrying out a loft conversion which tends to be much cheaper because the main structure is already in place. For best results, add at least one bedroom. Turning your home from a two to three bedroom house, for example, is the most effective way to increase the value. If you want to boost your home’s value against a future sale, looking at the price difference between two and three bedroomed houses similar to your property in local estate agent listings can help you assess whether you will actually be better off.

Kitchens and Bathrooms

Even simply redecorating a home can increase its value, especially if the current décor is looking dated or worn. While this is true throughout the house, the biggest difference will probably come from refreshing an out-of-date kitchen or bathroom. On an individual level, house values largely work in terms of ability to appeal to potential buyers. These are two of the most important rooms for buyers, and a worn, dated, or unpleasant kitchen and bathroom can do a lot to put people off and significantly reduce the value. Refreshing these rooms may or may not result in a value boost that outweighs the cost, but it should at least help to partially offset the cash price of having the work done.

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New Year’s Resolutions: Frugal Roads to Success

New YearWith the first of January almost here, many people will be preparing to embark on New Year’s resolutions. There are all kinds of things people might resolve to do differently in the new year, but a few resolutions are particularly common. Some are also potentially costly, but there are ways to achieve them without spending as much as you might think.

Do More Exercise

Doing more exercise is a common New Year’s resolution. However, it is also a costly one as many people find that the best way to achieve this is with a paid gym membership or by taking up an exercise class.

The easiest way to get around the cost of gym membership and exercise classes is to simply exercise at home, or take up an activity such as jogging. Many books, videos and articles, including a lot of free online resources, can help you put together an effective exercise regime. However, one important reason many people choose to go to a class instead of exercising at home is motivation. At home, it is all too easy to just stay on the sofa, whereas in a class you have other people to motivate you. One way to get this at home is to partner with a friend who also wants to get into shape and exercise regularly together. You will each feel accountable to the other and have more motivation to stick with your regime.

Eat More Healthily

Eating more healthily is another common resolution, and many people combine it with exercise after making a resolution such as “lose weight” or “get in shape.”

The reason this one can turn out costly is that many healthy or diet foods can be more expensive than their regular counterparts. One way to get around this is simply to avoid specialist health foods or diet regimes that revolve around branded products such as meal replacements. Often, you can achieve great results without buying such specialist products, simply by putting greater focus on healthier “standard” foods. If you do want to buy the odd low-fat version of your favourite treat, many supermarkets offer low-fat own branded goods which will be cheaper than buying from a major weight loss brand like Weight Watchers.

Stop Smoking

Smoking is an expensive habit, so a New Year’s resolution to stop should automatically be a money-saver. However, it is hard to give up an addiction without help, and the various aids on the market can still put a strain on your purse strings.

The most important way to save money on aids to quit smoking is simply to shop around for better prices. Some places charge a lot more than others for stop smoking aids, and you stand to save quite a bit if you find the cheapest place to buy. Also, consider own-brand products as well as the big brands. Most products work by giving you an alternative source of nicotine, and if they give you the same dose then they will probably provide you with the same experience regardless of brand. However, exercise caution when buying cheap, unregulated e-smoking liquids, as there is some evidence that sub-standard mixing procedures and questionable ingredients can make these products hazardous.

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Credit Cards – the basics

Here are some of the basics of credit cards that everyone needs to know when approaching them.

What is a credit card?

The simplest answer to this question is that a credit card is one way to borrow money. You make an application to a bank, building society or specialist card issuer and once it is accepted, you receive an unique card created just for you. It has your name, an exclusive number and the dates on which it has been issues and it will expire.

Furthermore, each credit card has a set credit limit. This is the amount you can borrow. This amount may not be the one you asked for in your application but rather it is the one set by the issuer. However, this can be increased if you show that you are able regular payments on time.

1How does my credit card work?

You can use your credit card to buy goods and services and each month you will get a statement indicating how much you have spent. The least you need to pay is the minimum amount shown on your monthly statement which is usually 2% to 5% of the amount due. However, the ideal situation is if you can pay off the full balance at once each month. Otherwise, the card issues will charge you interest each month on the ‘outstanding balance’ (the money you still owe).  Note: a very good explanation of all the words associated with credit cards and borrowing can be found at this online credit card terms glossary.

When you are shopping, the electronic system used by the retailer will read the encrypted details contained in the black information strip on the back or on the chip on the front. In that way your card number, name, expiry date, limit and the cost of item you are purchasing will be recorded, together with the shop’s identification number.

The bank of the shop then checks you card detail against your card issuer’s data base and provides a guarantee to the shop that it will get paid. After that, you can enter your PIN to authorize the transaction and complete the purchase.

Your card can be a flexible friend because it can be used in millions of places around the world, both online and via telephone.

Remember you will need to have a good credit record to be able to apply for a credit card.  You can find your credit score online for only £2 with Experian.  This will tell you if you would be accepted for credit.

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Quick and Easy Spending Cuts

Cost cutting with clipping pathNobody likes spending money when they don’t have to, yet many households of all income brackets have unnecessarily high outgoings. There are a number of quick and surprisingly easy ways to cut the cost of running your household, often without having to give up any luxury you currently enjoy.

Always Switch Providers

Which providers, you may ask? The answer is just about every one that can be switched. The main examples include:

  • Car/House Insurance
  • Utility Providers
  • Banks and Credit Providers

Rates change all the time, and the cheapest provider one year is rarely still the cheapest when the next year rolls around. Never automatically renew a contract, and always use comparison sites to search for the best deals. It is usually best to try two or three different comparison sites to ensure coverage of the full market, as no site is able to search every single provider.

If you are with one of the “big six” energy companies, switching may be especially worthwhile. Usually, switching lets you get the same thing for less. However, the most recent customer satisfaction surveys have shown that small energy companies blow the big six away in customer satisfaction. In this case, you could be paying less and actually getting a better service.

Liftshare

Bills are one of the big expenses that households face. Another is usually the cost of running a car. If you use your car to travel to and from work, this is likely where a big portion of your car’s running costs go, and these costs can be cut significantly through a little bit of cooperation with your colleagues.

From a financial point of view, lift sharing benefits everyone involved. Clubbing together with other people in your workplace to share lifts means that every person involved will have less driving to do and will significantly cut the money they spend on fuel. If one of your colleagues wants to be involved but does not drive, they could instead contribute petrol money to the people that do. This still helps the drivers save money, and is probably cheaper and more convenient for non-drivers than public transport.

If you cannot come to any suitable arrangements with anybody in your workplace, it may be worth seeing if you can share lifts with people who both live and work close to you. Dedicated lift sharing websites specialise in matching up people who make similar journeys and are interested in a lift share arrangement.

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Finding Forgotten Funds

Sometimes getting a boost to your funds doesn’t always have to involve an unexpected windfall. Sometimes, you might find that you already have the funds and never realised. In years gone by, this might mean finding an alcove in your home where you hid some savings and forgot about them. Nowadays, there are a whole range of places you might fund some unexpected forgotten funds.

PPI Refunds

The PPI scandal has been going on for years, yet still thousands of people every week are making new claims. Ironically, when something becomes so prominent in the news it is easy to start filtering it out and just assume it doesn’t apply to you. Nonetheless, millions of people who have taken out credit were mis-sold PPI and are entitled to a refund, and refunds average at around £2,750 per policy. To find out more, you may wish to consult professionals such as PPIClaimsAdviceLine.Com for advice and help with your claim.

Energy Companies

Usually, energy companies take a direct debit for a set amount from your account each month. If that turns out to be more than necessary to cover your usage, they keep the difference and add it to your account as credit against any future billing periods where your usage might be too high to be covered by your direct debit. However, if you are quite frugal with energy and consistently use less then credit will simply keep building up on your account. Some people amass hundreds of pounds in credit this way without thinking much about it. If your account is significantly in credit, you are entitled to get that money back rather than leaving it with your energy provider. You should also be entitled to have your direct debit lowered in future so you are less likely to be paying too much.

Paypal Accounts

If you ever sell things online, particularly on popular auction site eBay, you quite likely receive payments via leading online payment system Paypal. However, this money does not go straight to your bank account. Instead, it is added to your Paypal account for use on future payments, and if you want to return it to your bank you will have to manually withdraw it. The same thing can happen if you are issued with a refund for something you bought online. It is quite easy to let money build up in your Paypal account without realising, so it could be worth checking whether you have anything to withdraw.

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UK Income Tax Threshold Highest in G7

Tax AllowanceA rise in the UK’s income tax threshold took effect yesterday. The government is claiming that following the increase, Britain now has the highest tax-free personal allowance in the G7.

UK residents will now pay no tax on their first £10,000 of yearly earnings. This new threshold replaces the previous limit of £9,440. According to the government, this means that people in the UK now take home more tax-free income per capita than their counterparts in any other G7 country.

The G7 or Group of 7 is a grouping of seven of the world’s most prominent advanced economies. Besides the UK, the group consists of Canada, Germany, Japan, France, Italy and the United States of America. The organisation was originally formed in the 1970s to bolster the economic strength of the countries involved in the face of various economic disasters facing the world at that time.

Although the increased threshold means that less income will be subject to income tax, the separate national insurance threshold remains at a lower level. This means that many people who are now lifted out of tax entirely will still be making national insurance contributions. National Insurance contributions are calculated on a weekly rather than yearly basis. However, the threshold currently stands at £111, which for comparative purposes is proportionate to a little under £5,800 a year. This threshold has increased from £109 compared to the last tax year, meaning a far more modest sum of £104 per year is newly freed from National Insurance.

The government has been increasing the personal allowance year-on-year for the past few years, and claims that in total over 26 million working people have benefited. Of these, 3 million have been removed from income tax altogether. The government claims that yesterday alone, around 255,000 people have found themselves no longer subject to income tax.

Furthermore, the government claims that after the latest rise in the personal allowance, an average taxpayer will be paying £705 less in income tax over the year than they did in 2010. As a result of increases to the personal allowance the complete amount of income tax saved by “the typical taxpayer” since the coalition was elected, it is claimed, amounts to £1,824. The Prime Minister described the increases as “one of the proudest things I have done in government.”

However, Labour remain sceptical of the government’s figures, and claim that the average family is in fact nearly £1,000 a year worse off.

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Minimum Wage Gets First Inflation-Beating Rise in Six Years

A government announcement has revealed that minimum wage is to increase to an hourly rate of £6.50. This marks the first time in six years that a minimum wage increase has exceeded inflation.

The last time workers received a pay rise in real terms was in 2008. Since then, all increases have been in line with or behind inflation, meaning that in terms of value the minimum wage has not increased. The new increase, which represents a rise of 19p per hour and will take effect in October, stands to affect a million workers.

The increase represents a rise of 3%. This compares to a rate of inflation which currently stands at 1.9%.

Apprentices, who have a separate minimum wage, will also see their pay increase. The minimum wage for apprentices will become £2.73 for each hour worked, which represents an extra 5p.

Younger age bands also have a separate minimum wage, and once again this is set to increase. 16-17 year olds and 18-20 year olds will each receive a 2% rise, getting a minimum hourly rate of £3.79 and £5.13 respectively.

Vince Cable, Business Secretary, accepted the recommendation for the increase which came from the Low Pay Commission. Mr Cable also encouraged companies to share the benefits of economic recovery with all of their staff, rather than just minimum wage workers for whom it is now required. Mr Cable said: “I urge businesses to consider how all their staff – not just those on the minimum wage – can enjoy the benefits of recovery.”

However, the Low Pay Commission believes that the minimum wage is in need of reform. Professor Sir George Bain, the Commission’s founding chair and the man who was originally responsible for the minimum wage’s introduction in 1999, said it was a “child of its times.”

Sir George said that now, the minimum wage had become a “blunt instrument,” and that many employers would actually be able to pay significantly more to their lowest-level workers. He recognised that in some areas such as retail, setting the minimum wage to the level of a “living wage” would cause unemployment, but emphasised that there were many other sectors where a significantly higher minimum wage could easily be paid. Sir George also encouraged the use of “special case for London to have a higher national minimum.”

While the concept of a rise in the minimum wage was widely welcomed, some felt the increase was not significant enough. For example Unite, the largest trade union in the country, called it “timid.”

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