Super ISAs Fail to Grab Savers as Rates Fall

ISA popularity seems to be dropping. According to the most recent data from the British Bankers Association (BBA), the amount of money placed into tax-free savings accounts at the end of August has dropped 15% compared to the same time last year.

In the period from January to August 2014, £9.3 billion was placed into cash ISAs by savers around the UK. Across the same portion of 2013, savers invested £11 billion into cash ISAs.

For the government, these figures are likely to come as something of a disappointment. July saw the introduction of the “super ISA,” which were first announced in the 2014 Budget by Chancellor George Osborne. This resulted in a number of reforms including a new, higher tax-free savings limit of £15,000. The restrictions in how much of this could be held as cash were also lifted, so for cash-only savers the allowance increase nearly threefold.

More than half of the money deposited in cash ISAs during this period, a total of £4.9 billion, was invested in just a single month. The month in question was July, so this disproportionately large figure is likely down to people holding onto their money until the changes to the ISA rules came into effect.

At the time, the large amount of money deposited in July was taken as good news. It seemed to explain a slow start to the year’s ISA activity, as savers held back in order to take advantage of super ISAs. As BBA Chief Economist Richard Woolhouse put it, “it seems people were just waiting until the new rules came into effect to invest their money.”

However, with figures now showing data for the whole of July and the following month, this optimism seems to have been not entirely well-placed. With ISA deposits still 15% below the previous year’s levels, it appears that 2014 has still marked a fall in the fortunes of ISAs even with the introduction of the new, more attractive rules.

In their place, new options such as retail bonds and peer-to-peer lending are growing in favour. These kinds of options are a form of investment rather than straightforward saving, and accordingly they come with a level of risk. However, amidst low ISA rates it seems many savers are wiling to accept those risks in the pursuit of better returns.

Poor ISA rates have dropped further, and this could be partly because of the fall in ISA deposits. A two year fixed rate ISA will now net you 1.97% interest at most, whereas in July the best offer was 2.06%.

UK service sector growth remains strong

In June 2014, the UK service sector continued its steady growth which points to a further strengthening of the economy in the first half of 2014.

Furthermore, according to the same survey, employment in the service sector grew at a record pace. The services sector plays an important role for UK economy because it accounts for three quarters of UK economic growth. The indication showed that business volumes in the service sector rose at the fastest pace for six months.

According to chief economists, the services sector index taken together with strong construction and manufacturing data published earlier this week suggested that economic momentum was holding.

The ongoing surge in construction and the largest quarterly rise in manufacturing output for 20 years, confirms that the economy is getting back in shape on all fronts. The data shows that there is a UK growth of 0.8% in the second quarter which is building on economic growth of 0.8% in the first three months of the year. Thus, this makes it more likely that there will be an interest rate rise which would occur later this year rather than in 2015.

The data coming from the surveys conducted by the Purchasing Managers’ Index, increases the likelihood of policy makers to decide that a preventive rise in interest rates later this year is warranted. This is believed to be so, especially when we look at the speed at which the labour market is improving.

However, officials from the Bank of England have given mixed signals on when a potential rise in interest rates may happen. The Bank of England governor Mark Carney has been accused by MPs for being unreliable after his suggestion that interest rates may rise by the end of this year and then refuting this idea the following week. According to him, it might be the case that there is more spare capacity in the economy than the Bank has initially estimated in its February Inflation Report. The specific concern of the Bank is the slow rate at which the average wages are increasing,

Markets are seen to be focused on when interest rates would rise, rather than on the point where they would ultimately settle at. Thus, interest rates may rise to 2.5% by the end of the first quarter of 2017.

If the figures are correct, economists believe that we might see even larger falls in unemployment ahead. More payrolls are expected to support consumer spending over coming quarters.

PPI claims ‘have yet to peak’

Over £13 billion has been paid out in compensation for mis-sold PPI since 2008. Despite this the Chief executive of the Financial Services Compensation Scheme, Mark Neale warns that these “[claims] will go on for a number of years”. The Financial Services Compensation Scheme often helps customers by getting back their money for them after businesses have become insolvent. Mark Neale has stated, “we will continue to see firms fail with PPI liabilities and it’s too early to say we’ve seen the peak”.

It is predicted that PPI claims will rise by 20% in 2014, which equates to higher than 16,000 claims. Mr Neale went on to say, “I can’t tell you for how long, nor can I tell you when the peak of claims will be, but typically, you have a fairly normal distribution curve over the years”.

PPI was originally provided to customers as a safety measure to help protect them, by covering their loan repayments if the customer became ill or became unemployed.  However, many complaints have arisen from customers who believe they have been mis-sold PPI. As a result, a large amount of money has been paid out to compensate these customers. £20 billion has been earmarked by the Big Four banks, in order to compensate their customers. In May 2001, it was estimated that an average of £735 million a month was being paid out.

Although there does seem to be a decline in new claims currently, there is still approximately £500 million being paid out each month.

The majority of customers claimed through the Financial Ombudsman. Mr Neale said, “the Ombudsman service has seen a fall in new claims it’s receiving. Sooner or later that will happen to us, but it’s too soon to say [exactly when] that’s going to be”.

According to the head of the UK’s financial compensation authority,  the financial sector in Britain will continue to see claims for PPI from customers who have been mis-sold to,  and it is clear that the situation has not peaked and that there are many more claims  to arrive and therefore more payouts to be made.

How the 2014 Budget Affects You and I

The Budget plans of the chancellor George Osborne affect us all.

The biggest change this year seems to be regarding pensions. Pensioners will no longer be required to buy an annuity, but will be able to access their cash lump sum and use it as they wish. Although this change has been criticised as it could mean that some pensioners may become liable. As they may fall into a higher tax threshold, which means they will need to pay tax at this rate. This also means that they may need to pay the income tax earlier, rather than in stages. Pensioners will be able to obtain free financial advice to help make these decisions.  However, this will not affect pensioners who have an existing annuity. On another note, pensioners who enjoy playing bingo will be pleased to hear that the duty on bingo has been reduced to 10%.

From January, the over 65’s age group will have the opportunity to save in a 1 year bond at a rate of approximately 2.8% or a 3 year bond at a rate of 4% if they wish to.

Many savers will be pleased to know that the tax-free limit on Individual Savings accounts has been increased to £15,000 and the 10p tax rate on savings will cease to exist.

To help families the Help to Buy scheme will extend to 2020. From next September the government will also provide 20% of childcare costs tax-free to parents who pay 80% of childcare costs to a registered provider. The chancellor will bring changes to fuel duty, which will benefit families by approximately £15 a year.

There will be an increase by 2% over inflation on tobacco and taxes on alcohol will increase above inflation, with the exception of ordinary cider and Scottish Whisky. However, beer duty will be cut by a penny which will reduce the price of beer.

The personal allowance will increase to £10,500 for everyone in 2015 to 2016. This will be a relief to many taxpayers.

So as the austerity plan continues and taking into account the economic situation, there does seem to be a few changes made, in an attempt to benefit the majority of people and balance out the economic situation in the UK.

Finding the Right Solution for Effective PPI Claims

The whole payment protection insurance debacle created by Britain’s banks and lenders is an ongoing issue – namely because even though thousands of people are justifiably due compensation for their mis-sold PPI policy, many are struggling to receive the recompense they are due. Banks have been caught deliberately trying to delay claims, persuade customers they are not valid, and training staff to find ways of deterring and not compensating whenever possible.

Although many people are choosing to pursue their claim for PPI compensation on their own, it is for the above reason that many are turning to professional claims handers for help.

Why You should Get the Help of an Expert for PPI Claims?

When you look at the PPI scam, you will realize that the lending companies or the banks involved will not give out the money owed to you just like that. They will first contest your claim and most probably, you will have to go through legal proceedings before you get your PPI refund. And standing against a big financial company whether it is a bank or a money lending institution is an ill-advised move.

Finding an Expert

In the UK, there are many companies which handle PPI complaints. You can browse online and find some of the best experts who can help you succeed. The problem with the PPI claim agencies is that the numerous numbers present make it difficult for you to choose the right one. There are many ways in which you can choose an appropriate agency.

  • You can shop around and look for the best possible service offered by the experts.
  • The review websites give an approximate idea about the services and their advantage from which you can make a choice.
  • There are many forums online that also deal with the claims. You can get objective as well as unfiltered information about the experts.

Make sure you research completely on the professional service you are going to approach for PPI help. Go for a company that is popular and well-known – they are more likely to be reputable and have more experience. Look into their track record and how many successful cases they have dealt with earlier. When you are satisfied with the results, you can approach the company for helping you with your PPI claim.

The Cost of An Education

The cost to get an education in this country has increased exponentially in the last decade, with UK students now paying tuition fees of £9,000 a year compared to it being free before the turn of the century.  This situation is the same as in America, where the cost of a university education has risen dramatically.  In America forty years ago federal aid was provided in the form of grants and other government subsidized funds (68%). These forms of financial aid, for example the Pell Grant, covered 2/3 of tuition costs. Fast forward to the present day and not only are we seeing an increase in school related expenses, but a decreasing number of federal subsidies. So much so that for the first time in American history, the amount of debt due to student loans has surpassed that of credit cards.

We will admit it can be a difficult pill to swallow. So where do we go from here? And what does this mean for generations to come? Consolidated Credit has created a visual history to answer these very questions. It traces American college debt from as early as the GI Bill to present day institutions. Be forewarned that these numbers pack a serious punch.

SME Conference Aims To Help CFOs Balance Risk & Growth

ICAEW held their annual SME conference in London recently and discussions centred on the importance of balancing growth with effective risk management. Whilst small and medium sized organisations across the country have cause to be optimistic after a lengthy period of consolidation, the message from economic thinkers is still one of caution.

The audience consisted of ICAEW members either heading up SMEs or operating on behalf of them, with an open floor discussion. Tony Tydeman, heading up the Commercial Finance division of asset-based lender ABN Amro, was the first to initiate proceedings at One Moorgate Place. He was followed by Steve Merchant of chartered accountants Baker Tilly, who introduced himself with the line “what a difference a year makes” – pointing to the predicted economic growth rate of 2.4% by the end of this year, rising to 3.8% in 2014. “Pretty stunning,” in his own words, and certainly cause for real optimism. His sentiments were echoed by recent research carried out by ABN Amro which discovered that 69% of SMEs are actively planning growth in the next one or two years. Though despite this, Merchant still urged caution.

“If your head is in the oven and your feet are in the freezer, your body temperature on average is OK,” he stated in reference to being wary of statistics coming off the back of surveys. In other words, whereas some companies and industries are enjoying a positive spell others are still lagging behind. However, his conclusion derived from spending time talking to business owners up and down the country was that there is a lot of “energy, optimism and activity” in evidence.

Corporate asset finance was discussed by the panel, with ABN’s Tydeman pointing to supplier-side finance issues through traditional finance and a growing appetite for alternative ways to access funding. Whilst a lot of SMEs are indeed keen to grow, research found that 44% of SMEs don’t feel that they have the right kind of people in charge to realise their growth ambitions.

Joining the discussion at this stage was Joe Jouhal of Data Duplication, a company pleased to have utilised asset-based lending in order to grow their business into the corporate sector. Backing up Merchant’s analogy, he explained that “things are mixed at the moment, it depends on where you are based and what your marketplace is as to whether you find the economy in a positive state or not.”

In conclusion, he referred to “downward pressure” on the economy, despite a growing surge of confidence in it. “The media’s coverage is important,” he went on to say. “During the Olympics, everyone felt great and it contributed to the uplift in public mood. The media can be quite negative in its take on the economy and it will filter into a business’ way of thinking.”

 

Houses, Help to Buy and the UK mortgage market

The government’s Help to Buy scheme has been brought in with the aim to help first time house buyers with deposits.  A number of Banks including HSBC, RBS and NatWest are now set to implement the new scheme throughout the UK.

This comes at a time when sales are reportedly the highest that surveyors have seen in just under 4 years. Many surveyors, according to the Royal Institution of Chartered Surveyors are predicting an increase in house prices, with some believing that the Help to buy scheme could drive up house prices even further.

Danny Alexander, the Treasury Secretary disagrees with these claims, stating that “People who think that there’s a housing bubble should get out more. They should get out of Kensington and Chelsea, and go to Manchester or Birmingham, and major towns across the country.” He went on to defend the scheme saying that it supports those who do not have “piles of cash”.

The scheme is anticipated to last for 3 years, providing help to those moving house and first-time buyers, who will be able to use the scheme for properties valued up to £600,000.

However some MPs are worried that the new scheme could raise house prices without careful consideration by the government. The Treasury Select Committee said the “Mistakes could distort the housing market or carry threats to financial stability.”

They added “We continue to believe that the government of the day will face strong incentives to extend the scheme, with the attendant risk that the mortgage guarantee scheme becomes a permanent feature of the UK mortgage market.”

Mr Osborne believes that the Help to Buy scheme would allow more people to get started on the property ladder; he also added that the UK housing market is now beginning to recover.

Shadow chief secretary, Chris Leslie scrutinised the upper limit of £600,000 for the scheme stating that “Unless George Osborne acts now to build more affordable homes, as we have urged, then soaring prices risk making it even harder for first-time buyers to get on the housing ladder. You can’t tackle the cost of living crisis without building more homes.”

Halifax will soon be offering mortgages with a rate of 5.19% costing £995 in fees compared to NatWest and RBS who offer no fees for a 4.99% fixed-rate mortgage for 2 years with the deposit amounting to 5%.

The scheme provides the opportunity for many who were not able to get into the housing market due to lack of funds to purchase their first home as rates for deposits are set to drop from 20%, which was set at the beginning of Britain’s economic crisis, to more affordable levels.

Losing Weight on a Budget in 2013

Because of economic hard times, more people than ever before are looking to get by with less money. Reducing costs on household bills and vehicle expenses are mainly at the forefront of people’s minds to save extra cash, but losing weight is also an important issue, as we all look to lead healthier lives.

If you want to lose weight on a budget in 2013, then you should consider the following points:

Eat at home

While eating out can be a nice treat maybe a few times a month, going out on too much of a regular basis can have a tremendous effect on your wallet. For this reason, it’s a good idea to eat at home more, so you can cook your meals from scratch and save hundreds of dollars a month.

Coupons

In recent years, coupons have took off in a big way. There are now thousands of coupon sites where you can find great deals on food brands available at the supermarket, meaning you can significantly cut the costs of your shopping bill. Also, make sure you keep an eye on the Sunday newspapers, as there are usually some great coupon deals to be found for groceries.

Appetite suppressants

If you find yourself constantly spending money on junk food snacks to satisfy your hunger cravings, then you might want to consider an appetite suppressant supplement. For example, Garcinia Cambogia extract has been getting a lot of attention in the news and media recently, as it has helped millions of people lose weight and save money by reducing their urge to binge eat.

Canned food

Let’s face it, items such as fresh fruit and vegetables can be expensive, especially when you are buying out of season. For this reason, why not buy the canned version to save yourself some money? Not only is canned food cheaper, but in most instances it is just as nutritious as the fresh and frozen alternatives.

Walk

Why spend your hard earned money on an expensive gym membership, when you can get all of the exercise your body needs…for free. The summer is a great time to put your walking shoes on and get out in the fresh air to burn those calories.

Water filter

An important part of weight loss is drinking enough water every day so you stay well hydrated. Unfortunately, tap water is often full of chemicals, and bottled water is expensive. You can get round this by purchasing a water filter, so you can drink as much water as you want without affecting your health or breaking the bank.

Beauty on a Budget – 10 Gorgeous and Affordable Mascaras

I’m obsessed with mascara, even before I trained as a Makeup Artist I was always saving up my paper round money to buy the latest mascara. As you can imagine I’ve tried and tested every mascara on the market.

Which Mascara Is The Right One For You?

Mascara’s have a use by date of 6 months as you can get eye infections if you use one that is out of date. When you are deciding which one to buy I recommend that you check ophthalmologists test it, as if it is it will be suitable to be used on sensitive eyes. First think about what you want your eyelashes to look like.

For instance you might already have long lashes so prefer an original thick wand or if you have thick lashes and would rather give length to your lashes you would be better using a longer wand or if you simply want separation, a plastic wand will be perfect for you. As a Makeup Artist in Manchester I have mastered the technique of applying mascara by placing the wand at the root of the lash for the greatest volume at the root and wiggling the wand. Then for maximum length to the tip of the lash I use a zig zag motion.

budget mascaras

You don’t have to spend a fortune on mascara to achieve a great result

I go through a least one mascara a month, as I prefer to build up the lashes rather than using strip lashes on my clients. I think it looks more natural and most clients are surprised at how long there lashes look, therefore It’s important that I stick to a budget. Here’s a list of reasonably priced effective mascaras so you don’t have to break the bank.

The Top 10 Mascaras You Can Buy For Under £20!

1. L’Oreal Double Extension, it has a primer at one end, a great buy – £11.29
2. Maxfactor False Lash Effect – £7.99
3. No7 Exceptional Definition – £11
4. Maybelline Great Lash – £4.99
5. Stila Glamour Eyes – £15
6. Benefit BADgal lash – £17.50
7. Clinque Doubling – £16.50
8. Bare Minerals Flawless Definition -£16
9. Rimmel Volume Flash Max – £6.99
10. Smashbox Bionic – £17

From the list of mascara the one that I use the most is the L’oreal Double Extension. You can save more money if you collect Boots Advantage Points or shop at the airport duty free. I also like to buy the packs of Lancôme Hypnose Mascara for £29 when they are on sale, so I’m only spending an extra £7 for an extra mascara. There it is, the top 10 affordable mascara’s that give you beautiful lashes – on a budget!

Guest Author Bio: Emmalene Sophia is a Makeup artist based in Manchester, she performs bridal, occasional and TV make up as well as makeup lessons in Manchester and the surrounding area. She regularly blogs at ExpertMakeUpArtist.com as well as other websites.