Money

Where can I find information about money services such as banking, insurance and help with money problems etc?


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Banking Services

It's rare for anyone to get through life without using the services of a bank. By and large, you won't get very far by hiding your savings in a mattress and bartering for your weekly shopping with whatever you've managed to grow in your garden. Given that we all rely on banking services, it's important to make sure that we're getting the right deal.

Banks offer many different types of account and there are some important questions to ask when you're shopping around.

How easy will it be for me to access my money?

Many accounts give you easy access to your funds, however some savings accounts may limit access to your money in return for a higher interest rate. You may also find that some basic bank accounts will restrict you to using the banks own cash machines.

How much will it cost?

Basic services such as using cash machines or setting up standing orders are usually free. However banks may charge for bouncing cheques, reversing payments or unauthorised overdrafts. Banks must inform you of all their charges and are obliged to keep you up to date when they change. When comparing bank accounts, it's useful to consider the potential fees. If your bank has charged you a fee without telling you in advance, or if the charges are unfair, you may be able to make a claim. Get in touch with your local CAB for help.

What services are available?

Your bank may offer an account package that includes additional services, such as travel insurance, payment protection or access to high street offers. You may find these useful, although be careful that you're not paying for services that you don't intend to use.

Borrowing Money

Whether we're making a major purchase such as a car or house, or planning for a special occasion, we often need to borrow money in some form or another, and there are many ways that we can do this.

Loans

When you take out a loan, you borrow a fixed amount and agree to pay it back over a set period, along with any interest that is accrued. Interest can either be fixed or variable. Loans come in two basic types: secured and unsecured. In the case of secured loans, you will put up something as collateral, usually property, which the creditor will be able to take possession of in the event that you default. Even if your loan is unsecured the creditor can take legal action that will effectively turn it into a secured loan, and so it's important to make sure that you are able to make the repayments.

Shop around for a good deal, and pay particular attention to any fees you may have to pay if you default. Short term loans may seem convenient, but if you're late making payments the fees can be high. It's worth checking whether the lender offers any 'payment holidays' or other measures to help out if you experience difficulties. And beware of any fees connected with early settlement. Paying off a loan early is one way of avoiding interest, but some lenders may charge an early redemption fee.

Overdrafts

An overdraft is a credit facility on your bank account, effectively allowing you to borrow money up to a pre-agreed limit. Exceeding the limit will incur charges, often called 'Arrangement Fees' or 'Service Charges'. Details of these charges should be made available to all customers. There has been some debate over whether such charges constitute an unfair 'penalty charge'. In 2007 the Supreme Court ruled that the OFT does not have the authority to determine whether the charges are fair under the present regulations.

Credit Cards

Credit cards have had a profound affect on the way we pay for goods and services, allowing us to charge bills to the card and pay off the balance later, usually within 20 - 55 days. Failure to pay off the bill within the stated period will usually incur interest, although some providers will offer special deals to extend the interest free period. Like bank accounts, credit card accounts offer different incentives to get you to sign up, including high street discounts, fraud protection and 0% balance transfers. You can use an accredited comparison site to find the product that's best for you.

Finance Agreements

In most cases, when a company provides credit it will be regulated by a credit agreement. For example, car finance is subject to the Consumer Credit Act. This determines what information the agreement should contain, what documents should be provided to the customer, how the credit is advertised and your rights to withdraw from the contract. It's important that you make sure you are familiar with the terms and conditions of the agreement before you sign up.

Insurance

Competition in the insurance market is fierce, which is good news for consumers, as it means you have plenty of opportunity to shop around and get the best deals. But be cautious, because the cheapest deal isn't necessarily the best. Check what the policy covers. For example, if you're buying travel insurance, will it cover cancellation? Accidents or emergencies? What about if you have a pre-existing medical condition - will you be covered? And if you're buying home contents insurance, check what might be excluded. Do you have to insure high value items separately?

It's also worth noting what additional situations might be covered. Your home insurance policy, for instance, might insure you for losses incurred outside the home, or might cover certain legal expenses.

Once you've found the deal that's best for you, make sure it's still the best when you come to renew. Many companies will automatically renew your policy the following year, and you may find that the premiums start to creep up. Don't be afraid to switch insurers, or to ask your present insurer to match a lower quote.

But a word of warning - ensure the details you supply to your insurer are accurate and complete. Also be sure to inform them of any changes of circumstances. Failure to do so may invalidate your policy.

Debt Management

Many companies have sprung up which charge fees for advice, debt management plans and insolvency solutions. Such companies may be able to provide the kind of service that's right for you, but be wary of firms that demand substantial fees up front. Also be cautious about monthly fees for payment plans - would that money be better used to reduce your debt? Other solutions are available, including free debt management and advice. Get in touch with your local CAB for more information.

PPI

There is no shortage of firms who can help you claim mis-sold payment protection insurance. It's a relatively straightforward process to claim this yourself, especially as the banks are now obliged to proactively contact customers who have been mis-sold the insurance.

Loan sharks

Organisations which lend money have to be licensed by the Office of Fair Trading, and are required to comply with their codes of practice. Unfortunately, there are many unlicensed money lenders, 'loan sharks', who demand extortionate rates of interest and will resort to harassment and bullying in order to recover debts. Typically a loan shark will offer little or no paperwork, refuse to give vital information and even take items such as passports or driving licences as security.

You can check if a lender is licensed by searching the Consumer Credit Register. Or you can phone 020 7211 8608 between 9.30 am and 4.00 pm, Monday to Friday.

If you live in Derbyshire and you've experienced problems with a loan shark you can contact the Public Protection Project Team on 01332 644 000 for confidential help.

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Also see our page on How to Complain