Your quick guide to this summer's personal finance news
Summer is typically a quiet time in the world of finance. But since June's election, there's been plenty of new developments that may affect your wallet.
Goodbye, card payment surcharges
Ever tried to pay by card only to be told there’s going to be a surcharge? Or been surprised with a payment processing fee at the end of the online checkout process?
Well, this will soon become a thing of the past. The government have announced they’ll be banning all credit and debit card surcharges from January 2018.
The ban is the result of an EU Directive which outlaws these kinds of fees across the EU. However, the rules will also be made part of UK law, so they’ll remain in force even after Brexit.
Here’s how the ban will work:
It’ll be illegal to charge people a payment processing fee, online or offline (e.g. in a shop).
The ban will apply to anyone based in the UK who takes payments from British consumers - from your local grocery store to online retailers, airlines and even government departments and local councils.
The ban won’t be limited to credit and debit card payments. It’ll also apply to other payment methods such as PayPal, Apple Pay and Android Pay.
Card surcharges are typically around 2% to 3%. So you stand to save a fair amount of money once the ban enters into force. There will also be greater transparency, because the price you’ll see will always be the price you’ll pay.
On the downside, merchants often apply card charges to cover payment processing costs they’d otherwise have to pay themselves. So, come January 2018, some may raise their overall prices to offset the ban’s impact on their bottom line.
Contactless payments are officially more popular than cash payments
This July, the number of contactless payments exceeded cash payments for the first time since their introduction in 2007.
Contactless payments got off to a relatively slow start, but they are now pretty widely accepted. Even the Church of England is trialling it for collections during services.
But contactless payments also have their downsides. Case in point, according to research by the London Business School, they make it easier to splurge without feeling guilty. By contrast, parting with cash is “psychologically painful”, which leads you to think twice before you buy. So, if you’re trying to stick to a budget, going old school and sticking with cash might be the better option.
The state pension age is going up sooner than planned
The government have been planning to raise the state pension age for quite some time. However, this July they announced they’ll be moving the schedule forward.
Under the new timetable, the state pension age will increase to 66 by 2020, to 67 by 2028 and to 68 by 2039 - seven years earlier than originally planned. So, if you were born after 1970, your road to a well-deserved retirement may have just become longer.
But don’t despair. You don’t actually need to wait till you’re 68 to stop working. Most workplace and personal pensions allow you to take out your retirement pot much earlier - at age 55. Which is all the more reason to start saving for retirement today.
Letting agency fees in England are set to be banned
If you’re a private tenant, you’re in for some good news. Letting agencies may soon be banned from charging you any administrative fees. Fees are typically charged to cover things like conducting a credit check or checking your references.
The exact details of the measure, which was announced during the Queen’s Speech, still have to be worked out. But all the main political parties included the pledge in their electoral manifestos. So there’s a very good chance of the ban becoming law in the near future.
Letting fees are already banned in Scotland. By contrast, according to the latest English Housing Survey, private tenants in England pay around £223 in letting fees every time they move. Housing charity Shelter puts the figure much higher - at over £500 per move.
The government have also proposed setting limits on security and holding deposits. This would mean security deposits couldn’t be more than one month’s rent and holding deposits not more than one week's rent.
If these measures go through, you’ll need to save up less money in order to rent a new property.
A new £10 note is on its way
A new, plastic £10 note, which features the author Jane Austen, will soon make its way into your wallet. The Treasury formally unveiled the new note on 18th July 2017 - the 200th anniversary of Austen’s death. It’ll enter circulation on 14th September 2017.
The new note is smaller in size than the current paper £10 note. It has several security features that make it harder to counterfeit, including letters and numbers only visible under a microscope. Austen will be the only woman (apart from the queen) to feature on a UK note.
On the downside, it contains the same material - tallow - as the new fiver, which caused a lot of controversy last time round.
Hopefully, someone will at least proofread the design this time, before the new note is mass-produced.