This piece first appeared in Saga Magazine in November 2012
The text here may not be identical to the published text  

Money News November 2012

Payday loan perils, Help with heating bills, Council benefit cuts, Winter Fuel Payment abroad

Pay Day loans
More and more people in financial difficulties are turning to the quick fix of pay day lenders. But they often live to regret it. Here is how pay day loans work. You run short of money. So you call up a payday lender or go online and ask for, say, £200. The money can be in your bank account within a few minutes. You agree to pay back the money at a set time – say 28 days – together with a fee. If you borrow £200 that can be £50 or more depending which firm you go with and the APR can be anything from 1734% to well over 3000%. You give the firm your debit card details so the money you owe can be taken on the due date.

People take out payday loans because they need money urgently and have no other form of credit. So a month later when the loan is due, it is likely they still have those financial problems. So they go to another payday lender to repay the first. That £200 loan which has already become £250 will now turn into a £326 debt to payday lender 2. A month later they go back to the first firm and borrow more to pay off the debt to payday lender 2. They now owe £407. In just three months that £200 loan has more than doubled to a debt of over £400.

Payday lending is growing fast. One major payday lender says it saw a fourfold increase in its business in 2011 making nearly 2.5 million loans. If you or a younger relative are in financial difficulties because of a payday loan there are two steps you can take. First, if you have given your debit card details and payments are being taken out of your account you can stop this by telling your bank. It has to stop the payments at once and if it allows a subsequent payment out it has to refund the money to you – though some banks will deny that. Second, get help from a debt advice charity such as National Debtline www.nationaldebtline.co.uk 0808 808 4000. It will help you negotiate with your creditors and sort out a sensible repayment plan.

Council Tax help to be cut
People in England and Wales who are under pension age will find the help they get with council tax bills cut from April. The current national scheme of council tax benefit which has been in place for twenty years will be scrapped and every local authority will be responsible for its own council tax support but with the money available for it cut by one tenth. People over women’s pension age (around 61yrs 6months by April 2013) will be protected from the changes so the cost cutting will fall on younger people. Many councils will introduce a minimum payment of 20% of the full council tax which everyone under pension age will have to pay however low their income. And people under pension age who currently get their council tax reduced will find they pay more in most areas from April. The picture is still not clear as many councils are still consulting on the new scheme they will implement. A few councils – about one in twenty – have said they will continue with the existing system and find the extra money by making cuts elsewhere.

The 25% discount for people who live alone – or are the only adult in the household – will not be changed.

In Scotland the Government has decided to keep the scheme as it is now and make savings elsewhere. In Wales the Assembly will make the cut but there will be one scheme of council tax support covering the whole country. In Northern Ireland no change is planned in the current schemes to help with rates.

Winter Fuel Payment abroad
The European Court has forced the Government to allow UK citizens people who have moved to Europe to claim winter fuel payment. Before the ruling people who got the payment while they lived in the UK could keep it if they then moved to live elsewhere in Europe. But the new ruling means that people who have lived and worked in the UK for most of their lives can claim winter fuel payment for the first time even if they moved to another European country before they had claimed it. So someone who moved to Spain in their fifties after a working life in the UK can now claim the payment for this winter if they were born on 5 July 1951 or earlier. The payment is £200 per household and is not means-tested. If both people in the household was born 23 September 1932 or earlier the amount is £300. Europe includes the 27 countries in the EU including Gibraltar plus Iceland, Liechtenstein, Norway and Switzerland.

Download the claim form here http://goo.gl/ZVUFT  or call +44 191 218 7777. More details at http://goo.gl/qJpgu

If you live in the UK and were born on 5 July 1951 or earlier you should get the Winter Fuel Payment this winter. If you do not claim a state pension the DWP may not know about you or pay it. So you need to claim it. More from www.direct.gov.uk and put ‘winter fuel’ in the search box or call 0845 9 15 15 15.

Help with heating costs
As the heating goes on for winter many are worrying about the bills as energy firms raise prices or soon will. But thousands of people could get help with cutting their bills. Throughout the UK there is free help available with insulating your home or updating your heating system. Some schemes apply to everyone – regardless of age or income. Others concentrate on low income households who get pension credit or are on means-tested benefits with children or who are disabled. Contact Energy Savings Trust energysavingtrust.org.uk 0300 123 1234 or call Warm Front (England) 0800 316 2805. NEST (Wales) 0808 808 2244. Energy Assistance (Scotland) 0800 512 012. Warm Homes (Northern Ireland) 0800 988 0559.


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