Graduate debt on the rise: 5 tips for new students

The A level results are out NOW – and a new world of university life is set to open up for thousands of teenagers.

Most new students realise they’ll leave university with a loan they’ll spend years having to pay back once they’ve made it into the world of work.

But new research shows that new graduates will face average debt levels over a third of the average outstanding mortgage.

By the time they start paying back their loans – maintenance and tuition fees – their debts will be well in excess of £41,000, according to The Money Charity,  which is 35% of the average outstanding mortgage (£117,162).

And how you manage any credit you have now can affect your chance of getting credit in the future.

It’s not like when this writer was a student, when not only did you not need a loan or tuition fees, but you actually received grants from the council to help you!

The average debt for the graduates who entered repayment this year was £24,640, up from £21,170 in 2015. The figures have tripled since 2003, mainly due to rising accommodation costs, higher loans, and the gradual rise of tuition fees.

And with the maximum tuition fees rising from £3,465 to £9,000 next year, loan costs are only likely to increase.

Here are five simple tips for students to keep their credit rating in shape:

  1. Many students will live in shared houses, and split utility and other bills. Your credit history can only be linked to other people if you have a financial link with them. Paying rent together doesn’t count, but having multiple names credit agreements like utility bills may link you financially.
  2. Managing overdrafts, credit cards and mobile phone contracts you have responsibly can help maintain a healthy credit report.
  3. Even if you’re living at your parents’ home, it’s important to register to vote, and give that exact address when you apply for credit.
  4. Try not to be tempted to skip or delay your monthly repayments if you can, as your credit report can show you if you’ve missed some payments on cards or loans you have – and they stay on your credit report for six years.
  5. Try not to go over your overdraft limit, if you have one, and try to keep an eye on what you are spending! Always speak to your bank if you are struggling.

Experian also has a Credit Guide for Students and Young People, aimed at helping students & graduates understand how to use credit wisely to get the things they want in life.

(Blog post updated 16 August 2016, earlier version 18 May 2015)

 

I keep getting mail for someone who doesn’t live at my address

By Neil Stone, Social Media Executive

man receives bad news in the post.Post in other people’s names
It’s great to come home and find letters waiting for you on your doorstep but when the letters turn out to be for a previous resident or even someone that has never lived at your address it can be frustrating. If it’s a demand for payment it can also be understandably worrying.

The good news is that as long as you have no financial connection to the individual (such as joint account) then their information will not affect your credit report in anyway.

This is because all credit checks are done by name, and not address, so lenders won’t see or use information relating to the other person when checking your report.

The best thing to do is to return the letter unopened to the sender clearly marked as “not at this address”. The lender should then look for their customer elsewhere.

Sadly we can’t prevent a person from using an address to apply for credit, or stop lenders from contacting their customers at an address, but by regularly returning the post the lender will stop trying to contact them. Continue reading

How does the drop in interest rates affect you?

Yesterday, one month later than most experts had predicted, the Bank of England announced a historic change in interest rates, the first change since 2009 – and rather than the upward rise that had been widely predicted for the past few years, it fell from 0.5% to 0.25%.

 So what does this mean in practical terms?

Mortgages – For those on a tracker mortgage, as long as your lender passes on the cut to its own base mortgage rate (or if it is linked directly to the BoE base rate), your rate (and monthly payment) should go down.  In all, there are about 1.5 million trackers in the UK.

However, some banks and building societies have a ‘tracker floor’, which means there is a limit to how low the percentage can go above the Bank of England base rate. In this case, your rate (and mortgage payment) would be unlikely to change.

If you have a fixed rate mortgage, you wouldn’t be affected if the rates went down during your fixed period, but when the time comes to re-mortgage – or if you’re a new homebuyer – , the options open to you could potentially be more favourable, with some experts suggesting long-term fixes even going below 2%.

Savers – In the event of an interest rates cut, it may depend if banks chose to pass on the cut to savings accounts. Some savers may decide to switch to bonds or shares, which could have the effect of driving those prices higher.

For pension savers who are using an annuity, a rate cut could make annuity rates fall by putting pressure on the long-term. This could have a potential negative effect on employee pension schemes too.

Needing currency for holidays – While interest rate cuts can often mean a weakening of the pound, it may well be the case that the currency markets will have been factoring in a cut for some time already – hence there may be little change if it does eventually happen.  Interest rate cuts can be done sometimes to provide an economic stimulus – to encourage people to spend rather than to save – so perhaps this could help improve consumer confidence and boost the pound.

But what about when it does rise? - Mark Carney, Governor of the Bank of England, has warned against expecting interest rates to stay low forever in these uncertain times, and suggested that homeowners would do well to prepare their finances to be ready for a potential rise of up to 3% in the coming years.

Many homeowners, particularly those who’ve joined the market in the past seven years, will have never been faced with an interest rate rise, and tighter borrowing conditions in the future could make it harder to cope with a rise.

How your credit score could help –  Having a higher credit score could mean you get better deals or lower interest rates on credit, loans and mortgages. The Experian Credit Score is a guide to help you understand your Experian Credit Report, and how the way you’ve managed the credit you’ve had in the past might affect applications you’re making now.

It can also help you to monitor your progress as you get your finances in order before you apply. Getting your credit score up could open up the potential chance to get better rates.

(original post 14 July 2016, updated 5 August 2016)

Experian’s wedding costs guide

The cost of the average wedding:  around £18k

What’s the cost of the average wedding?

The day you get married is as special a day as they come, but wedding costs can often be higher than you think. Here we take a look at how much weddings can cost – and not just for the happy couple.

Estimates vary as to the average cost of a wedding in the UK.  Some experts say £17,000, some say £20,500, some, after itemising various parts, say as much as £30,111.

What we found
Experian research in 2014* found that the average couple (meaning those either planning to get married, are married or that have been married) say the budget came in at just under £4,000 (£3,998).

However, once they were asked to itemise separate costs, such as the dress, the venue, the rings and the honeymoon, the total average cost leapt up to £6,627 – suggesting that perhaps many of us underestimate how much a wedding will cost. Continue reading

Digitally-savvy users most likely to be victims of fraud

Credit Card Security ConceptYou might think that a deep knowledge of all things techie might help protect people against identity theft, but according to new research from Experian* tech-savvy consumers are much more likely to be victims of ID fraud compared to other, less technologically-literate users. 

The study found that the most digitally-savvy group – the most prolific users of mobile and social technology – made up almost a quarter (23 per cent) of all ID fraud victims in 2015. This group also saw the biggest increase in ID theft over the past year, rising by 16.7 per cent over the previous 12 months.

Continue reading

Jangle wins ‘Best Family App’ at #LBPawards2016

Jangle - LBP awards 2016We’re thrilled to announce that Jangle, Experian’s free children’s app, has won a Platinum award for ‘Best Family App’ at the 2016 LovedByParents (LBP) awards.

It also won a silver award for ‘Best Children’s App’ too.

LovedByParents is a parenting website offering news, pregnancy and parenting advice, articles, reviews and competitions, and their annual awards comprise several categories from travel accessories to feeding products.

What is Jangle?
Recognising the importance of helping children learn essential money management skills early in life, Experian and consumer champion and BBC ‘Dragon’ Sarah Willingham have partnered to develop Jangle, a free app which has been quality marked by pfeg (part of Young Enterprise).

Jangle is a great new and free app for children aged 7-11, that teaches children money skills in a fun and easy way while helping them save for the things they want.

It’s easy to use, and contains a wide range of exciting activities that you and your children can choose to do in order for them to learn about money, save money, and have a lot of fun in the process  – from baking cakes to planning journeys, from planning a party to hunting for bargains.

You can find out more about Jangle here, and you can download the Jangle app for iPad here.

5 ways the cost of living has changed since 1966

UK Bobby Moore World Cup postage stampHas ‘fifty years of hurt’ come by already? Saturday 30 July marks the fiftieth anniversary of English football’s finest moment, when they thought it was all over (and it was) and England’s XI won the World Cup for the first and only time with a 4-2 win over West Germany at a sun-drenched Wembley Stadium.

We thought it would be interesting to look at five ways the cost of living may have changed since 1966 – in real terms – which brought up some surprises.

1.       Buying a house – In 1966 the average cost of a house was £3,620, which equates to about £60,848 in today’s money. In contrast, the average cost of a house in the UK broke the £200,000 barrier for the first time in April 2016, going up to £313,000 in the south of England.   Continue reading

Brexit: how to manage your holiday spending

Summer at ocean beach with two chairs and umbrellaWhile it’s still not fully clear how our money will be affected by Brexit, one area where we are likely to notice a difference in our pockets is around holiday spending this summer.

Since the referendum result, exchange rates have dropped against both the dollar and euro. What this means is that you’re now likely to get less dollars or euros than you would have last year. At its highest point in the last year, you would have been able to exchange £100 for €143, whereas now you’ll get €119. Likewise with the dollar, at its highest point in the last year, you would have gotten $157 for £100, $26 more than £100 would get you today.

While your pounds may not go as far as they would have last year, there are some savvy ways of getting the most from your money with some simple preparation and smart decisions.

When to exchange

At the moment, it’s impossible for anyone to say for certain whether the pound will weaken again, remain stable, or strengthen – and in what timeframe. When it comes to choosing when to exchange your holiday money, you can either choose to exchange your money now to lock in today’s exchange rate in case sterling falls again – or – you can wait until nearer your departure date to see if the pound recovers.

There are no guarantees which way it will go, but keeping an eye on what the experts are saying will help you make an informed decision. The main thing to avoid is turning up at the airport and hoping for the best. Exchange rates at airport bureaux can be extremely expensive, so shop around in advance instead to make sure you’re getting the best value.

Paying by card

Another alternative to cash is to take a pre-paid currency card. This will allow you to pay by card abroad, but with an exchange rate that’s been locked in before you travel when you transfer the money to your card.

There are also specialist credit cards available that don’t charge overseas transaction fees and have special exchange rate terms. However, the exchange rate you pay on the card can still vary and you’ll be paying the current exchange rate at the time of purchase, rather than a rate you’ve locked in in advance.

The higher your credit score, the more likely you are to be accepted for the most competitive rates, so use eligibility checkers to understand what you’re most likely to be accepted for before you apply and avoid wasted applications that can negatively affect your credit score. Specialist credit cards work in the same way as regular credit cards, so make sure you can afford to pay back what you spend on the card during your holidays and that you don’t miss a payment after you get back.

Whenever you’re paying by card, whether debit or credit, it’s better to pay in the local currency than in sterling, as you can be charged an additional fee otherwise.

Savvy spending

Aside from getting the best deals you can on currency, there are some other ways to save some cash.

In advance:

• Raid your piggy bank for old currency you may have left over from previous trips. Even small coins add up, and an extra €20 could get you a free lunch at the beach!
• Think about what you’ll be doing on holiday and divide activities into a list of must-dos and things you could do without. This will help you plan where to spend your money doing things you love, while avoiding a post-holiday hangover caused by over-spending on things you could have dropped.
• If you were planning to hire a car, consider whether you really need to. If your accommodation is close to local amenities, why not walk or use public transport, and free up money to spend on meals or other activities?
• Shop around for the best deals you can get on travel insurance, rather than automatically opting for the first deal you’re offered when booking your holiday.
• Check your roaming package with your mobile phone provider. You may be able to buy a low cost overseas bundle in advance. Regular roaming and overseas data charges can be very expensive, so make sure you don’t end up with a massive bill when you get home.

At the airport:

• Don’t be lured into unplanned airport purchases. Do your holiday shopping in advance, including toiletries and sun protection, and avoid the temptation of duty-free stores.
• Food at the airport or on a plane can be costly, so consider bringing a packed lunch.

When you get there:

• Consider alternating eat-out/eat-in nights. It’s possible to enjoy the local cuisine at home too, so look for a good-sized supermarket that will have a variety of foods to choose from. When you do eat out, veering off the beaten track a little means you can often find local places, where you’ll get better quality and value than the typical tourist traps.
• Local beers and wine can often be much cheaper than more well-known international brands, which can keep costs down on poolside drinks or nights on the town.

If you haven’t yet booked a holiday overseas, you might want to avoid the uncertainty of exchange rates by planning a ‘staycation’ within the UK. We have stunning beaches, picturesque villages and beautiful countryside – so, just because you can’t get overseas doesn’t mean you can’t have a fantastic holiday right on your doorstep. Check out our latest post looking at the pros and cons of staying put versus taking flight.

Holidays: Staycation v Going Abroad

JWhere are you going this summer holiday – flying off somewhere or staying in the UK?  More than 1 in 10 Britons say they are less likely to go abroad this summer.  And with the pound having taken a big hit in recent weeks, it’s not hard to see how the temptation to choose to stay put in the UK is growing.

We look at the factors – cost and otherwise – and try to work out which is best.

Hotels and location
GO – It often doesn’t just depend on where you go, but when you go. Whether you stay or go, school holidays are always likely to be more expensive.  Costs vary from country to country, and the pound doesn’t go as far as it did a year ago.  Popular western Mediterranean islands like Mallorca and Ibiza are also becoming premium destinations now, with good hotel rooms hard to come by, as security fears make many holidaymakers avoid certain hotspots that are now considered to be danger zones.  Bookings to Portugal and Spain are respectively up 23% and 22% since last year.

STAY - Hotel prices in the UK are often higher than a comparable hotel abroad – there are fewer of them, plus there’s competition from overseas visitors and businessmen. In addition, the sunny days are so infrequent that when it does look as though it’s going to be sunny, competition for rooms is high. But Devon, Cornwall and the Channel Islands are particularly popular right now, with ‘strong sales’ reported.  Continue reading