First published 20 March
The coronavirus pandemic is worrying on many levels. While health is the prime concern, there’s also the potential impact on your short, medium and long-term finances to consider.
With that in mind, we’ve put together some top tips for cutting your bills and making your money work as hard as possible. We’ve also rounded up the raft of support measures put in place by the government and financial providers.
Here are some easy tips for reducing household bills during the crisis.
Top tips for reducing household bills during the crisis
Especially if you’re on an expensive standard variable energy tariff, check whether you can find a cheaper option – you could save almost £290* by switching. It takes around five minutes and you won’t be without gas or electricity at any point – you’ll use the same pipes and meters as before. The only part that changes is who sends you the bill.
*51% of customers that applied to switch via MoneySuperMarket could save at least £289.40, March 2020.
Insurers have pledged to make sure customers are treated fairly during the coronavirus crisis. This means you won’t have to inform your provider if some of your habits have changed – you are working from home for example or using your car instead of public transport to get to work. Claims should also be processed as efficiently as possible.
And remember that the same rules apply – it’s very likely to be cheaper to switch than to auto-renew your current policy when it expires – savings of up to £269* a year are available on motor cover.
*51% of consumers could save up to £269.82 Consumer Intelligence, March 2020
If you’re paying interest on a credit card debt, consider taking out a 0% balance transfer card. This will help you to spread out the cost – in some cases for as long as two years – without paying interest on it. But, more than ever in these unprecedented times, it’s important to check your eligibility before you apply.
There are still 0% balance transfer cards with no fees available – so it doesn’t have to cost to switch your debt over. But note that the longest 0% periods do come with fees attached.
If you’re planning to borrow, ensure you do it in the cheapest way possible and don’t take on debt you cannot afford to service or repay. Consider a 0% interest purchase credit card, a current account with an interest free overdraft or a personal loan.
If your current mortgage agreement is due to expire, find out if you could save by remortgaging to one with a better rate – or see what better deal your current lender can offer (this is known as a product transfer). You could find yourself hundreds of pounds better off a month.
The government has instructed banks and other lenders to allow customers who are financially struggling with coronavirus to apply for repayment holidays. The rules include borrowing ranging from mortgages to payday loans.
Find more detail further down this guide.
If you haven’t changed current accounts in a while, there are a host of deals available, with some offering cash incentives just to switch.
You’ll be covered by the Current Account Switch Guarantee which will make sure it all goes through smoothly in no more than seven working days.
You may even be able to switch across an overdraft if you have one. However, bear in mind rules are changing on overdrafts both during coronavirus and beyond. More on this below.
If you’re lucky enough to be in the position to do it, start putting more away into your savings. It makes sense to put money away to cover unexpected eventualities if you can.
If you decide to take your car off the road to save money because you're not using it, you’ll still need to insure it unless you get a Statutory Off Road Notice (SORN) from the DVLA – you’ll need this even if your car is parked up on the driveway.
You can buy insurance against your car being stolen or damaged while it is off the road under the provisions of a SORN.
Postpone your MOT
The government has implemented a six-month extension for all cars, vans and motorbikes that are due for an MOT between 30 March and 31 July 2020. If your MOT is due from 1 August onwards you will have to book it in as normal.
In cases where the extension is granted you will be responsible for maintain your own vehicle – anyone found driving an unsafe vehicle could face prosecution. Once the six-month extension ends, you will need to book an MOT as you usually would.
Finally, if you take your vehicle for an MOT and it fails, the extension will no longer apply. You will need to make repairs and get it passed before you can drive it again.
What financial help is available during coronavirus?
- The government’s Self-employed Income Support Scheme opened on 13 May. It initially pays 80% of your average profits over the past three years, up to £2,500 per month and is open to anyone who earns £50,000 or less. You will be eligible to apply if you have tax returns from 2018/2019.
The scheme, which originally applied to earnings for the months of March, April and May, was extended on 29 May to cover the months of June, July and August. However, this 'second grant' only covers 70% of average profits (up to £2,190 a month).
You can still apply for the first grant (March, April and May) but you will need to do so by 13 July. You'll be able to make a claim for the second grant in August
- If you’ve only recently become self-employed you’ll have to apply for help through Universal Credit, which has been extended to make it easier to claim
- If you are employed and furloughed, the Coronavirus Job Retention Scheme will pay 80% of your wages up to £2,500 a month. The scheme will run until the end of October.
While you will still continue to receive 80% of your salary until that date, it's worth being aware that the government's contribution towards your furloughed salary will start to reduce.
Your employer will be required to start paying National Insurance and employer pension contributions in August. By September, in addition to this, businesses must also pay 10% towards wages for furloughed staff - rising to 20% in October.
You are permitted to return to work while still under furlough on a part time or full-time basis. Employers will also receive a one-off bonus of £1,000 for each furloughed employee who is still employed as of 31 January 2021. Employees must earn more than £520 per month on average.
- The government has implemented three-month mortgage repayment holidays for borrowers in financial difficulty due to the pandemic – full details on this below
- Payment holidays on credit cards (and other retail credit such as store cards and catalogues) as well as personal loans can be extended for customers still financially struggling due to coronavirus. If you’ve yet to apply for a payment holiday from your credit card or loan provider, you will have until 31 October to request one
- The FCA has now set down proposals to extend help for customers still struggling with car finance, buy-now-pay later loans, rent to own and pawnbroking. Those still to request help will have until 31 October to do so if the proposals are passed.
- Anyone struggling with insurance premiums – such as car, home, travel, life and critical illness – can ask their insurer for help. This could take the form of a temporary reduction in cover, a change of policy that results in cheaper premiums or payment deferral of between one and three months – longer in some cases
- Banks have been ordered to offer customers still struggling financially due to coronavirus an extension to the three-month interest-free overdraft buffer of £500. If you’ve yet to apply, you will have until 31 October to do so.
Separate FCA legislation implemented from 6 April ruled that current account providers must charge one single rate of around 40% interest (APR) on both arranged and unarranged overdrafts, with no additional daily charges.
The FCA had said that nobody paying the 40% rate should be worse off than before the rules were introduced. But for the overdraft break, this has been tweaked to ‘nobody financially impacted by coronavirus’ should be worse off
- Interest rates have been reduced to 0.1% This will mean a reduction in mortgage payments for borrowers on tracker and some variable rate mortgages, but not those on fixed rate deals
- Private and social housing tenants in England and Wales are protected from eviction until 23 August – even if they are behind on rental repayments. They will remain protected by the three-month notice period on evictions which runs until the end of September. In Scotland, tenants must be given six months' notice and in Northern Ireland, it's 12 weeks
- Major internet service and mobile providers have implemented temporary measures to help vulnerable customers and those struggling to pay their bills – more on this below
- The government has paired up with energy suppliers to ensure pre-payment and pay-as-you-go customers remain on supply – more on this below
- A new ‘Eat Out to Help Out’ discount scheme will provide a 50% reduction of up to £10 per head for sit-down meals in cafes, restaurants and pubs across the UK from Monday to Wednesday every week throughout August 2020. It can be used unlimited times
- The rate of VAT applied on most tourism and hospitality-related activities including food and accommodation will be cut from 20% to 5% until 12 January, 2021
- Home buyers can benefit from the threshold to which stamp duty kicks in being raised with immediate effect from £125,000 to £500,000 until 31 March 2021. For more on stamp duty click here
- Homeowners and landlords in England will be able to apply for a Green Homes Grant to make their properties more energy efficient by installing new loft insulation or an eco-friendly boiler, for example. The scheme will pay up to two-thirds of costs up to £5,000 per household, with those on low incomes being able to claim for the full amount of the work up to £10,000.
- The government has put together a package of support for businesses. Find out more here
Mortgage holders who are struggling to make their monthly payments can apply for a three-month payment holiday.
You will be able to do so until 31 October.
Alternatively, you can apply to make underpayments.
Rules are slightly different around buy-to-let mortgages but the same payment breaks are likely to apply if you are struggling due to non-payment of rent – contact your lender to find out.
How mortgage payment holidays are implemented will vary by lender but are likely to take one of two forms:
- the unpaid debt accrued over the payment holiday could be added to the total amount outstanding, leading to a small increase in monthly payments for the rest of the term
- the term itself could be extended
Interest will still be charged during the payment holiday and added to the outstanding amount.
We’ve built a mortgage payment holiday calculator to help you work out how much the extra interest will increase your mortgage repayments by once the freeze comes to an end.
Eligibility for a payment holiday will vary by lender. Each will review every case on its merits, but it’s likely that borrowers will need to be up to date with their payments to qualify for the payment holiday.
If you do not wish to take a full payment holiday, you may be able to reduce your monthly payments for a certain period.
If you agree a payment holiday or a payment reduction with your lender, there should be no negative impact on your credit report as you will not have “missed” a payment without prior arrangement.
That said, banks consider wider factors when deciding whether or not to lend – such as the balance of your mortgage debt over time – so the decision to apply for a payment holiday should not be taken lightly.
If your insurance is up for renewal in the next few months, shop around for a cheaper deal – don’t be tempted to do without it.
Mortgage lenders usually require buildings insurance to be in place to protect the underlying asset. And contents insurance is always a good idea.
Car insurance is a legal requirement, so that is a must-have for anyone with a car or other vehicle.
If you decide to take your car off the road to save money, you’ll still need to insure it unless you get a Statutory Off Road Notice (SORN) from the DVLA. That’s the case even if your car is parked up on the driveway.
More about energy help
The government has told energy companies to ensure supply is maintained to pre-payment and pay-as-you-go customers who may be struggling to pay for their energy because of financial difficulties linked to the crisis.
For those in self-isolation, energy companies may send top-up cards containing emergency credit through the post.
If you have concerns about the continuity of supply or being able to afford payments should contact your supplier as soon as possible.
As far as customers with credit meters are concerned, energy companies are being urged to treat cases of financial hardship with ‘forbearance’. Again, they will be looking at customers’ situations on a case-by-case basis.
It’s always a good idea to make sure you have the best possible energy deal – shopping around and switching could save you up to £290*. You can get a quote here in a matter of minutes.
If you want more information and help with switching your energy supplier, contact our call centre (free) on 0800 170 1921.
*51% of customers that applied to switch via MoneySuperMarket could save at least £289.40, March 2020.
More about broadband help
BT/EE, Openreach, Virgin Media, Sky, TalkTalk, O2, Vodafone, Three, Hyperoptic, Gigaclear and KCOM have all agreed the following commitments:
- Working with customers struggling to pay their bills as a result of Covid-19 to ensure they are treated fairly and supported
- Removing all data allowance caps on all current fixed broadband services
- Offering generous new mobile and landline packages. These vary between providers, but can include things like data boosts at low prices and free landline or mobile calls
- Vulnerable customers and people self-isolating will receive alternative methods of communication wherever possible if priority repairs to fixed broadband and landlines cannot be carried out
Switching is still available to customers of most providers.
Your work rights during the coronavirus crisis
As well as help set out above for the employed and self-employed, you will be entitled to your normal sick pay and sick leave as agreed by your employer.
If you are entitled to statutory sick pay (you must be employed and earning £118 a week or more) you will receive it from day one if you self-isolating due to coronavirus.
For other illnesses and other reasons for sick leave, statutory sick pay will be payable from day four, as usual.
Employees are by law entitled to take time off work to care for their children (or for anyone who is dependent on them), although your employer is not obliged to pay you for this time.
Schools closed on 20 March but a phased reopening of primary schools started from 1 June.
What support is available for businesses?
The government has published detailed guidance on the support available to businesses during the crisis, such as the Coronavirus Business Interruption Loan Scheme and Bounce Back Loan scheme. Find out the full details with our guide.
Coronavirus and travel
The Foreign & Commonwealth Office (FCO) warning against all but essential travel has been lifted for some countries, including many popular European holiday destinations, effective 4 July. FCO advice against all but essential travel remains in place for countries not on the exemption list.
From 10 July, people returning to England from certain countries will also no longer need to self-isolate. You can find the full list here.
Head to our travel insurance guide for more information.