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 deal is ending, think about remortgaging to a deal with a better rate. Or find out what your current lender can offer – 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 financially struggling with coronavirus a three-month holiday on their mortgage repayments. How this works varies from lender to lender, but requests are being fast-tracked. You'll still have to pay the interest that accrues in due course, however.
Payment breaks on other lending are available too – find out more 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.
Bear in mind that all banks must now offer an interest-free overdraft buffer of at least £500 for three months.
Rules from the regulator (Financial Conduct Authority) brought in pre-coronavirus stated that, from April 2020, banks must swap daily and monthly overdraft fees with a simple interest rate of around 40%.
While this went ahead as planned, the FCA has ruled that nobody should now pay more under this system than they would have done previously for the next three months.
If you can afford to, 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.
If you wish, 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 announced a six-month exemption for all cars, vans and motorbikes which need a MOT, starting from 30 March 2020 – although you will still be expected to maintain your vehicle, and anyone found driving an unsafe vehicle could face prosecution.
Once the six-month period ends, you will be expected to book a fresh MOT as normal.
For more tips, read our 18 small tips to getting money calm
What finacial help is available during coronavirus?
- The government’s Self-employed Income Support Scheme opened on 13 May. It pays 80% of your average profits over the past three years, up to £2,500 per month. The scheme will be open to anyone who earns £50,000 or less. You will be eligible to apply if you have tax returns from 2018/2019
- 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 has now been extended to the end of October
- The government has implemented a three-month mortgage holiday for borrowers in financial difficulty due to the pandemic – more on this below. The payment break is also available for buy-to-let mortgages
- Financial providers have been ordered to apply a three-month payment freeze to those struggling with personal loans, credit card payments, car finance, rent-to-own and buy-now-pay-later loans – also on catalogues and debt to pawnbrokers. Payday lending debt can be frozen for one month
- Anyone struggling with insurance premiums such as car, home, travel, life and critical illness should be offered help from their insurer. This could take the form of temporary reduction in cover or a change of policy where appropriate – which results in cheaper premiums or a partial refund of an annual premium paid upfront. Failing that, you can request a payment deferral of between one and three months – longer in some cases.
- On arranged overdrafts of up to £500 at minimum, banks must offer 0% interest for three months
- 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
- After an estimated 450,000 plans were put on hold during coronavirus, but the housing market ‘reopened’ in England on 13 May for socially distanced valuations and viewings
- Private and social housing tenants are protected from eviction – even if they fall behind with rent for at least three months
- 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
- The government has aput 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 payment holiday. Having been announced at three months on 17 March this is likely to be increased for those still struggling until 31 October under new proposals set down by the FCA. This will also be the new deadline for those struggling and yet to apply.
If the proposals are agreed, the rules should be implemented soon after 26 May.
How the payment holiday is implemented will vary by lender. Customers who want more information are urged to contact their lender direct.
The holiday could 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 levied 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 pay freeze comes to an end.
Eligibility for a payment holiday will vary by lender but 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. Again, this is something to discuss with your lender.
If you agree a payment holiday or a payment reduction with your lender, there should be no negative impact on your credit score as you will not have “missed” a payment without prior arrangement.
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.
If you take a repayment holiday on your debt due to coronavirus, your credit rating will not be affected. However, this is on the proviso that you apply for the payment break and have it officially agreed by the provider.
If you continue to be unable to pay beyond a time that has been officially agreed and enter into a debt repayment plan, it may start to impact your credit rating.
With more people staying at home during lockdown, demand for energy is likely to increase, which could leave people worried about their gas and electricity bills.
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, who are saying networks and call centres and cope.
But Virgin Media and cable customers are not currently able to switch, because this would need a BT engineer to come to your house – unless the wires are already present from an old connection.
Your work rights during the coronavirus crisis
If you are forced off work and are self-isolating because you or someone in your household has coronavirus or its symptoms, you will be entitled to your normal sick pay and sick leave as agreed with 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.
If you are self-employed, you'll receive 80% of your average profits over the past three years, up to £2,500 per month. The scheme is now open and available to anyone who earns £50,000 or less.
You will be eligible to apply if you have less tax returns dating from 2018/2019 tax year, but if you’ve just become self-employed you’ll have to apply for help through Universal Credit, which has been expanded.
If you're on a zero hours contract you may be able to claim benefits.
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 on 12 May the Prime Minister set down plans for a phased reopening of primary schools 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 Loans. Find out the full details with our guide.
Coronavirus and travel
The government is still advising against all overseas travel indefinitely.
You may be able to claim on your travel insurance if you are unable to obtain a refund or alternative arrangement for anything for which you’ve already paid.
If you have a booking for this summer, you’ll need to monitor the situation and await contact from your airline or tour operator.
Head to our travel insurance guide for more information.