Top tips for reducing household bills during the crisis
Last updated: 2nd April
The coronavirus pandemic is worrying on many levels. Our health and that of our loved ones is the prime concern, but people are also naturally worried about the potential impact on their financial situation, especially if the crisis persists into the summer and beyond.
With that in mind, we’ve put together our top tips for cutting your bills and making your money work as hard as possible.
We’re also providing as much information as we can on various aspects of family finance, from government announcements and support measures to the action taken by banks and other organisations to support their customers.
The situation is changing day by day, so we will update this information regularly.
If you’re on a standard variable tariff, check whether you can find a cheaper option – you could save almost £2501 when you compare energy deals. It takes five minutes to switch, and you won’t be without gas or electricity at any point – you’ll use the same pipes and meters as before, and the only thing that changes is who sends you the bill.
When you switch to a new energy tariff, you may want to consider the following:
- Economy 7 tariffs offer different rates depending on when you’re using energy, with it being cheaper during evenings and weekends. If you’re on an economy 7 tariff you’ll be able to save on your energy bills by using big appliances such as your washing machine and dryer later at night
- Some providers offer seasonal payments, and it means your energy bills will be cheaper over the summer months – starting from April. This could be a good way for you to reduce your energy costs during these difficult times
The insurance regulators are working hard to make sure customers and insurers alike are protected during the current situation. They have now issued clear guidance to help protect house insurance consumers:
- Customers must be treated fairly
- You aren’t required to tell your insurer if you’re working from home doing clerical work
- You do need to let your insurer know if you have clients in your home, but this should be very rare given the social distancing rules
- Prolonged working from home or self-isolation with kids might lead to an increase in accidental damage. If you’re worried about this, not every home insurance policy includes it as standard, so it may be worth considering a cheap add-on
- You won’t need to tell your insurer if you have equipment owned by your employer at home, such as laptops. Insuring this is your employer’s responsibility
- You will need to let your insurer know if you’re keeping stock at home, for instance if you run a mail order business. You’ll either have to ask for an add-on to your home insurance, or to your business insurance
If you pay interest on a credit card debt, consider taking out a 0% balance transfer card, which will help you to spread out the cost over a period of time – in some cases, as long as two years.
Providers are beginning to tighten their eligibility requirements, while some products are being removed from the market. It's very important to check your eligibility before you apply.
There are still 0% balance transfer cards with no fees available – so it doesn’t even have to cost to move your debt over. You may however prefer to pay a small fee to get a longer 0% period.
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.
Whatever you do, don't cancel direct debits or refuse to pay. It's always better to get in touch with your lender, who will be able to help you out with a payment plan.
If your current mortgage deal is ending, think about remortgaging to a deal with a better rate. If you’re on a variable rate, now could be the time to switch to a fixed tariff if you can.
If you’re struggling to make repayments, speak to your bank or loan or credit card provider about whether you can take a break from repayments. Providers must take your personal situation into consideration and agreeing a repayment holiday will prevent you from defaulting on your repayments, which would affect your credit profile.
The government has instructed banks and other lenders to allow struggling customers 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. Find out more here
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.
That said, a number of banks have announced measures to support financially vulnerable people by waiving interest or adding buffers to current accounts. It's worth shopping around very carefully to see which bank has the best emergency measures for your needs.
Most banks are now switching to 40% interest on overdrafts, so if you're in your overdraft - look for a buffer.
If you can afford to, start putting more away into your savings. The situation is changing daily and it makes sense to put money away to cover unexpected eventualities if you can.
If your car insurance is up for renewal, now’s the time to look around for a better deal. For just five minutes work, you could save up to £2702. Same applies to home insurance.
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.
151% of customers that applied to switch via MoneySuperMarket could save at least £248.37, November 2019
2 51% of consumers could save up to £270.32 Consumer Intelligence, November 2019
Postpone your MOT
The government has announced a six-month exemption for all cars, vans and motorbikes which need an MOT, starting from 30 March 2020. This is a temporary measure to help combat the spread of the virus, though motorists will still be expected to maintain their vehicles, and anyone found driving an unsafe vehicle could still face prosecution. Once the six-month period ends, you will be expected to book a fresh MOT as normal.
How is the financial world reacting to coronavirus?
- The self-employed will receive 80% of their 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, and will be rolled out by June at the latest. You will be eligible to apply if you have less than three years of tax returns, but if you’ve just become self-employed you’ll have to apply for help through Universal Credit, which the chancellor Rishi Sunak claims is being expanded.
- The government is to pay 80% of the wages of employees not working due to the impact of the coronavirus on their employer, up to £2,500 a month
- Pubs and restaurants have been ordered to close from Friday 20 March, with theatres, cinemas, gyms and leisure centres asked to close as soon as they reasonably can
- The government has announced a three-month mortgage holiday for those in financial difficulty due to the pandemic
- Details are yet to emerge, but many banks and building societies are already contacting their customers with information about how they will provide financial support
- If customers are concerned about their situation and have yet to hear from their lender, they should initiate contact
- The Bank of England base rate has fallen from 0.25% to 0.1% (it was 0.75% before the Budget on 11 March). This will lead to a reduction in mortgage payments for those on tracker and variable rate mortgages but not those on fixed deals
- The government is bringing forward legislation to prevent private tenants being evicted if they fall behind with rent as a result of the crisis
- Likewise, housing association tenants affected by the crisis will not be evicted if they fall behind with rent
- Banks, building societies and credit card providers are working on a “case-by-case” basis to provide support to customers in financial distress
- The government is working with energy suppliers to ensure pre-payment and pay-as-you-go customers remain on supply
- The government is also working on a package of measures to support businesses
The government has announced that mortgage holders who are struggling to make their monthly payments will be entitled to a three-month payments holiday.
However, each lender is deciding how to implement the scheme. Customers who want more information are urged to contact their lender direct.
The three-month holiday could take two forms, depending on the lender:
- the unpaid debt accrued over the three months 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 by three months.
Interest will still be levied during the three-month payment holiday and added to the outstanding amount. MoneySuperMarket has built a free 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.
It is not yet clear how eligibility for a payment holiday will be determined, but lenders may review each case on its merits. It is 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.
The government says it will introduce emergency legislation to ensure private tenants are not evicted if they fall behind with their rent as a result of financial difficulties associated with the crisis.
Housing association tenants are being given similar assurances.
Landlords with buy-to-let mortgages should be eligible for three-month mortgage payment holidays if their tenants are unable to pay their rent for that period.
The financial conduct authority is consulting on emergency guidance for banks to cover people worried about overdraft fees and outstanding debts. These won’t come into effect until Thursday, April 9, but here’s what’s under consideration:
- On arranged overdrafts of up to £500 at minimum, banks will be asked to offer 0% interest for three months
- People worried about debts on credit cards and store cards will be allowed to ask for a payment freeze for three months, though interest will still accrue and will probably be added to subsequent payments
- Likewise, loan companies will be asked to offer three-month repayment freezes, though interest will again accrue
We will update this when we know but, but until then, anyone in financial difficulties who has credit card debt should do everything possible to make at least the minimum monthly payment on time.
If you are struggling, you should contact your provider as an urgent priority to agree a course of action. Having an agreement in place could help protect your credit score.
Action could include:
- a payment holiday
- a waiver of fees for a missed payment if agreed in advance
- an increased credit limit to accommodate additional spending. This should be treated with caution, however, as you should avoid taking on debt you cannot afford to repay.
If you are being charged interest on a credit card balance or balances, you could transfer the debt to a 0% balance transfer credit card. More details here, but bear in mind you will normally be charged a fee calculated as a percentage of the amount you transfer. And you must repay the new card debt before the 0% interest period expires, otherwise you’ll start being charged interest once more.
And if you miss a payment, you’ll lose your entitlement to the 0% interest terms.
If you have a personal loan and are struggling to meet your repayments, talk to your provider about a payment holiday, reduced payments or a waiver or fees for a missed payment.
If you have an overdraft which you cannot service, the same message applies – talk to your bank. You may be able to negotiate a freeze on interest rate charges or secure another favourable arrangement.
A lot of people are understandably worried about their credit score as the outbreak continues. At present, there isn’t an enormous amount of advice out there for people who have outstanding debts but whose income has fallen. This is what we can suggest:
- Mortgage-holders have been offered a three-month holiday on payments. The exact details of this vary between mortgage providers, so the first thing you do is talk to your lender. MoneySuperMarket’s credit score partner TransUnion says that agreed-upon payment holidays shouldn’t affect your score, but that you should make sure your lender records it properly in your credit file
- If you have outstanding debts, you should do your best to at least make the minimum repayments on time
- Avoid taking out any extra credit at this time unless it’s totally necessary
- The government has intervened to guarantee up to 80% of people’s wages – up to a cap of £2,500 per month, which should hopefully be enough to service outstanding debts. A package of measures for the self-employed will shortly be announced
The situation is changing rapidly, and we will update this blog as soon as we know more.
With more people staying at home as a result of the crisis, 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 be willing to send top-up cards containing emergency credit through the post.
Anyone with concerns about continuity of supply or being able to afford payments should contact their 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 at least £248*. 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.
Our call centre is open Monday to Thursday, 9am – 8pm; Friday 9am – 5.30pm; and Saturday 10am – 2pm. We are closed on Sundays.
Please note, our call centre is dedicated to helping customers with energy switching enquiries only.
*51% of customers that applied to switch via MoneySuperMarket could save at least £248.37, November 2019.
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 will be open to anyone who earns £50,000 or less, and will be rolled out by June at the latest. You will be eligible to apply if you have less than three years of tax returns, but if you’ve just become self-employed you’ll have to apply for help through Universal Credit, which the chancellor Rishi Sunak claims is being expanded.
If you're on a zero hours contract you may be able to claim benfits.
Employees are by law entitled to take time off work to care for their children (or for anyone who is dependant on them), although your employer is not obliged to pay you for this time.
Schools across the UK are closing until further notice as of Friday 20 March.
Travelling during the coronavirus crisis
The government is currently advising against all overseas travel (for a period of 30 days that started on 17 March – this could well be extended).
If you are booked to travel during this time, 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’re already overseas, your ability to travel will be affected by local restrictions and the availability of transport. The government is urging British citizens to abide by the requirements of the authorities in the territory where they are situated with regard to travel and quarantine.If you have a booking in the summer, you’ll need to monitor the situation and await contact from your airline or tour operator.
We’ve got more information on how travel is being affect by coronavirus here.
What support is available for businesses?
The government has published detailed guidance on the support available to businesses during the crisis. The measures include:
- statutory sick pay relief package for SMEs
- a 12-month business rates holiday for all retail, hospitality and leisure businesses in England (separate measures are available in Wales, Scotland and Northern Ireland)
- small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
- grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
- the Coronavirus Business Interruption Loan Scheme to support long-term viable businesses who may need to respond to cash-flow pressures by seeking additional finance
- the HMRC Time To Pay Scheme to help with tax.
General advice regarding family finances
- Review your income and outgoings to get a realistic view of your finances and how they might be affected over the coming months
- Pounce on any opportunities to make savings by switching to cheaper deals or cutting out unnecessary expenditure
- If you are concerned about your ability to meet any kind of repayments or pay regular bills such as Council Tax or utility bills, contact the relevant bank, building society, local authority or company as soon as you can to discuss your situation
- Millions of people will have concerns about their financial situation in this unprecedented crisis, so there is no cause for embarrassment
- Institutions and businesses are being urged by their government to be as constructive as possible in the support they provide to their customers, so you should expect a sympathetic hearing
- Be open and honest with your employer about your health and your childcare obligations