Latest news with #DebtAwarenessWeek
Yahoo
30-03-2025
- Business
- Yahoo
Lowest earners ‘running out of options' ahead of April bill hikes
Households are bracing themselves for across-the-board increases to their bills, with those on the lowest incomes running out of options, a charity has warned. Citizens Advice said those on the lowest incomes were 'already stretched to breaking point' even before 'awful April' sees price hikes on everything from energy to council tax. Households in the lowest 10% for income were already spending around two fifths (41%) of their earnings – after housing – on water, energy, broadband and car insurance bills, according to a study into social tariffs by the charity in partnership with the Institute for Public Policy Research (IPPR), abrdn Financial Fairness Trust and Policy in Practice. This compared to 11% for those on middle incomes, with those in the top 10% for income spending just 5%. This week is #DebtAwarenessWeek and we want to talk about stigma. There's lots of things that people might feel judged for, but we're clear that struggling with debt is not one of them. StepChange offer lots of free support: — CitizensAdvice (@CitizensAdvice) March 27, 2025 The study found single-adult households, and particularly those with children, were more likely than other groups to be spending 20% or more of their post-housing income on these bills, leaving them more exposed to price shocks. The IPPR said well-targeted social tariffs and bill support schemes across water, energy, broadband and car insurance markets could save households hundreds of pounds a year. If social tariffs reduced these essential bills by 25%, those in the lowest 10% for income could see savings of around £13 a week or £680 a year – the equivalent to a boost in income of around a tenth for a typical household in this group. Citizens Advice chief executive Dame Clare Moriarty said: 'After years of cost-of-living pressures, households across the country are about to feel the extra shock of rising essential bills. But for those on the lowest incomes, these unavoidable costs are already eating away at their finances, leaving their budgets stretched beyond breaking point. 'Social tariffs could be an effective safety net and put money back in people's pockets, but the Government and providers must work together to make sure nobody struggling to make ends meet misses out. 'We want to see people eligible for bill support automatically enrolled to receive it. This change can't come soon enough.' Professor Ashwin Kumar, director of research and policy at IPPR, said: 'Essential bills are leaving the lowest earners with little room to breathe and causing huge anxieties. 'Well-designed social tariffs and bill support – across water, energy, broadband and insurance markets – could save households hundreds of pounds a year and provide a vital lifeline to some of the most vulnerable people across the country.' The research comes as energy bills for millions of households are to rise by 6.4% from April 1 when Ofgem increases its price cap for a third consecutive quarter, while water bills will increase by an average £123 per year – the largest hike since the industry was privatised in 1989. Most councils in England are planning to hike council tax bills by 4.99% – the maximum amount permitted – next month, with some including Birmingham, Bradford, Newham, Somerset, Trafford and Windsor & Maidenhead having been granted special permission to go even higher. Broadband and phone bills are rising while the cost of a TV licence and the standard rate of car tax are both going up by £5, and electric vehicles will no longer be exempt. With the average household already spending £2,062 on essentials each month, analysts believe the latest increases could add another £49.45 to this figure. Here are the bills that are rising from April: – Energy Ofgem's latest increase to the energy price cap will add £9.25 a month or £111 to the annual bill of an average household that pays by direct debit, which already stands at £1,738. The unit price of gas will increase from 6.34p per kilowatt-hour (kWh) to 6.99p per kWh while electricity is going up from 24.86p/kWh to 27.03p/kWh. Worried how having debt on your account will affect your energy bills? Below you will find advice and links on who to contact and information on the Breathing Space scheme, a free scheme granting you space to find a debt solution ⬇️ — Ofgem (@ofgem) March 26, 2025 Ahead of the increase coming into effect, households are urged to send in an accurate meter reading to ensure that all energy they use before the higher prices come into effect is billed at the lower rate. It is also sensible to check if it would be worth switching to a fixed tariff, which work by locking in a set rate for gas and electricity for a specific period such as 12 months. These deals are becoming increasingly common across energy firms, but consumers need to check for exit fees. To find the right tariff, households should consider all options including cheaper variable tariffs – a tracker product that changes daily based on wholesale cost – or time-of-use tariffs that can benefit those charging electric vehicles overnight or who want to take better advantage of off-peak rates. – Water Households in England and Wales will see their water bills increase by an 'extortionate' average of £86 over the next year alone. Regulator Ofwat has allowed companies to raise average bills by 36% or £157 in total over the next five years to £597 by 2030 to help finance a £104 billion upgrade for the sector. Some firms have been allowed significantly higher increases. Southern Water customers will face a 53% increase and Severn Trent households will see their bills rise by 47%, before inflation. However, despite the average £31-a-year rise, households will be hit particularly hard from April with an average increase of £86 or 20% front-loaded into the coming year, with smaller percentage increases in each of the next four years. Unlike gas and electricity suppliers, households cannot choose which company supplies their water, meaning they must either absorb the financial hit or consider ways to reduce their consumption. – Council tax Millions of households will see a jump in their annual council tax bills from April 1 with most local authorities in England increasing a typical band D bill by 5% – an increase of £109 to £2,280 from the 2024-25 figure of £2,171 – although some local councils have permission to impose hikes of up to 10%. They are Windsor & Maidenhead, Newham, Bradford, Birmingham, Somerset, and Trafford. Bills in Wales are set to rise by around 4.5% to 9.5% and in Scotland the jump will typically be at least 8% – though this is the first increase in two years following a freeze in 2024-25. The amount of council tax you pay is set by the value of your home, with the average value home being placed in Band D. If you think your property is in the wrong band it might be worth requesting a revaluation, however be aware there is a risk it could be placed into a higher band rather than a lower one. It is also worth speaking to the council about what support is available for those who are struggling or on lower incomes. – Mobile and broadband Some customers will see rises in line with inflation while others may face fixed hikes depending on when they signed up or upgraded. For those on inflation-linked contracts, broadband prices will rise by an average of £21.99 annually, with some newer plans seeing increases of up to £42 a year, according to Uswitch. Mobile users face similar increases, with an average increase of £15.90 for inflation-linked contracts, and up to £48 for newer deals. Broadband customers should check their contract status to see if it is possible to switch without incurring a penalty. Switching to a new broadband deal after the initial contract has ended could save up to £180 a year. Vodafone, Virgin Media and Community Fibre are some of the providers freezing prices until 2026 for those who switch before the April increases. Mobile customers can text INFO to 85075 to check the status of their contract and any exit fees, or consider lowering their data plan to save money. – TV licence April's bill increases will see the price of a standard colour TV licence rise by £5 to £174.50 a year. The price of a black and white licence will also go up from £57 to £58.50. You can claim a free TV licence if you are 75 or older and claim Pension Credit or live with a partner who receives the benefit by calling 0300 790 6071. – Car tax The standard rate of tax for cars registered after April 2017 will rise to £195 from the start of April, an increase of £5. Some owners may pay more, or less, if their car was first registered before 2017, with the rate dependent on when a car was first registered and the type of fuel it consumes. Another major change will see owners of electric vehicles (EVs) subject to car tax for the first time. Any EVs registered since April 2025 will be subject to the lowest rate of tax of £10 in the first year before moving to the standard rate of £195.
The Independent
28-03-2025
- Business
- The Independent
How to get help with debts and spot the warning signs of a problem
Households are braced for a fresh round of bill hikes in April – and some may have to dip into savings or perhaps even go further into debt to cover expenses. If you're slipping further into the red, support is available, and Debt Awareness Week (March 24 to 30 2025) encourages those with money worries to open up and take steps to get help. Richard Lane, chief client officer at StepChange Debt Charity, says: 'Debt is a normal part of life for many people, whether it be a mortgage, car finance agreement or credit card. 'Borrowing on credit can be a useful to manage chunky expenses and spread the cost of a big purchase. However, debt can be a sensitive topic, and the stigma around it often prevents people from talking openly or spotting problems early. 'This Debt Awareness Week, we want to encourage open conversations, challenge the stigma, and help more people feel confident seeking support.' Here are some ways to tackle debts: – List everything you owe. Getting an overview of your total debt will help you to see the scale of the issue – which could be better – or worse than you thought. – Be aware of debt becoming a problem. Lane says: 'There can be several warning signs that could indicate debt has become a problem, and it could be time to seek free and impartial advice. For example, if you're falling behind on essential costs like your rent, mortgage or bills, using credit to make it through to payday, or being hit by late payments on credit or overdraft charges. 'If you're finding yourself worrying about credit repayments, and it's causing you stress and anxiety, this is also a sign you could benefit from some support.' – See if debt costs could be less expensive. It may be possible to cut interest charges by moving some debts around, for example, by looking at 0% balance transfer credit card options. Bear in mind any fee for transferring the balance as well as the length of the zero-interest period. – Use budgeting tools. Consumer help websites and charities have free budgeting tools to create some financial 'wiggle room'. Some people may have a 'negative budget' – where their outgoings are more than their income – no matter how hard they try. If this is the case, seeking support early could stop debts spiralling. – Consider contacting a charity. Lane says: ' Charities like StepChange offer free and impartial debt advice – we're not concerned about what caused your debt problems and we're only here to help you get back on track without judgement. It's also important to note that seeking free debt advice and exploring your options will not impact your credit file.' – Speak to loved ones. Speaking to family or trusted friends can be a relief, as well as opening up an important source of support. – Contact your bank. Eric Leenders, managing director of personal finance at UK Finance, says: 'If your credit card or loan repayments feel unmanageable, don't wait until you miss a payment, contact your lender as soon as possible. 'They are prepared to help, even if you are currently up-to-date with payments. The sooner you reach out, the more options they'll have available to find a solution that works for you, and the faster they can provide assistance.' Banks and building societies also offer various financial wellbeing initiatives – and you don't always need to be a customer. HSBC UK recently announced it is extending a 'financial health check' service across branches, for customers and non-customers. Sally Williams, HSBC UK's head of branch network, says: 'A simple financial health check could be a game-changer.'
The Independent
24-03-2025
- Business
- The Independent
Arrears on household bills surge 25% among those in debt
Arrears on household bills have surged by 25% among those seeking debt advice as April bill hikes loom, a charity has warned. The StepChange debt charity said its average client was £3,911 in arrears on household bills, up from £3,124 in 2023. Overall, the average amount of debt for each StepChange client jumped 7%, from £16,706 in 2023 to £17,936 last year. Mortgage arrears saw the most dramatic rise, soaring by 69% from £6,054 in 2023 to £10,239. Almost a fifth of StepChange clients (18%) with a mortgage are now in arrears, the charity said. However, the proportion of clients with a mortgage remained low at 14%. Energy arrears have risen by 28% year on year, with a 58% jump since 2022, from £1,485 to £2,340 last year. Council tax arrears have increased by 14% in the last year to £1,972. StepChange said fewer clients were now citing the cost of living as their main reason for debt despite overall debt levels rising significantly, and many had struggled to rebuild financial stability after 'years of economic turmoil'. In 2024, three in five clients (60%) were in some form of employment, up from 59% and 56% in 2023 and 2022 respectively. The average monthly income among clients was also up 7% year on year, standing at £1,874 in 2024. StepChange chief executive Vikki Brownridge said: 'As we mark the start of Debt Awareness Week, it's important to shine a light on the reality for those facing debt issues in 2025. 'We've now seen a consistent trend of debt levels deepening over the last few years, with the most severe rises occurring in the household arrears our clients have, particularly when it comes to mortgage, council tax and energy debt. 'This is something which could worsen as many bills are set to rise further next month. 'Consistently rising living costs are pulling higher earners into debt, with more people finding work is not shielding them against financial hardship. 'Those on the lowest incomes face growing budget deficits and it's a concern that this could be pushing more people to rely on credit to make ends meet. 'At this week's Spring Statement, it's important the Government does not exacerbate hardship for the most financially vulnerable households. 'This should include addressing increasingly unaffordable household bills, such as energy and council tax, through targeted support aimed at delivering long-term affordability for low income households.'
The Independent
23-03-2025
- Business
- The Independent
The higher earners in problem debt
'I feel ashamed and don't want my loved ones to find out,' is one of the main barriers to getting debt advice, according to StepChange Debt Charity. I know through my work as a money coach that there's a lot of shame around money. Money shame is the feeling that you're fundamentally 'bad', stupid, unworthy and lacking in your abilities when it comes to money. Shame makes people turn inwards, beat themselves up, and stops them seeking help. And this is a problem. Especially when it comes to debt. Because it means the situation gets worse. Monday 24 March marks the start of Debt Awareness Week, run by StepChange. It aims to raise awareness and understanding of the stigma around debt and help people take the first step to getting support. High income, problem debt If money worries leave you feeling lonely, you're not alone. In my line of work, I know that anyone can fall into problem debt – from the most vulnerable in society to higher earners. Whatever your income, if there's more going out than there is coming in, then money is always going to be a problem at some point. As one person shared with me: 'I earn £70,000 a year but I'm £30,000 in debt. I've been living beyond my means for a long time now. My perception of what's affordable has changed as I've earned more but also in relation to friends who have more money to spend than me. 'I struggle to budget. I've been winging it, hoping for the best and using credit when I get stuck. I'm embarrassed and ashamed and I've been hiding it from everyone in my life. I thought I'd be more financially secure at this point in life and it scares me that I'm not.' It's one thing to earn enough money to service debt. But it takes only one unexpected event – a financial shock – for things to unravel. Financial shock Simon Trevethick, head of communications at StepChange, says: 'We saw, five years ago, a pandemic that put in jeopardy millions of people's finances, millions of people's livelihoods. That sudden financial shock is something we've seen time and time again over the more than 30 years StepChange has been working with people in problem debt. 'The reality is that unexpected life events will impact us all at some point, whether that's a job loss, illness or a relationship breakdown. 'These things can have a knock-on effect on our finances and increase the risk of debt problems. This means that people who are on higher incomes aren't immune to getting into financial difficulty, if they're servicing multiple debts and paying out a lot to those each month. 'It's when unexpected life events happen and suddenly those debts do become an issue that it can be difficult to shed the feeling of shame and stigma that's attached to this idea that if you fall into debt, it's a result of your own financial mismanagement.' Debt stigma This debt stigma prevents many people seeking help that would aid their financial situation and alleviate their money worries. StepChange clients wait more than a year, on average, before they reach crisis point and turn to the charity for help, says Trevethick. 'Once somebody does get in touch with us and they've had an opportunity to share that burden, they start sleeping better, their relationship with their family improves, their mental health improves. 'The point of Debt Awareness Week is to highlight just how common financial difficulties are, particularly at the moment, and to say that you're not alone and there is help out there.' Seek help If you're struggling to cover your basic monthly outgoings including your mortgage or rent, household bills, and minimum credit card repayments, that's a sign to seek help. Start by pinning down where you are now. Make a list of who you owe money to, how much you owe and the interest rate you're being charged. Seek help. Financial guidance website MoneyHelper has a debt advice locator that lists where you can access free debt advice from organisations including StepChange Debt Charity. Contact your lender. Trevethick says: 'So many people are absolutely terrified to tell their lenders that they aren't able to afford their repayments. Your bank has a legal duty to help you and work out a way forward.' How did you get here? This is a big one for my clients. It's one thing to draw up a budget and work out how to tackle the debt. But it's important to address how the debt arose in the first place so we can address the underlying issue so it doesn't happen again.
