Whilst many households and companies are looking to save money at every corner, there are a number of initiatives from the government and high street banks that can help you stay on top of cash flow in this unprecedented time.
Use 0% overdrafts
British banks have agreed to freeze overdraft rates until the end of June and also increasing overdraft limits, giving households access to an emergency borrowing facility if they need it.
Unauthorized overdrafts for individual current accounts and business bank accounts will typically incur fees of 30% to 50% and are often considered one of the most expensive forms of borrowing.However, high street banks have agreed to waive fees for the next 3 months, and maybe longer. As an account holder, it is essential to check if this is available from your provider before you go into your overdraft and this includes customers that use challenger banks, since different terms may apply.
Use mortgage payment holidays
In addition to overdrafts, high street banks have agreed to offer mortgage holidays for three-months since a lot of young families and households were unsure how they were going to pay their mortgages.
This payment holiday will be welcomed by many homes that have lost income and their jobs during the pandemic.
However, any money saved will be carried onto future mortgage payments and some banks are charging a small administration fee for the convenience.
For a number of people who were on the verge of moving home, banks have agreed to extend mortgage offers for as long as 3 months. For those who have had mortgage offers denied but are desperate to move, they can use bridging loans or other types of non-bank finance to complete the deal.
Use balance transfer credit cards
If you have credit card debts outstanding and in a position now where you cannot afford repayment and the fees are starting to add up, you can consider using a 0% balance transfer card where you can move all the debt onto another card and pay 0% for up to 24 months.
This will help you save money on any interest incurred and also give you some time to get your finances in order once the coronavirus period has ended.
Avoid high-cost credit
If you are looking to budget and stay on top of your finances, you should avoid using any form of high-cost lending during the crisis including payday, guarantor, logbook, doorstep or similar.
These types of finance can incur large fees for missed repayment and if your income is not certain for the near future, taking on this type of financial commitment could be very high risk.