Don’t rely on credit for household bills, says expert

People should refrain from using credit, loans and overdrafts to pay their household bills, the money education charity Credit Action has said.

Although people have been increasingly using these facilities in the past year, the organisation says that it is not a long-term solution.

Capital Economics recently reported that the share of household income spent on food, bills and other unavoidable costs has risen to 31 per cent from 25 per cent over the past six years.

“It could well be that people who need to find that little bit of extra money to get them to the end of the month or pay the gas bill may revert to credit to do that,” commented Chris Tapp, director of Credit Action.

However, he said that people should be careful of becoming overly reliant on credit since resorting to these measures for long time periods could result them having in serious financial difficulties.

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Not all children ‘would be interested in taking financial advice’

Children would benefit from more financial education in order to make the most of their Child Trust Funds (CTF), but they might not “necessarily be interested in taking that kind of advice”, claims a financial expert.

Ark Financial Planning said that although there are children who have been made aware of the ‘value’ of money, there are more who are concerned about what they can do with it rather what it can do for them.

Phil Perry, a spokesperson for the company said that issues arise when attempts are made to label money in funds for educational costs when not everyone wants to go to university.

“I certainly think the government need to have a little bit more idea on what they expect that money to be used for,” he added.

CTF are saving accounts for children and those born after September 1st 2002 who receive a £250 voucher to start their account.

According to reports in the Daily Telegraph, those children born within a year of the September 1st 2002 can expect windfalls worth a total of £2.4 billion when they reach 18 years of age.

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Winter will see more claims

Homeowners are likely to make more insurance claims in the coming months as a result of the bad weather.

That is according to Lloyds TSB, which says it is expecting to see a 15 per cent increase in burst pipe claims during the first quarter of this year.

The insurance provider is highlighting the fact that something as seemingly minor as a burst pipe can prove to be both a major headache and a real financial burden.

Lloyds has revealed that the average claim for a burst pipe is around £2,500, while the most expensive the firm has ever seen was £156,000 for a particularly troublesome problem.

Homeowners are being warned to take action to help keep damage from a burst pipe to a minimum, with advice such as locating the stopcock, gas valve and ball valves, in case the worst happens.

Lloyds also advises people to leave their heating on a low heat if they are going away on holiday, as this will prevent pipes from freezing, while outdoor pipes should be well insulated during the winter months.

“So far this winter we’ve had relatively mild weather so many homeowners were caught unprepared for this cold snap,” said Lloyds TSB’s Phil Loney.

“A little bit of effort now could save you a lot of wasted time and stress caused by problems such as burst pipes or broken boilers.

“To give yourself peace of mind, make sure you have adequate home insurance that will cover you if the icy conditions do take their toll,” he added.

Residents are also advised to leave their insurance details with a trusted neighbour when travelling in case there is an incident while the house is empty.

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