The start of the year is traditionally a time for many people to take stock of their finances and see what’s making them better, or worse, off.
While some aspects of our everyday finances may be within our control, such as discretionary spending on treats, others may be less avoidable, such as the rising cost of travelling to work or increased borrowing costs.
Whether it’s for better or for worse, here is a look at what 2020 could mean for people’s finances…
House prices could rise by 2%
Some commentators say they expect UK house prices to increase by around 2% in 2020 – although there may be big variations depending on where you live.
Rising house prices could be good news if you’re selling, or less welcome if you’re trying to get on the property ladder. However, there are still plenty of low-deposit mortgage deals around to give first-time buyers a helping hand.
Nitesh Patel, Yorkshire Building Society’s strategic economist, says: “We’re seeing more and more lenders giving access to 5% deposit mortgages, which can be useful for those looking to buy their first home.”
The cost of commuting is going up
Train fares have increased by 2.4% in Scotland, and 2.7% across the UK, despite concerns about delays and overcrowding on some routes.
Laura Suter, personal finance analyst at investment platform AJ Bell, suggests some people could make use of their employer’s season ticket loan scheme.
Another alternative she suggests is: “Put the season ticket on a 0% interest credit card to spread the cost across 12 months.”
Overdraft charges overhauled
The Financial Conduct Authority is bringing new industry rules into force in 2020 to make overdraft charges fairer and simpler to understand. The regulator’s changes will be in force by April 6. It has promised to shake up the “dysfunctional” overdraft market – including stopping banks and building societies from charging higher prices for unarranged overdrafts than for arranged overdrafts.
More than 50% of banks’ unarranged overdraft fees came from just 1.5% of customers in 2016.
People who sometimes slip into an unauthorised overdraft may well find they pay less under the new rules. But those who stick within their authorised overdraft may potentially pay more.
Some current account providers have already announced plans to impose new blanket overdraft rates set at 39.9% – leading some commentators to say that being charged around 40% annual interest for going into the red could become “the new normal”.
This may come as a shock to some borrowers, but at least the costs they are actually paying should become clearer.
Suter says this is “good news for anyone who accidentally slips into the red. Banks will have to make their fees clearer, putting them in one annual interest rate, and won’t be able to charge fixed fees, per day or month, for going into your overdraft.”
A fairer broadband deal
Regulator Ofcom has challenged broadband companies to make prices fairer for “out of contract” customers.
Internet users go out of contract when their introductory offer has ended – but could save money by negotiating a new deal or switching provider. Ofcom found these customers could save around £100 a year by contacting their current provider to get a better deal.