Managing Money Handbook

Transcription

1 Maximising Income Managing Money Handbook Managing with a Budget Borrowing Money Tackling Debt Saving Your Money The Consumer Council

2 Contents Bank Accounts 2 Maximising Income 8 Managing with a Budget 12 Borrowing Money 17 Saving Your Money 25 Tackling Debt 28 Insurance 30 CitizenCard 34 CONTENTS Glossary of Terms 35 Useful Contacts 38 The information is correct at time of going to print and may be updated periodically. July

3 Opening A Bank Account Savings (or deposit) account A savings account is used for putting away money that is not needed immediately, for safe keeping and to earn interest. Savings accounts are good for saving for furniture, a holiday or emergencies. Banks offer savings accounts, as do the Post Office and Credit Unions. Bank Accounts Everybody should have access to a bank account. It means that you can receive payments from an employer or benefits. It also gives you the freedom to set up direct debit payments for utility companies, take out cash at a cash machine and even pay by card in shops. Types of bank accounts Basic bank account A basic bank account is for managing day-to-day money. Cheques can be paid in, as can wages or benefits by electronic transfer. No cheque book will be offered but cash can be withdrawn at machines. Direct debits and sometimes standing orders can be set up. (See glossary of terms on page 35). No overdrafts are offered. A major advantage is that credit checks are not usually required. Current account A current account is for managing day-to-day money but it has more features than a basic bank account. Overdraft facilities are offered and direct debits can be set up. (See glossary of terms on page 35). Some may be accessed by telephone or internet. Most banks will let you have a debit card to pay for your shopping and to also pay for bills by standing order. (See glossary of terms on page 35). The Post Office card account This account can be used to receive benefits, state pensions and tax credit payments only. Other payments, such as wages cannot be paid into it. Cash can be withdrawn, free of charge at any Post Office branch using a plastic card and a Personal Identification Number (PIN). No overdraft facilities are available and no credit checks are required. Credit Unions Credit Unions are organisations owned and run by their members, for their members and they offer savings and loan accounts to them. Most of them also offer free life or loan-protection insurance and sometimes other insurance products. A few of the bigger ones also offer some form of current or basic bank account. Credit Union members all share a common bond such as living or working in the same area, working for the same employer or belonging to the same trade union, church or other association. Bank Accounts How can I open a bank account? STEP 1 - Choose a bank, building society or credit union you wish to bank with. Shop around to find a bank which suits your needs, for example, telephone banking. 2 3

4 STEP 2 - Choose the type of account that suits you best. A good idea is to ask different banks about the services they can offer you, especially as some may have special deals for new customers. You may be able to apply online or in person at your local branch. STEP 3 - Visit the bank with two forms of identification (ID) to prove your name and address if the bank is busy you may be asked to book an appointment. You will be asked personal details such as date of birth, employment status and address. STEP 4 - Open the account and receive your account number and sort code, cash card or debit card, (see glossary of terms on page 35). You should receive your cash card and bank details through the post. EU National Identity card (photographic); Electoral ID card; Translink Senior SmartPass; Inland Revenue card issued to self-employed people in the construction sector; Student ID/registration card (student account only); Firearms certificate; or UK Armed Forces ID card. Bank Accounts What proof will I need to open an account? To be able to open a bank account you need two forms of ID to prove your name and address. The law says that banks and building societies have to identify their new customers. They will explain which documents they will accept as proof of your identity, although this may vary from one bank to another. 2. Confirming where you live: UK driving licence with current address; Gas, water, electricity, cable TV or landline phone bill (less than 3 months old); Mobile phone bills are not acceptable; UK credit card statement no older than three months; UK mortgage statement no older than three months; Household or motor insurance certificate; Post Office/bank statement - no older than three months; Original Vehicle Registration document; Correspondence from Benefits Agency (dated within the last six months); Current rates bill (issued within last 12 months); or HM Revenue and Customs tax notice for the current or next tax year. Bank Accounts Documents accepted by most banks: 1. Confirming who you are: Valid Passport; Driving Licence; Blue Disabled Driver s pass (current); 4 5

5 Bank Accounts If you cannot provide any of the above documents, other documents may be acceptable, such as: A letter from a government department or local authority confirming a right to state benefits such as Housing Benefit, Jobseeker s Allowance etc; or A letter from an appropriate person such as a social worker, probation officer, solicitor or counsellor stating that you are who you say you are. Can I open a basic bank account whatever my credit history? Almost everybody should be able to open a basic bank account. The bank may want to check your credit history to see if you have any county court judgments against you or have been made bankrupt. If you have, you may still be able to open an account, it depends on the bank. What if there is not enough money in my account to pay my direct debit or standing order? Can I set up a new bank account before I am released from prison? The Offender Management Unit (OMU) can help you open a bank account while you are still in prison, so it will be ready for you to use when you are released. To be considered you must be in the pre-release stage of your sentence, i.e weeks prior to your release date. OMU staff will explain the application process, advise what you need to do and submit an application for you. You can ask Landing staff for further information. Bank Accounts You cannot go overdrawn with a basic bank account because you will not get an overdraft limit. Make sure you have enough money in your account to pay your bills because if there is not enough, then you may be charged a fee ( 15-38) or the bank may cancel your direct debit or standing order. 6 7

6 Maximising Income Staff from the OMU can help you apply for a Discharge Grant a few weeks prior to your release. Community Care Grant is a payment for essential items to promote community care and independent living. You do not have to repay the grant. Maximising Income It is tough living on welfare benefits for the first few weeks and months after release, when you may face one-off costs such as setting up accommodation. You may also be starting a new job and have to wait for up to a month for your first payment. It is important to maximise your income by: Claiming a Discharge Grant before you are released; Claiming the benefits, allowances and tax credits you are entitled to, for example, Income Support, Job Seekers Allowance, Employment & Support Allowance or Housing Benefit; Applying for a Community Care Grant from the social fund if you need to buy something like replacement furniture or a cooker, or when moving into independent living for the first time (this is explained below); or Applying for a crisis loan to cover living expenses until you are in receipt of benefits. Who can claim? The qualifying benefits for a Community Care Grant are Pension Credit, Income Support, Employment and Support Allowance (income related) or Job Seekers Allowance (income based). If you expect to receive one of the qualifying benefits upon release, you can apply for a Community Care Grant in the six weeks leading up to your release date. You can apply for clothing and items you will need to promote independent living. This grant can be applied for at any time following your release. Please note that you cannot apply for the same grant within 28 days of your previous application. A Crisis Loan is a repayable interest free loan which is payable in emergency situations. Who can claim? Anyone aged 16 or over without sufficient resources to meet immediate short term needs can apply. You do not need to be in receipt of benefits. The loan must help you meet expenses in an emergency or as consequence of a disaster, where a crisis loan is the only means by which serious damage or risk to the health and safety of the claimant or a member of your family may be prevented. A Crisis Loan can also be awarded to meet rent in advance payable to a private landlord where a Community Care Grant is being awarded following a stay in institutional or residential care. Maximising Income Discharge Grant is a payment made by the Prison Service to sentenced prisoners on the morning of release to ensure they are not destitute on release. The grant is similar to the amount of weekly Jobseekers Allowance and is paid at two rates: a standard payment if you have an address to use upon release; or a higher rate if you need to seek, secure and pay for accommodation on release. 8 9

7 A Budgeting Loan is a repayable interest free loan for essential items such as: Furniture and household items; Clothing and footwear; Rent in advance and/or removal expenses to secure new accommodation; Improvement, maintenance and security of the home; and Expenses associated with seeking or re-entering work. Benefit tips 1. Claim as soon as you can or you may lose money; 2. Claim forms can look long and complicated. If you don t understand any of the questions, ask someone for help; 3. Whenever you are contacted by phone or in person about benefits, make a note of the date and time and the name of the person you spoke to; 4. If you do not have a bank account, open one so benefits can be paid into it; 5. If your circumstances change, for example, if you start work, inform the relevant organisation who is responsible for paying your benefits e.g. Social Security Agency, the Northern Ireland Housing Executive or HM Revenue and Customs. Keep a note of who you spoke to and when you spoke to them. It is good practice to inform all relevant agencies to make sure that you receive the correct amount; 6. If you think you have been overpaid benefit, check with the relevant agency about it. Having to repay money can cause hardship later on and you could be accused of fraud; 7. If you are thinking about moving in with a partner, check how it will affect your benefits; 8. Ask for receipts for forms or documents you hand deliver as evidence for your claim; 9. Sometimes there are delays or you may be paid the wrong amount, or your benefit may stop; and 10. Get advice from NIACRO or your local advice centre about appealing or making a complaint if you are unhappy with a decision about your benefit payments. Maximising Income To qualify you must be in receipt of one of the following benefits for at least 26 weeks: Pension Credit; Income Support; Job seeker s Allowance (income based); or Employment and Support Allowance (income related) If you need assistance with form filling, drafting letters to the Social Security Agency or making appointments, please speak to either the OMU or the Northern Ireland Association for the Care and Resettlement of Offenders (NIACRO) staff, before you are released. Maximising Income 10 11

8 Managing With A Budget How to set a budget Use weekly or monthly amounts. Do not mix them up; To convert weekly payments to monthly, multiply the weekly payment by 52 and then divide the result by 12. Multiplying by 4 is not accurate; To convert monthly payments to weekly, multiply the monthly payment by 12 and then divide the result by 52; Make sure the amounts are realistic. Look at what you spent in previous bills or statements but if these are not available, guessing is better than ignoring them; Start with a rough copy and do as many as you need to get it right; Include fines; Do not forget travel costs for visiting family, getting to work, shops and so forth; Include any loan or catalogue repayments; Include an amount for emergencies such as equipment breakdowns and other lumpy costs like Christmas and birthdays; and Accurate figures will give an accurate budget but if you are not sure of a figure, then have a guess at it rather than leaving it out. Managing with a Budget A budget is a financial plan listing what income is coming in and what expenditure is going out of your household; It helps to control spending by comparing what you plan to spend with what you actually spend; It allows you to determine if you have enough income to meet your needs; and It can help you to plan to meet goals. Dos and Don ts Do Be straight with yourself about how much money you have got coming in and how much you spend; Review your budget if your circumstances change to make sure you are living within your means; and Find out if you are eligible for state benefits or tax credits and claim them. Managing with a Budget Don t Put off dealing with your finances until tomorrow; Overstretch yourself by spending more than you can afford; and Ignore the problem if you are struggling with debt. Get specialist help

9 Managing with a Budget Setting up a budget INCOME Income Support/Jobseekers Allowance Employment and Support Allowance Housing Benefit DLA/AA Tax Credits Child Benefit Wages/Salary Other TOTAL INCOME OUTGOINGS Rent/mortgage Rates Electricity Gas Home heating oil Mobile phone/landline Food/household Cigarettes TV Licence Travel/bus fares Clothes Magazines Fines Loans Credit/store cards Savings Other TOTAL OUTGOINGS WEEKLY MONTHLY WEEKLY MONTHLY Total Income - (minus) Total Outgoings = (equals) What s Left Keeping a record in a diary of exactly what you spend each day will help you keep tabs on your budgeting and show you a true reflection of your expenditure. The Consumer Council (CCNI) has published a Spending Diary and a Budget Planner to help you do this. Contact them for a free copy. (See contacts section on page 40). Paying for utilities Paying for electricity, home heating oil, gas, or coal can take up a large amount of money. There are some things you can do to make this easier: You can switch your supplier for electricity and gas. It is worth doing if it works out cheaper for you; Use the CCNI s gas and electricity price comparison tool to help you find the best value energy for you. Go to (See contacts section on page 40); Shop around to compare prices on home heating oil and coal; Think about asking your electricity or gas supplier to install a Pay-As-You-Go-Meter - this way you are in charge of budgeting as you go along; or If you have a complaint about electricity, natural gas or coal that you cannot resolve with your supplier, contact CCNI who has the legal power to act on your behalf and investigate your complaint. (See contacts section on page 40). CCNI has a range of energy guides called Switch On that give you information about how to shop around for energy suppliers, how to switch supplier, ways to pay and how to make your home more energy efficient. These are available Managing with a Budget 14 15

10 on their website at or by calling them on for a printed version. (See contacts section on page 40). Borrowing Money Ways to boost your household budget Managing with a Budget 16 Wherever and however you live, running a home is expensive. Here are some general tips that can help you reduce the costs and keep in control of your budget: Claim all the benefits and tax allowances that you are entitled to; Shop around for services such as telephones, television, internet and electricity. The companies providing these services compete with each other to give good deals to customers so you may find you can save money by switching; Your local library should have internet access (this may be free) and there are quite a few websites that can help make it easy for you to check if you are paying too much for your services; You can also cut bills by switching to low energy light bulbs and switching off appliances such as TVs and DVD players rather than leaving them on standby; Before you go food shopping make a shopping list and stick to it. If you do see special offers or buy one-get-onefree deals, make sure you do not buy more than you need rather than ending up wasting food. It is also a good idea to look out for cheaper brands such as a supermarket s own brand which can help you save money; Remember that ready made meals and takeaways are usually more expensive than cooking from scratch; and Try to give up smoking! Having a 20-a-day habit costs around 2,000 a year. There are different ways you can borrow money for the short to medium term. Make sure you choose the most suitable for you. These can be: Bank overdraft: An overdraft on your current account is a way of borrowing. You need to manage your money or risk it being withdrawn or having to pay extra charges if you exceed your overdraft limit. You can ask your bank or building society for this or they may offer one with specific current accounts. They will set the amount of money you can borrow (called your overdraft limit). Like other money you borrow, you will usually have to pay interest on your overdraft. Your bank or building society will tell you how much this will be; Personal loans: Personal loans are more suitable for borrowing larger sums over a longer term. Costs vary across lenders and may depend on if the loan is secured or unsecured; Secured loan: This means that you have to have an asset, for example, a home or car that the loan can be secured against. So, if you cannot repay the loan, the lender can sell your asset to get the money back. You may be charged less interest on a secured loan but there may be extra fees; and Unsecured loan: The lender does not need your home or car as a guarantee against the loan but legally you must still repay the loan. The lender can take court action against you to get its money back and this could involve substantial costs Borrowing Money 17

11 and affect your credit rating. In extreme cases it could mean you losing your home. Credit cards, store cards and in-store finance any damage to the goods during the contract period - always check the costs and charges. If your circumstances change for the worse and you are unable to keep up with payments, you may lose both the goods and the money you have paid. Payday loans Borrowing Money Credit card: This is a form of borrowing and paying for goods and services instead of using cash or cheque. You can apply for one from a bank or a building society and certain high street stores. If your application is accepted you will be given a credit limit by the card issuer which limits how much you can spend. Credit means you buy today and pay tomorrow but there is a charge if you do not pay off your bill in full each month. Store cards: These are like credit cards. You fill in an application form and are given a spending limit based on your creditworthiness. They tend to charge higher rates of interest than most other loans. Usually you can only use them in your chosen or group of stores. In-store finance: This may be a useful way to help you pay for expensive purchases such as furniture or large electrical goods over time. Some may offer 0 per cent interest for a fixed period but overall it can be more expensive than other ways to borrow. Hire purchase (HP): This is a common way to pay for expensive items such as cars, furniture and computers. Watch out, as it differs from other types of credit. With a HP agreement you are hiring goods but with an option to buy once you have paid all the instalments. Until you do, you will not own the goods and you cannot modify or sell them without the lender s permission. You will be responsible for Payday loans are short-term loans that you get in return for proof of your income. They are basically cash advances on wages or benefits that you are expecting. They are available online, on the high street and can be given for up to 31 days. Interest rates can be over 1000 per cent Annual Percentage Rate (APR). If you fall behind with your repayments and roll over the interest until the next pay cycle, it can turn out to be very expensive. Other borrowing If you are unable to borrow from mainstream lenders such as a bank, other ways to borrow may be available. In particular, beware of illegal lenders often called loan sharks (see below for more information). Other licensed lenders often charge a much higher rate of interest than banks and building societies because they run a higher risk that some borrowers will not be able to repay. Rates can vary considerably though, so it pays to shop around. If you see online adverts for credit, don t be misled, some can be a very expensive option. You may also be able to get a loan from the Social Fund. The loans are interest free but you must pay them back. They help you budget if you are on a low income or to manage Borrowing Money 18 19

12 in a crisis. There are two loans available, a Crisis Loan or a Budgeting Loan (see the beginning of this section for details). Illegal lenders (also known as loan sharks) Loan sharks are unlicensed lenders who operate illegally and will lend you money when nobody else will, but: The repayment interest will be very high and you may find it difficult to keep up the payments; You may be forced to get a second loan to pay off the first, causing your debts to spiral out of control; or Violence or intimidation may be used to collect debts. Borrowing Money Credit unions Credit unions are owned and run by their members, for their members. Some credit unions may lend to you as soon as you become a member. Others will lend to you after you have shown them you are able to save regularly. The APR on their loans is capped by law so they often charge much lower interest rates on loans than other alternatives. Credit Unions may also be able to help you manage your money. Home credit (also known as doorstep lenders) Money lent to you by doorstep lenders (sales people who come and knock on your door) can be expensive. If you consider taking out a loan from them you should: Ask to see the lender s licence or other authorisation. If they do not have one, they are operating illegally, so do not use them; Be clear about the amount you are borrowing, how much you must repay and for how long you will be making repayments; Ask how much in total the loan is going to cost you; Make sure you understand what will happen if you cannot keep up the repayments; and Always make sure the lender records payments received and signs your record book. Avoid borrowing from unlicensed lenders and report any that approach you to Trading Standards (See contact details on page 41). What is APR? APR stands for the Annual Percentage Rate. Anyone officially lending you money has to tell you what their APR is. They work this out by adding together the interest you will be charged over a year plus any extra costs, such as arrangement fees. The idea behind APRs is that they make it easier for you to compare the cost of borrowing. For example, one company might have an APR of five per cent, while another has one of ten per cent. The key point to emphasise is that the lower the APR, the better the deal is for you (the borrower). That is why people are encouraged to shop around and compare. Borrowing Money 20 21

13 Remember: certain your name and details are held in the files of the three main credit reference agencies: Try not to buy on impulse because you have seen a special offer or discount; Shop around for the best deal. Can you buy it at a lower price, or get cheaper credit from another store, catalogue or lender?; Work out the real cost of buying on credit and check the APR. What is the cash price and how much extra will it cost to pay by instalments?; Do not take out a loan for longer than you need it. How quickly can you pay it off and what is the most you can afford to repay each month?; Check your budget so you know what you really can afford to repay. If something unexpected comes up, for example, if the car needs repairing or the children need new shoes, will you still be able to keep up the repayments?; and Read the small print very carefully before signing! What exactly are you agreeing to? 1. Experian Limited; 2. Equifax PLC; and 3. Callcredit Limited. Borrowing Money Getting your credit report The information shared may include information about your previous credit history. This information is called a credit reference file or a credit report. Lenders may ask your permission to contact a credit reference agency for a copy of your credit report. Having a good credit history will improve your chances of getting credit so the information on your credit report is very important. The information credit reference agencies hold on you include: Your address. This is taken from the Electoral Register and will confirm you live at the address you say you do; Court judgments and bankruptcies; Details of previous and existing credit accounts; and Other credit checks. Borrowing Money Before giving you credit, lenders such as banks, loan companies and shops want to be confident that you can repay the money they lend. To help them do this, they may look at the information held by companies called credit reference agencies. How can I get a copy of my credit report? By law, under the Data Protection Act, you can write to any of the credit reference agencies and ask for a copy of your credit report. (See Contacts Section on page 42). Credit reference agencies give lenders a range of information about potential borrowers, which lenders use to make their decisions. If you are an adult living in the UK, it is almost 22 23

14 What is the cheapest way of getting a copy of my credit report? Write a letter and ask for a copy of your statutory credit report. Each credit reference agency is allowed to charge a fee of 2; or and ask for a copy of your statutory credit report. You can now order a single copy of your statutory credit report from the credit reference agencies website for 2 if you have a valid debit or credit card. You can ask for this report to be posted to you or you can choose to view it on the internet. Saving Your Money Borrowing Money What can you do if you think the information on your credit report is not accurate? If you think you have been wrongly refused credit because of an error on the credit reference agency file, you should do the following: Step 1 Write to the credit reference agency. You should ask them for a copy of their file about you. The law says that information held about you must be accurate and up to date Step 2 If the credit reference agency refuses, write to the Information Commissioner s Office (see contacts section on page 40). Saving money on a low income is difficult but by saving small amounts often, it can soon mount up. Rather than saving cash at home, it is a good idea to think about saving in a more formal way. Your money will be safer and you will not be so tempted to borrow it. The amount you have should also grow because the bank or building society will give you interest - that means they will give you a bit of extra money as a reward for saving with them. How to save more Freeing up spare cash to put into a savings account is not always easy, the first step is to learn how to budget. Just about everyone could benefit from saving more but many people say they never have enough money left over to put into a savings account. So by changing the way you think about saving and spending and learning to budget, you might just find that you can come up with some money saving ideas so you have a little cash to put aside for a rainy day. Saving Your Money Step One: Budget The first step to saving is to budget properly. To be able to do that you need to work out your essential monthly outgoings. Do not worry if you need to start small - even a fiver a month will build up eventually. Look at all your monthly expenses in detail and with a little effort something can always be cut

15 Step Two: Change your way of thinking The single greatest money saving strategy you can learn is that whenever you come across something that you are certain you absolutely must have, just wait a little while. It s unlikely it is going to go away and if you take 24 hours or even a few days to think about whether you really want it, the desire to have it often subsides. Step Three: Set goals The most important thing is to have a clear goal about what you expect to achieve through your efforts. For some it might be going on holiday and for others it is buying something they have always wanted to have. Sometimes it is the security of knowing that you are not over extended and can respond to any emergency that may arise. There are probably as many goals as there are ways to live, so you can save more money. The best one is to never lose sight of the goal and the reason why you are striving to save money. Credit Unions are great for people on low income. They are community savings and loan cooperatives where members pool their savings to lend to one another and help to run the Credit Union. You have to become a member of a credit union to start saving your money with them and in return you get what is known as a dividend. This is an extra sum of money like interest that is usually paid to you once a year, so it will help your savings grow. Saving Your Money Planning for the unexpected Even if we are really good at sticking to a budget, life has a way of throwing up things that we were not expecting. For example, something might need to be replaced or repaired or we may have to spend extra money because of an emergency. Any of these can cause problems for your budget and that is why it makes sense to try and save up a bit of money rather than spend everything we have. It is also important to think about the extra money we usually end up spending at times like Christmas, birthdays and holidays. Christmas club savings account Organisations such as the Post Office aim to provide customers with a secure and convenient way to save for Christmas and avoid getting into debt. On joining a Christmas club, a card is issued which can then be used to make quick and easy deposits - the minimum being 5 and the maximum 500, with an annual limit of 1,000. Cardholders can start to access their money between the 1 November each year and the 31 January. The card can be used to pay for items in various high street shops. Before you sign up for any savings scheme, make sure that it is secure. Ask the business how your money will be protected, for example, if you lose or damage your savings card or booklet, can you still access your savings? Ask the business if they have insurance in place which protects savers in the event of it going bust; and Ask the business for a copy of their terms and conditions and read these carefully. Saving Your Money You can open a savings account at a building society, bank or through the Post Office, or you could choose to save with a Credit Union

16 Tackling Debt Rent and mortgage arrears; Rates; Gas and electricity bills; Magistrates court fines; Maintenance; and Hire purchase agreements. Tackling Debt Debts tend to grow and there can be serious consequences if you do not pay them back - it is important to face up to them as soon as possible. Before your outgoings get out of hand and become debts, you might like to cut back on your spending for a short while. Is there something you can do without, such as cigarettes or satellite TV? If you have a small debt, try not to spend money on non-essentials and you may be able to pay your debt off quickly before too much interest is charged. How to tackle debts 1. Make a list of all your debts; 2. Go back to your budget and see if you have got any extra money that you can use to pay them off; 3. Prioritise your debts. That means working out which ones you must sort out first. This is important because you get into more trouble for not paying off some debts than others. For example, if you do not pay your bills at home, your gas or electricity supply could be cut off or if you do not pay your TV licence, you could end up being sent to prison; 4. Get in touch with everyone you owe money to and explain you are in debt. Then you must negotiate how you are going to pay back the debt. 5. Contact your local Advice Centre. (See contacts section on page 37). 6. Do not be tempted to borrow more money to try and pay off your debts before getting some good advice; and 7. Tackle any other debts (non-priority) you have once you have sorted out a plan for your priority debts. How you do this depends on whether you have any extra money to pay back the debts. If you do, you can try to come to an arrangement with the creditor you owe money to and freeze the interest added to your debt. This means it will not get any bigger and you can arrange to pay back a little bit every month. Advice organisations can guide you through your options and help you talk to the people you owe money to. They can also explain your best options if you do not have any extra money to pay back debts. Remember Do not feel guilty. Many people are having the same problem. You are not alone. Tackling Debt The debts we need to tackle first are known as priority debts. They include: TV licence; 28 29

17 Insurance How insurance works Insurance can seem complicated but the basic principles are quite straightforward: An insurance company works out how likely it is that an accident or event will happen and what it would cost to put it right. Based on this, the insurance company sets a premium. This is the amount it asks you to pay in order to protect yourself against the accident or event. The cost of the premium is often spread across a year so you can pay it on a monthly basis. If whatever it is you have insured yourself against happens, you make a claim to your insurance company and it pays out the agreed amount. INSURANCE You buy insurance in order to protect or cover yourself against unexpected financial loss which can result for example, from personal injury, illness, or damage to your property or personal possessions. Some of the most common types of insurance cover are: Car insurance: It is illegal to drive a car without insurance so this one is a priority if you are thinking of driving again; Home contents insurance: This covers the contents of your home which means items like your furniture and television are insured against things such as theft or flooding. If you are renting a home it is usually you who must pay this; Buildings insurance: Most people who own their homes have buildings insurance. This means if something like a fire or flood happens the insurance company will give you some money to repair the damage. If you rent a home your landlord pays the building insurance; and Life insurance (often called life assurance): Some people take out life insurance which means that if they die someone close to them such as a husband, wife or child will get a sum of money to help them carry on living. Tips for purchasing insurance: It is important to shop around and try a range of brokers and insurers. Do not just go with the first quote you receive. 1. Make sure you understand the terms and conditions of your policy and what it covers before signing it; 2. Keep up to date with your payments to make sure you are covered; and 3. If you have a complaint about your insurance, complain to the company. If you are still not satisfied, contact the Financial Ombudsman Service who can help resolve issues free of charge. (See contacts section on page 40). INSURANCE 30 31

18 Important information about insurance for people with criminal convictions and their families As an ex-offender when applying for insurance, you must disclose your unspent conviction(s) even if it does not say you need to - it is an offence not to. Although this may make you feel as if you are still being punished for your offence, it is very important to do this. If you do not disclose unspent convictions and you need to make an insurance claim, you may find that the insurance company does not pay out. More information on insurance CCNI has published two guides to help consumers understand how to shop around for insurance policies and these are: Driving down the cost of car insurance: and Home contents insurance. Both are available on their website or by calling them for a printed copy. (See contacts section on page 40). INSURANCE You should retain a copy of your insurance policy as proof you have disclosed all unspent convictions. If you want help with this please contact NIACRO s Disclosure Advice Line. (See contacts section on page 38) Please contact the Association of British Insurers for more details about companies who offer insurance services. (See contacts section on page 40). For more information about where you can go for insurance if you have an unspent conviction, please contact UNLOCK The National Association of Reformed Offenders. (See contacts section on page 40). INSURANCE 32 33

19 CitizenCard Glossary Of Terms Why do I need a CitizenCard? Many organisations need to be certain of your age or identity. Using a CitizenCard is voluntary but it can make life much easier for you to access the products and services you are entitled to, especially if you do not have a passport or driving licence. Citizen Card Where can I use my CitizenCard? CitizenCards are accepted nationwide at supermarkets, off-licences, newsagents, forecourts, pubs, clubs, gaming centres, cinemas, banks, airlines and in many other places. Can anyone apply? Babies, children, adults - anyone can now obtain a CitizenCard. If you are under 16 you will need parental consent. How do I apply for a CitizenCard? You can collect the form from most supermarkets, convenience stores, off-licences, post offices or newsagents. You can also apply by downloading an application form from Complete the form and send it to CitizenCard with your payment. Balance - the total amount of money in your account or the amount you owe the bank if you go overdrawn. Bankruptcy - a legal way to write off debts which you cannot afford. Cash (ATM) Card - a plastic card that lets you get cash from your account through cash machines, at your bank or building society branch and by using cashback facilities, for example, at supermarket tills. Collection Agency - an agency which is hired to collect money owed. They do not have anymore power than the original creditor. Credit - money borrowed with an arrangement to repay a loan. Creditor - the company or person who you owe money to. Credit Reference Agency - a company who holds a record of your credit history. You can apply for a copy anytime but a creditor can only apply when you make an application for credit. Glossary of Terms How much does a CitizenCard cost? The standard cost is 15 (the card is posted within three weeks). Urgent applications cost 30 (the card is normally posted one working day after receipt of application). Debit Card - this works like an electronic cheque. When you pay by debit card the money is automatically taken from your account

20 Glossary of Terms Debt - money owed. Debtor - the person who owes money. Default - when you miss an agreed repayment. Direct Debit - a way of paying bills from your bank account to a company like Power NI. The money is taken from your account automatically on the agreed dates. Expenditure - money needed for essential living costs. Finance Agreement - an agreement to repay money for goods purchased like a sofa on credit. Financial Statement - a list of all income and expenditure, including details of money owed. Guarantor - someone who has to pay your debt if you do not pay. Hire Purchase (HP) - an agreement where you do not own the goods until you have paid the credit agreement off. This is commonly used when purchasing cars. Housekeeping - money spent on food, cleaning products, toiletries, etc. Overdraft - a facility which allows you to spend more money from your account than you have in it. Payment Protection Insurance (PPI) - an insurance policy that is sometimes taken out with a loan, credit card or any finance agreement. It can cover sickness, accident and/or redundancy. Many people take out this insurance without knowing, so it is important to check if this insurance has been taken out. Priority Debt - any debt which if unpaid threatens your home (rent or mortgage), your car (hire purchase), your freedom (court fines, rates,) or an essential service (gas, electricity). Sort Code a six-digit number which is usually formatted as three pairs of numbers, for example, It identifies both the bank and the branch where the account is held. Standing Order - a way of paying bills from your bank account. The bank pays the amounts from your account automatically on the agreed dates to the company you are paying. Write Off - when a creditor no longer requests payment for a debt. The debt may still appear on your credit history but you will not be asked for payment. Glossary of Terms Income - any regular money coming into the household. Interest - the cost of borrowing money. For example, if you borrow 100 with interest of ten per cent, you will repay 110. Therefore the interest is 10. Non Priority Debt - any debt which you do not repay on time, the creditor does not have extra power to recover the money, such as credit cards, loans, overdrafts, etc

21 Useful Contacts Useful Contacts NIACRO (Belfast Office) 4 Amelia Street Amelia House Belfast BT2 7GS Tel niacro@niacro.co.uk NIACRO Disclosure Advice Line Tel : anne@niacro.co.uk NIACRO (North West Office) 9 Queen Street Derry/Londonderry BT48 7EG Tel Ask for NIACRO s Money/Benefits adviser ADVICE NI Debt Action NI project 1 Rushfield Avenue Belfast BT7 3FP Tel debt@adviceni.net Please contact Advice NI for your local money/debt adviser Housing Rights Service 4th Floor Middleton Buildings High Street Belfast BT1 2BA Tel: hrs@housingrights.org.uk Consumer Credit Counselling Service Helpline Citizens Advice Bureau Merrion Business Centre 58 Howard Street Belfast BT1 6PJ Tel: Useful Contacts 38 39

22 Useful Contacts The Consumer Council 116 Holywood Road Belfast BT4 1NY Tel: Information Commissioner s Office Wycliffe House, Waterlane, Wilmslow, Cheshire SK9 5AF Tel: or mail@ico.gsi.gov.uk Association of British Insurers 51 Gresham Street London EC2V 7HQ Tel: info@abi.org.uk Financial Ombudsman Service South Quay Plaza 183 Marsh Wall London E14 9SR Tel: from a fixed line or from a mobile complaint.info@financial-ombudsman.org.uk Trading Standards Service 176 Newtownbreda Road Belfast BT8 6QS Tel: Textphone: Fax: tss@detini.gov.uk Web: Useful Contacts UNLOCK The National Association of Reformed Offenders 35a High Street Snodland Kent ME6 5AG Tel: advice@unlock.org.uk

23 Credit Reference Agencies Utility Companies - Electricity Useful Contacts Experian Ltd Customer Support Advice Centre PO Box 1140 Bradford BD1 5US Equifax Plc Credit File Advice Centre PO Box 1140 Bradford BD1 5US Callcredit Ltd One Park Lane Leeds West Yorkshire LS3 1EP Power NI 120 Malone Road, Belfast, BT9 5HT Telephone: home@powerni.co.uk Airtricity 2nd Floor, Great Victoria Street Belfast BT2 7AF Sales: Customer Service: Main reception: Website: Budget Energy Energy House Ballinska Road, Springtown Industrial Estate, Derry, BT48 0LY Telephone: info@budgetenergy.co.uk Website: Useful Contacts 40 41

24 Electric Ireland Forsyth House Cromac Square Belfast BT2 8LA Phone: LoCall Web: Useful Contacts Utility Companies - Natural Gas firmus energy Kilbegs Business Park Antrim BT41 4NN Tel: furtherinfo@firmusenergy.co.uk Phoenix Supply 197 Airport Road West Belfast BT3 9ED Tel: info@phoenixsupplyni.com Useful Contacts 40 41

25 Glossary of Terms Citizen Card Elizabeth House 116 Holywood Road Belfast BT4 1NY Insurance Complaints line: Tele/Textphone: Fax: Websites: Consumer Council Northern Ireland ConsumerCouncil