Savers across the UK will be looking to put coronavirus and it’s economic impacts behind them in 2021. This will be harder for some consumers over others as financial companies across the UK adapt to continued restrictions and new realities.
Paul Green, the CEO at Over50smoney, provided clarity on what may lie ahead: “January is traditionally the time that we all start to think about our finances and plan our financial goals for the year ahead.
“However, this year is unlike any other. The UK along with the rest of the world is in the middle of a global pandemic.
“While there is light at the end of the tunnel, with the mass roll-out of vaccinations, we all know that 2021 will to be a tough year for savers and consumers in general.
“We know some things about how 2021 will unfold, but many issues remain uncertain.”
Paul went on to break down just how much this may cost customers: “The precise payments will depend on the individual customer but will be the highest of the following three calculations:
- “Two to five percent of the main balance (plus any instalment plan payment) – this is individual to each customer
- “One to three percent of the main balance plus any interest, default fees or account maintenance (plus any instalment plan payment) – this is individual to each customer
- “£5, or the total outstanding balance of an account if it is less than £5
“Barclaycard has written to customers and used an example of a balance of £2,500 with monthly repayments rising from £60.42 to £79.17. This is an increase of 31 percent.”
It remains to be seen how the economy will manage throughout 2021 but Paul concluded by making some predictions: “2021 looks like being a difficult year for savers and consumers overall.
“As the economic impact of the pandemic hits household budgets will get tighter.
“We know that the property market will slow. Although interest rates will remain low, borrowing including using credit cards, will become more difficult and costly as lenders seek to reduce risk.
“We also know that tax rises will be coming. People who have money to invest should think about the likely changes to inheritance and capital gains tax and see if they can avoid these.
“For example, if you were planning significant gifts to children during the course of 2021 it makes sense to bring these forward in case PETs are abolished.”
Paul noted more broad changes will likely be on the horizon come March as Rishi Sunak delivers the next budget.
Of course, it is not possible to know what the Chancellor will announce ahead of time but predictions have emerged that he will drastically alter the tax landscape in an effort to cover rising public spending.
When announcing the budget date of March 3, the government confirmed it will be setting out the next phase of plans to tackle coronavirus and protect jobs.