Boris Johnson was forced to extend lockdown measures recently as the latest coronavirus data proved to be alarming. According to the government’s data, the number of coronavirus patients in hospitals recently exceeded the April peak by 40 percent, the number of people testing positive for the virus reached a new high and the number of deaths is up by 20 percent.
The Prime Minister laid out how the new lockdown rules will work in what will be depressingly familiar to millions: “With most of the country already under extreme measures, it is clear that we need to do more, together, to bring this new variant under control while our vaccines are rolled out.
“In England, we must therefore go into a national lockdown which is tough enough to contain this variant.
“That means the Government is once again instructing you to stay at home.
“You may only leave home for limited reasons permitted in law, such as to shop for essentials, to work if you absolutely cannot work from home, to exercise, to seek medical assistance such as getting a Covid test, or to escape domestic abuse.”
While it remains to be seen how long this new lockdown will last, many believe it will easily run into the spring, meaning the UK will have been dealing with lockdown measures in one form or another for at least a year.
Fortunately, with a potential vaccine on the horizon, this could be the last time consumers will have to deal with such harsh restrictions and in the meantime, Justin Basini, the CEO and co-founder of ClearScore provided guidance on how savers can financially prepare for the months ahead.
This advice concerned debt, savings and credit scores as Justin began: “As we enter another lockdown that could well last until March, ensuring consumers have the best possible financial support in place to weather this difficult time is essential.
“Recent data from ClearScore found that 78% percent of the UK are planning to make their finances a top priority in 2021, with the pandemic undoubtedly playing into this.
“Whilst the government and industry bodies will be offering continued support in terms of furlough scheme and payment holidays, there are a number of things that consumers can do themselves to build up their financial resilience as we enter another lockdown.”
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Prioritise debt over savings
Given the low interest rate environment, Justin urged consumers to prioritise paying off their debts first before continuing to save.
Justin warned: “Missing just one month of repayments on your credit card could cause your credit score (how lenders judge your financial suitability for credit products) to drop by 21 points, so it’s always worth ensuring that you make at least the minimum repayments on any debts you may have, rather than putting extra cash towards your savings.”
Review your debt
Of course, interest rates aren’t the only element of debt management and Justin urged consumers to look into what they hold: “Prioritise any debt according to their APR. The higher the number, the more the debt will be costing you.
“Then look to see if you could save money by switching to a product with a lower interest rate. “If you have a mortgage, consider remortgaging to a cheaper deal or extending the term of your existing mortgage to provide some relief now.
“If you find yourself in particularly tough circumstances, don’t go it alone.
“Charities such as Step Change and Citizens Advice are available to support you through financial difficulties and offer tailored guidance to help improve your circumstances.”
Justin concluded by urging consumers to start by looking at moving their current balance to a zero percent balance transfer card.
These allow savers to pay off existing credit card debt over the course of the zero percent interest offer period. The average amount saved by switching is, according to ClearScore’s analysis, up to £626 and the following 10 key tips should be followed to improve ones credit score:
- Use a credit card little and often (making sure you pay it back in full each month)
- Keep your credit utilisation low (ideally lower than 30 percent of your total credit limit)
- Fix mistakes on your report (especially addresses)
- Get on the electoral roll
- Avoid making multiple credit applications in a short space of time
- Use an eligibility checker which shows you how likely you are to get a credit product before you apply
- Get your name on some bills if it isn’t already
- Pay your bills on time
- Look out for fraud on your credit report
- Make sure you have a good overall view of your finances by regularly checking your bank statements and credit report