Ask Andy #7 Your questions answered

This week my answers to your questions on mortgages, pensions, bank accounts, savings and credit cards.

I love hearing from you, whether it’s on the blog, social media, YouTube or on email. Often you’re asking me questions about your finances, and I’m always glad to help if I have the time.

But I realised that my answers could also be useful to other followers. So I’ll be putting my responses to the best questions into regular articles here on the blog.

Keep reading for some of the questions I’ve been asked, plus the video live from last week with even more!

Watch last week’s Q&A

Watch my answers to questions including whether I think there will be more bank switching bonuses, advice on how to spend less on Amazon, the impact on credit scores of switching and how much to have as an emergency fund.

What should I do with my savings to earn the most interest possible?

Chloe, via Instagram

The best accounts change all the time but the highest rates right now are with Virgin Money’s M Plus current account (2.02% on £1,000) and Chip+1 (1.25% on up to £10,000, though fees reduce what you’ll actually get).

You could lock in at 1% with some regular savers, or if you’ve more than £5,000 it’s worth considering Premium Bonds.

There’s more in this regularly updated article!

Can I switch a basic bank account?

I’m thinking of switching banks, but the problem is that I currently have a Barclays basic current account, not a regular one. Do you know by any chance if that affects the eligibility for the switching bonuses?

Irene, via the blog

Yes you can still switch a basic bank account over, though if there was a reason you had a basic account in the first place (eg poor credit history) you might find it harder to get accepted for the accounts offering incentives.

Do I pay tax on interest if I’m a non-taxpayer?

If someone earns in a year e.g. £5000 salary and 1200 interest on investments then does she pay 0 income tax because the total income is less than 12500, or does she pay 0% on 1000 of the interest, but 20% on the £200 interest that is above the threshold of £1000?

Janos, via email

Hi János,

There’s something called the Starting Rate for savings which increases the tax-free interest allowance for low earners to £5,000.

It’s available to anyone who earns less than £17,570 a year, though if you earn above the personal allowance level of £12,570 it reduced by £1 for every £1 earned.

Oh, and if this person is your spouse, it’s worth investigating the marriage tax allowance.

Andy

Should I close my old credit cards?

Really helpful summary, thanks.  I’m curious to know if having multiple credit cards sitting in the draw with £0 balance negatively impacts my credit score?

And if I cancelled a couple of them, therefore reducing my available credit would this have a negative or positive impact on credit score?

Paul B via YouTube

Hi Paul, there’s no right or wrong answer! Having too much credit available to you can be seen as a negative on your credit report, so closing unused ones makes sense. 

But, unused credit can be factored into your overall credit utilisation – the amount of money borrowed against the total available. Credit reference agencies suggest keeping this at around 30%. So closing cards could impact this.

Plus, long-held accounts can strengthen your report so closing them could see a short-term hit too.

Can I get a bank bonus without switching?

Do any banks offer cash incentives for just opening an account or do you have to complete a full switch?

Kop Kid via YouTube

Not really. There are monthly rewards with some accounts, but we’re talking about a few quid each month.

You can get some cashback from Quidco for opening a TSB account which doesn’t require a switch.

What’s the cheapest loan for a car?

Could you possibly go over the cheapest way to borrow money? For example – £10k for a car.. car finance is 7.9% APR whereas personal loan looks to be 2.8%. I just wanted to know whether there was a smarter way. Many thanks

Ess, via YouTube

Hi Ess. Generally the cheapest rate is going to be better – but there will be terms you need to check, such as how long the loan is for, whether you can pay it early and so on.

Car finance will be secured against the car – so they can take it back if you don’t pay. With a personal loan you’ll own it completely but owe the loan provider.

But your credit score could also be a factor here. Finance might be easier to get than a loan, and the garage might be able to offer a discount this way too.

Can I open new LISAs over 40 years old?

Bro, I have 25 years left in my Lifetime Isa.  I have a question regarding the lost decade. Say I have opened cash LISA to protect principal and contribute 4k until I’m 50. What about the decade till I’m 60 where I can only get low-interest rate and no growth

Precocious DeathEater, via YouTube

Really good question. So in theory you’d be able to open a new Lifetime ISA after 40 for transfers but not put any money into it. But in practice I’m not sure how many offer this. Hopefully it’ll change as more people go past 40 and then 50 years old.

Also, it’s probably best to use a Stocks and Shares LISA for retirement as it’s long term – so the gains should be much better than cash LISA

How to ask me questions

The best ways to get in touch is in the Andy Clever Cash Facebook community

Just post your question any time, or ask me live in my weekly Q&A each Thursday (which is also on Instagram and YouTube).

You can also comment on individual blogposts and videos or ask me questions via these channels:

• Twitter @AndyCleverCash
• Instagram @AndyCleverCash
• Email Andy[at]BeCleverWithYourCash.com

I can’t promise I’ll be able to answer all questions but I’ll do my best.