Halloween is here, and as the nights draw in, it’s not just ghosts and zombies you’ll want to keep from your door.
There are a number of financial frights lurking out there that are enough to give anyone nightmares. From rollercoaster investments to rocketing energy bills, rising mortgage rates and fraudsters out to steal your cash, here are some money scare stories that could keep you awake at night.
Tales from the cryptocurrency
Cryptocurrency, or digital cash, is an asset that many people thought would never last, but over the past few years, it’s proved increasingly popular. Research from the FCA suggests that nearly 5m people in the UK now own some form of crypto asset, equivalent to nearly 10% of the population. However, most investors in cryptocurrencies have had to endure a very rocky ride. Bitcoin, for example, reached an all-time high of $68,789 in 2021, but has charted an uncertain path since, falling to $15,757 last November and making a bumpy recovery since then – as of today, it is trading at around $27,546.
While it’s legal to trade cryptocurrency in the UK, it’s not currently regulated by the Financial Services Compensation Scheme (FCSC), which leaves investors at risk of losing their money if an exchange goes bust. And, of course, cryptocurrencies are prone to enormous swings in value, and no one can be certain they will recover when they next nose-dive.
Regulators around the world are increasingly cracking down on the cryptocurrency market. The FCA has flagged concerns that while more people have heard about cryptocurrency than ever before, few ever fully understand what they are investing in. If you want to know more about cryptocurrencies and the risks involved, have a look at our article Understanding Bitcoin and other cryptocurrencies.
House of Horrors for mortgage borrowers
The mortgage market has seen some serious turmoil since the government’s disastrous mini budget last autumn, leaving many homeowners worried about how they’ll cover steeper monthly payments.
Skyrocketing inflation led to the Bank of England hiking the base rate to levels unseen in over a decade, which in turn saw mortgage rates shoot up. With inflation starting to ease and the base rate appearing to have stabilised (at least for now), lenders are finally starting to nudge down mortgage rates too – but it’s been slow going, and offerings are still nowhere near as attractive as they were two years ago, when average two-year and five-year deals were below 3%.
The average two-year fixed rate currently stands at 6.50%, according to financial website Moneyfacts.co.uk. In comparison, prior to the mini budget, this same average rate stood at 4.74%. The average five year rate now stands at 5.99%, compared to 4.75% on the morning of the mini budget.
If you have rolled onto your mortgage provider’s Standard Variable Rate (SVR), or you might be about to when your current deal ends, it is definitely worth having a look around to see if you can save money by remortgaging. A few five-year deals at rates below 5% have crept onto the market in recent weeks, so these could be worth investigating if you are keen to fix as soon as possible – find out more in our article Five-year mortgage fixes dip below 5%.
If you can afford to, you might also want to consider overpaying your mortgage to reduce the amount you owe, but make sure you keep a savings buffer in place so that you have some spare cash available in case of any unexpected expenses. Learn more about some of the pros and cons of overpaying your mortgage in our guide Should I overpay my mortgage?
If you’re finding it hard to cover your mortgage costs, get in touch with your lender as soon as possible. They may be able to provide you with options that could help you reduce your monthly payments, for example, lengthening your mortgage term. Find out more in our article What can you do if you can’t pay your mortgage?
Speaking to an experienced mortgage advisor can help you to understand your options and get a great deal on your mortgage. If you’re looking for expert mortgage advice, you can speak to an independent mortgage broker with Unbiased. Every advisor you find through Unbiased will be FCA-regulated, qualified and unconnected to product providers – so they can offer you truly unbiased advice.
Invasion of the identity-snatching scammers
While Halloween may be a time for dressing up as someone or something else, there are fraudsters out there already faking their identity all year round to trick thousands of people out of their money. Scammers defrauded victims of over £1.2 billion in 2022 alone.
Three of the most popular scams at the moment include:
- Quishing emails – Quising describes when a fraudster sends you an email claiming to be from a bank or another organisation, like HMRC or a major retailer. The email will include a QR code and prompt you to scan it to buy a product, collect a refund or provide information. However, this code will direct you to a fake website that the scammers will use to collect your bank details. Be wary of any emails asking you for payment information and delete anything that looks fishy.
- Bogus giveaways – This is when scammers send emails, texts or Whatsapp messages claiming to be from a company offering you the chance to take part in a competition or giveaway. The link they send you – again, typically for the purpose of collecting your bank details – may be suspiciously short or not indicate what the website is, so be on your guard.
Loved one in need scam – You’ll receive a WhatsApp message supposedly from a family member, saying that they’ve got a new phone number and need money to pay a bill urgently. Messages often start with ‘Hello mum’ or ‘Hello dad’. They will then provide bank details for you to transfer money across to them. If you’re suspicious about a request for help you’ve received from a friend or family member, try and reach out to the person directly by another form of communication to confirm that their request for help is genuine.
Have a look at our article Types of scam and how to avoid them for more information on the most common scams and how to identify them.
Beware scary energy prices
It’s been a turbulent year for the energy market, and while the energy price cap is finally starting to climb down, energy bills are still much higher for the average household than they were before the crisis, now that government support for every household has been removed.
Coupled with a lack of attractive tariffs on the market, it’s looking to be another difficult winter for many. Finding ways to save energy while keeping warm is therefore more important than ever to make sure you aren’t hit by astronomical heating bills.
If you are worried about what this winter might hold, have a look at our article Energy Saving tips: how to reduce your bills, for some tips and tricks for keeping your energy spending to a minimum and The energy bills crisis: what can you do about soaring costs? for more information on the crisis itself and what to do if your provider goes bust. You should also check whether you might be entitled to any help with your heating bills. Find out more in our article Are you eligible for help with heating costs?
Cost of living nightmares
Almost everything seems to have crept up in price thanks to the huge jumps in inflation over the past year, from food to travel to clothes and more. While inflation is finally starting to ease, it’s still some way over the government’s 2% target, meaning our wallets are likely to keep being stretched for the foreseeable future.
This autumn could be a good opportunity to review your finances and see if there’s any way you can reduce your outgoings – or even boost your income – to help you cover high living costs.
You can check out our guides 21 ways to save money on your food bills, 12 ways to save on car and travel costs, 19 ways to cut clothing costs and Seven ways to save on your household bills for some ideas on cutting costs in your everyday life. Our Ways to save money section contains even more useful articles if you’re in need of further inspiration.
There are plenty of simple ways you might be able to supplement your income too. For example, our articles How to make money from your clutter and 13 things you didn’t know you could sell show just how many things you can convert into cash even if you have no need for them any more. Alternatively, our articles 10 ways to make money by renting out your life and 24 ways to make extra money and boost your income suggest some more ways of earning a little extra money that you may never have considered.
Investment fads that go bump in the night
Whether you are a major or small-time investor, one of your biggest fears may be your investment failing and taking your money with it. Just like any other industry, the world of investment goes through its trends. And while you might hope that you are investing in the next Microsoft or Amazon, there are plenty of fads along the way that fail to make profits. You need to keep your wits about you and avoid getting swept up in market hype.
You might remember the dot.com bubble at the end of the 90s where anything related to the internet seemed like a sure-fire money maker, or the BRICs (Brazil, Russia, India and China – four emerging markets) of the early 2000s, both of which saw huge numbers of people speculatively investing in a wide array of businesses in the hope of hefty gains. However, the dot.com bubble burst and saw technology stocks nose dive, while Brazil and Russia in particular dramatically failed to live up to investors’ expectations.
So how can you avoid being haunted by a failed fad investment? Here are a few tips that can help you steer clear of them:
Make sure you fully understand what you are investing in before you hand over any money: While investing in the unknown or brand new innovations might have the potential to provide you with good returns, if you can’t understand how a company, fund, or particular asset works or will make money, you might want to hold off investing.
If it seems too good to be true, it probably is: If an investment is promising a huge financial return have your guard up. Remember, no one can predict with absolute certainty how a market or particular asset will perform.
Ask yourself if any part of you feels uncomfortable with the investment: Sometimes, your gut is a good prompt of what you should do. If you have any concerns about the investment, or the risk seems too high, then this might not be the investment for you.
If you’re not sure where to invest or aren’t clear whether investing is right for you, read our article Investing – the basics and Investing in your 50s and beyond: an introduction.
You can find a local financial advisor on VouchedFor or Unbiased, or for more information, check out our guide on How to find the right financial advisor for you.