Halloween is fast approaching, and as the nights draw in, it’s not just ghosts and zombies you want to keep from your door.

These days, there are plenty of financial frights that can give you nightmares. From rollercoaster investments to rocketing energy bills 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. The number of people in the UK owning some form of cryptocurrency rose by over 20% between June 2020 and January 2021, according to the Financial Conduct Authority (FCA). Since Bitcoin was created in 2009, it’s become the world’s ninth most valuable asset, but it’s been on a rocky ride. Bitcoin recently reached an all-time high of just over $66,000 (around £44,147), but that’s after plenty of sudden drops in value. Even so, a growing number of people see cryptocurrency as an investment with the potential for long-term profits. But is it too good to be true? Do horrors lie beneath?

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

Homeowners are being warned that they are facing the biggest rise in mortgage payments since the 2008 Financial Crisis, according to official data, with some lenders already raising rates in the wake of Rishi Sunak’s latest Budget.

Inflation could hit 5% in 2022, while interest rates are predicted to rise to 0.75% by the end of 2023, according to the Office for Budget Responsibility (OBR). The biggest hike in mortgage payments is expected in 2023 when homeowners can expect to pay about £500 more a year on an average standard variable rate (SVR) mortgage, according to the Liberal Democrats.

At present, the average two-year fixed rate currently stands at around 1.3%, according to Statista, but they are already on the increase. So if you have been thinking about remortgaging, you may want to get your skates on.

If you have rolled onto your mortgage provider’s Standard Variable Rate (SVR), or you might be in this situation within the next few months, it is definitely worth having a look around for a new deal that could save you hundreds or even thousands of pounds over the coming years. You might also want to consider overpaying your mortgage while interest rates are low to reduce the amount you owe. Learn more about the pros and cons of doing this in our guide Should I overpay my mortgage?

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 over £2billion a year.

Three of the most recent scams include: 

  • Fake antivirus software emails – When you buy a computer you will sign up for antivirus software and, most likely, promptly forget all about it. One of the scams that is doing the rounds at the moment is an email telling people that their McAfee or Norton Antivirus has expired. In classic scam-style, both emails are written in a way to make you think you risk your machine being infected with a severe virus if you do not renew your subscription at exorbitant prices.

  • Fake Supermarket promo reward emails – Fraudsters often use a trusted brand to con people out of their hard-earned cash. Recently, people have been receiving emails from fraudsters that claim to be from Tesco, Asda and Morrisons, asking them to fill out a marketing feedback form for the chance to win a store voucher. If you get one of these, beware that none of these supermarkets are currently running a marketing campaign that offers this, so it is most definitely one to bin immediately.

  • Fake NHS Covid-19 PCR test text – Devastatingly for victims, fraudsters have used the uncertainty and stress of the pandemic to steal millions of pounds from people, and this is just the latest in a stream of Covid-related scams. People have been receiving texts that appear to be from the NHS, telling them they have been in contact with someone who has covid and to click the link to order their PCR test. Text scams are always tricky to spot, but it’s important to know that while the NHS may text you to state that you’ve been in contact with a covid case, they will never ask you to order a PCR test via text.

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

The news has been awash in recent weeks with soaring energy prices and one energy provider after the next closing their doors for good. This winter looks like it could be a difficult one for many people, and saving energy while staying warm is more important than ever to make sure you aren’t hit by astronomical heating bills. While predictions aren’t suggesting a particularly cold winter in the UK, the impact of climate change has made itself known across the world this year, so there are no guarantees we’ll avoid a cold snap.

With this in mind, being frugal will be the name of the game as well as making sure you claim government support if you are eligible for it. 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?

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. If you want financial advice, 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. VouchedFor also offers a Free Financial Health Check* with a trusted, well-rated advisor in your local area so you can see if you think advice might be for you.

Which financial frights give you goosebumps? Terrifying taxes? Insidious Insurance? Whatever your experience, we’d love to hear your thoughts. You can join the discussion on the Rest Less community forum or leave a comment below.

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