Can you make £500 switching bank?

22:22Most customers get it. It is credit score dependent. And of course First Direct is paying switchers£175 minimum at the moment. So if you think about it, for those on lower overdrafts, if your overdraft was£200 right now and you were to do that switch, at some point in the next couple of months you're going to get paid£175. So that reduces the overdraft and the rest of the overdraft is at zero percent it can be incredibly lucrative but first direct won't actually move your overdraft so if you're switching and you're overdrawn you will be given the choice of whether you want your old generally your old bank does depend on which individual bank i'm going to give you a generalized description it can change bank by bank of whether you want your old bank account closed or whether you want it to sort of switch across but your old bank account will be open so you can keep the debt there now what you could do of course is you could use your new account to pay off the old one.

23:11What I'm trying to say is it won't automatically port an overdraft. It will port any credit, but it won't port your overdraft across for you. So then it depends on the old bank on what it could do. Now, there are other things you could look at. You could look at getting a loan to pay off the overdraft. You could look at getting a money transfer credit card. Tesco and Virgin money. That's where you get a new credit card that pays money into your bank account for you. so you owe the credit card at 0%. They're only about one year 0 % and you'll pay a fee of around 4 % for doing so but that is effectively a way of shifting your overdraft to 0 % interest on a credit card.

23:49So there are things that you can look at. I'm slightly concerned by the amount of that overdraft. £3 ,600 is a big overdraft and it is worth a reminder here that most overdrafts now, we talked about it in Money Mastermind a couple of weeks ago, is the most expensive form of mainstream borrowing. A typical high street overdraft is 40%. A typical high street credit card is 25%. So actually, if you have an overdraft, your priority, unless you've got other extreme debts, your priority should be getting rid of the overdraft ahead of paying off credit cards. Just pay your minimum on your credit card and use any extra money you have to reduce the overdraft.

24:25So there are things that can be done, but it does get tricky with bigger overdrafts like that. Can you get a package bank account with a switching bonus? Kath has a Lloyds account because they're offering free AA cover now they're withdrawing this. Is it best to swap? Do other accounts offer similar? So a packaged bank account is, I tend to think of it as an insurance product. So these are where you get generally worldwide family travel insurance, mobile phone cover if you're lucky for the whole family's mobiles, and breakdown cover all included for a one-off fee within your bank account. So they call them packaged bank accounts.

24:54I tend to think of them as insurance cover with a bank account on the side because the real benefit is if you need all those different insurance policies, it can be vastly cheaper just to pay the fee for the bank account than it could to get the insurance separately. And they tend to be pretty good quality insurance as well. So you're asking me, are there any packages that have switching to at the moment? You've got the Santander. Can I just say, for regular listeners, you may remember my New Year's resolution two years ago was to stop saying Santander. I still have to consciously think every time.

25:27And I'm not sure, I think I'm closer. But it is an absolute mental hiccup saying that word. And so if you ever hit me pause when I say that particular bank's name, it's because I'm determined. So the Santander Edge account, sorry, the Santander Edge Explorer has a£17 a month fee, but gives you£180 for switching to it.

25:48Martin Lewis:So effectively, the fee is covered for just over 10 months. It includes worldwide family travel insurance, Max Shea 75, including winter sports, household mobile phone insurance. So for all the phones in the home, if you've got young people, you've got kids, teenagers with their own phones. So good for smartphones. And UK and European breakdown cover for the account holder. So if you're in a trusted relationship, you could get this, but technically make your partner a joint account holder as well. So that would cover you both. The other one is Club Lloyd's Silver. That's arguably better, slightly less insurance, but cheaper.

26:21So£200 Switch cash, but it's only£11.50 a month. so effectively the switch cast there is covering you what's that 18 19 months this is european not worldwide family travel insurance mobile phone insurance but for the account holder not for the whole family and family uk breakdown cover with recovery to the nearest garage or at home so those are two you should look at effectively i mean just think about this for everybody else who wasn't thinking about that effectively on one you're getting 10 months on the other you're getting well over a year. Free insurance, family travel insurance, mobile phone cover and breakdown cover.

26:57So if you're paying for those separately, that's a pretty lucrative deal.

27:00Martin Lewis:A year's free insurance, what I mean by that, you'll still have to pay the fee, but you will have got the free money that could cover it. So Adrian, you've been asking me questions. Now it's time for me to ask you them.

27:16Martin Lewis:hello and welcome to money mastermind adrian the score stands at you've got 18 right but 37 wrong in this three you've got last week's wrong i thought you were gonna go i thought you're gonna change it in this three option multiple choice quiz which means sadly you are N-B-R-C No better than random chance We have to improve this Adrian We have to get you better than random chance Don't start implying you've made it easier So I'll get it right Because then when I get it wrong again Then I'll feel even worse I haven't made it easier But I'm trying to be sort of Not help you and not tease you Fairer Not fairer, I was always fair No you weren't I was fair No, you were slightly Anyway Adrian, I'm a BAFTA winner now.

28:02You can't say that. Of course. I'm sorry, Your Majesty.

28:05Martin Lewis:Right. So, listeners, I want you to imagine a rugged 59-year-old man, a broadcaster from the West Midlands, handsome, charming, with a reputation for sparkling repartee and sharp sardonic wit. I know it really is not easy for anybody to imagine. Let's try, though. This man earns£100 ,000 a year and has long been contributing to his pension. Unfortunately, he has a long-owned legacy debt he's still repaying. He borrowed to invest in what he thought was a fantastic opportunity, Pinterest. But it turned out it was just the attempt at a beer mat app, Pint Rest, by one of his best friends. And that flopped.

28:49Martin Lewis:So last year he decided to take 30 % of his money out of his pension, some of which was taxed, some of which was tax-free, and use it to pay off the debt. My question, having taken the money out of his pension, if he wants to contribute to his pension again this year, can he? And how much? You're with the premise. He had pension money, he took 30 % out, 25 % tax-free, 5 % taxable, took the money out and now wants to start putting more money back into his pension. He's age 59. Can he do it? Here are your three options. A, yes, he can put in up to£60 ,000 or his earnings, whichever is lower. B, he can put in up to£10 ,000 or his earnings, whichever is lower.

29:33Martin Lewis:Or C, none. Once you've withdrawn, you cannot put money back in your pension. So talk me through the first options. The first is£60 ,000. I mean, that seems high, but whether you've taken money out or not, You just want to make, setting that aside, you just want to make an extra pension contribution. So he wants to make an extra pension contribution, but he's already withdrawn money from his pension and had some pension money. That's the key point. OK. So the question is, first of all, your decision is, is he allowed to put anything back into his pension and continue to save in his pension? Taking it as read that if he'd never taken anything out, he could put more in.

30:14Martin Lewis:He could put more in than the general limit if you haven't taken any money out. You can put in up to£60 ,000 or your earnings, whichever is lower. Of course, we're talking about the amount that you contribute tax-free. I mean, you can put more in, but it'd be taxed. So this is the amount that we generally talk about going into your pension. So that's the general rule for anyone. So my first option A, see, I'm being helpful. See, helpful. First option A is the fact you've taken money out doesn't change anything. The last option C is none. once you've withdrawn, the fact you've taken money out means you can't ever put money back in again.

30:45Martin Lewis:And the middle option, B, is, is there a rule that says if you've taken money out, you can put less in each year in future? I think it's B, because that sounds a reasonable compromise, because they don't want you just using it as a bank account, taking money in and out, because the money you took out... Well, that was literally... I'm not trying to... This isn't trying to lead you, but literally, George Osborne, when he did his pension freedom, was he wanted people to use it as a bank account. Side note, never do that, because it could be huge tax implications just taking money out of your pension.

31:15The way you take money out of your pension really matters if you're near pension age, call pension-wise and make sure you talk to them about it. You could pay way more in tax than you need. But that's not today's question. No. So, A, you were going B. Yes. What was C again? C was you can't put any money back in. That C would seem an excessive penalty for something where there was some exceptional circumstances. I think C is a compromise. You can just put up to 10K. So, B. B. B's who compromise. Final answer. Final answer. Adrian, you're locked in on B. I'm locked in on B. So, the usual rule is you can put in up to£60 ,000 a year or earnings, whatever is lower tax-free.

31:54Yet once you take your pension, or more specifically, access taxable income from a defined pension contribution, and if you remember in the question, 25 % was tax-free lump sum, 5 % was tax, you dropped the lower money purchase annual allowance of£10 ,000 on which you still get tax relief. Adrian, you got it right. Yes. Praise the hallelujah. Oh, beautiful. There you are. And that's your award today. Thank you very much indeed. Thank you, thank you, thank you. So look, this is really important to know. The exact rules are pretty complicated. Do not do this again without talking to Pension Wise, which is totally free guidance for you on this because it's really complicated.

32:38what I'm about to give you is broad brush, but it's really complicated. Have I mentioned it's really complicated? Do you think I've sold it enough that it's complicated and I'm just giving you guidance? So if you take a lump sum, let's say, and 25 % is tax-free, 75 % is taxable, you go down to£10 ,000. If you just take your tax-free lump sum and to just take your tax-free lump sum, you'd have to put the rest in a drawdown or an annuity, you would not drop down to£10 ,000. If you took your tax-free lump sum and you took£100 of taxable income from your drawdown, you would drop down to£10 ,000. If you had an annuity payment, you wouldn't.

33:19Martin Lewis:But it's complicated. Have I mentioned it's complicated? I think I've mentioned it more than once. It's complicated, so talk to pension-wise. The big message you should take from this, rather than the complexities of this, is if you take money out of your pension, and at some point in future you're going to want to put more in, it can reduce the amount that you can contribute and get the tax benefits on. So it's really worth thinking out and checking that you're not doing anything to change that before you do the decision. That's the bit to remember. It can change things. I need to check before I do it.

33:54Pension credits.

33:56Martin Lewis:Yeah, so look, I mean, pension credits was a really big issue during winter fuel payments because, and I was very critical of the government for doing this, what it announced is it was going to link eligibility for the winter fuel payment to pension credit. And, I mean, that was a mistake because pension credit has, for over a decade, I've been talking about it, it is a fundamentally underclaimed benefit. The hope was that while it did temporarily link it to winter fuel payments, I mean, that's all changed now, that there would be communication out there that would mean far more vulnerable pensioners, many people on very low incomes would start to claim it.

34:33Martin Lewis:But the latest stats are still over 900 ,000 of 2.3 million people who are eligible aren't claiming it. And as it's just been increased for the new tax year, even more people are now eligible, some who weren't before. But what I really wanted to do, Adrian, is I got an email. And I found this email really important because Because some people don't claim pension credit because they think it's not going to be very much money. Actually, the average payout's over four grand. But you can get pension credit and only get a tiny little bit of it. So this email I thought was really interesting. I've changed a couple of details because the person wanted anonymity.

35:12Martin Lewis:I'm going to read it to you if that's okay. So, dear Martin, as a direct result of your and the government impressing on the older generation to apply to pension credit, I have saved almost£3 ,000 in the last year. My husband and I retired, 83 and 76, with a state pension. I filled out the necessary forms and was awarded pension credit of£6.10 a week. So, doesn't sound that much. I mean, it's not bad. It's£300 a year. But she then goes on to say, This opened up benefits. Due to the application being backdated to when I applied, I didn't have any council tax to pay this year, a saving of£2 ,500 a year.

35:50Martin Lewis:Add to this a free TV licence, warm home discount and lower water bill. this has resulted in the saving of over three grand a year. This has made such a difference to my husband and me, with less worry over the cost of living. I'm still budgeting very carefully, but with less pressure and anxiety. It was, as you advised, that we were owed the money and not the pariahs that I decided to apply. My husband and I worked as a self-employed plasterer and me as a receptionist. We had worked hard to buy our own property and had only one child. We'd never applied for benefits. How many are in a similar position?

36:24Martin Lewis:I regret to say that I'm too embarrassed to tell my friends that I'm in receipt of these benefits, but please keep impressing on your viewers, in this case listeners, their rights and urge them to apply. I know the forms online are a little daunting, but I'm sure family or a trusted friend would help. So that's my big message, right? Pension credit isn't just about the money you get itself. It is the core gateway way to so many other things you know free tv license if you're over 75 housing benefit if you're a renter council tax deductions free dental treatment reduce prescriptions glasses and contact lenses it's absolutely crucial people know if they're eligible or not okay so do you want to go through the basics about how do you know and how you apply and so okay so i'm give you going to give you my rules these are my rules because it's incredibly complicated who is eligible and who isn't eligible.

37:17So we're going to be talking about, it's all about your total weekly income. This is for people of state pension age, so roughly 66 or more. Now your income is any income from any work, any private work or state pensions, and some benefits count your income as well. Plus, if you've got over 10 grand of savings or investment, each 500 pounds you have above 10 grand counts as one pound a week income, if only it really generated that much.

37:44Martin Lewis:It doesn't, but that's how it's counted. But anyway, it's mainly income from work and pensions and the state pension. So this is my rough rule of thumb. If you are a single person and your total weekly income is under£238 a week, you are likely to get pension credit. If you're a single person and your total weekly income is under£250 a week, it is definitely worth checking to see if you'll get pension credit. I'm not saying you will. I'm saying it's worth the time to check. If you're a couple, both of state pension age, if you earn a combined£363 a week or less, you are very likely to get it. If you earn a combined£380 a week or less, it's definitely worth spending the time to check.

38:31Martin Lewis:But I'm not saying you will get it. To check, it's dead easy. You can go online to gov.uk forward slash pension hyphen credit. Just go to gov.uk and search pension credit. or you can call the pension credit hotline if you're not good online 0800 99 1234. My biggest message, if you're going to apply or if you're asking about it and you're not eligible, they won't tell you off. There's no discouragement from application. The best thing to do is think you may be due. Don't stall. Just call or click. Actually, it's easier online. That's the message. Don't stall. Just call. And please, what I'd like to say to everybody listening to this, if you know someone that this may apply to if you know someone of state pensioner age living on a very low income just talk to them about pension credit maybe help them through it if you have the relationship that you can do so it is you know many people talk about intergenerational arguments and intergenerational wealth gaps what we're talking about here is 900 000 pensioners many of whom are living off under 238 pounds a week and potentially substantially under who can get their income topped up.

39:40Martin Lewis:These are some of the poorest and most vulnerable in society and we all have a duty and obligation to make sure they're getting what they're due.

39:51As I was successful in Mastermind, I'll be generous. I'll give you a chance to talk about a big win you had on Question Time.

39:57Martin Lewis:Yeah, your success, my success. Yeah, we just wanted to play this because the Question Time podcast, which goes out pod only, is well worth a listen. And this week's, we had someone who got£5 ,000 back just from calling the podcast. Effectively, he had an issue. His builders had gone bust. He called up. He hadn't been able to use Section 75, which I know you know what it is. That's the valuable credit card protection. He asked what should he do. And I gave him a different solution, something to try. I wasn't 100 % sure it worked. Well, this week, he got back in touch to tell us what happened. Have a listen to this.

40:38Martin Lewis:Mark in Northumberland. Martin, we spoke in January. I gave you a call and asked a question because I'd made a Section 75 claim. Are you a bust builder? Yes, bust builder. That's right. Yeah, yes. Yes, that's about your builder went bust. It's not about some... You're not trying to enlarge your chest, yes. No. No, definitely not. So, yeah, it went bust and we owed about£7 ,500 and Section 75 was rejected. So it was really a cry for help in January. And you suggested as a last resort to try chargeback because about£5 ,000 of that£7 ,500 was paid by credit card. Yeah, I remember. So I raised that with, it was M &S Bank.

41:24I raised that, but it was the same day as the call and filled the form out, gave them the evidence. And within about 24 hours, I said yes. you've got a valid claim. I've got goosebumps. I promise you, I genuinely have goosebumps. I'm so pleased to hear it because it was my last thing, scraping the bottom of the barrel that I could think of. Brilliant. It was a last chance. And I didn't realise I did this, but they actually recredited the money the same day. But I didn't know this either, but it has to go through MasterCard and you've got to wait 60 days before you get it. Because just to explain to people, So the way a chargeback process works, it's actually your card company or bank in this case asking the vendor, the firm's card company or bank for a reimbursement because you did not receive the service.

42:16Martin Lewis:So there has to be time for the other people to put in an objection. Yes, and they did. They objected after about four weeks. but to their credit M &S fought my corner and it was successfully challenged and I got a call so I got an email a few days ago to say it had all been successful it was all complete and they sent the money through oh wonderful I'm so pleased yeah yeah I mean it's not everything that we had but it was better than the nothing that we thought we were going to get five grand five grand you've You've got to look at it from that perspective, haven't you? Not what you lost because you'd lost everything and this way you've got five grand of it back.

42:56I'm so pleased. Yeah, and so it was a big thank you from us, you know, for the help. And also, well, M &S as well. They actually gave us an additional£250 as an apology because they said they should have also told me about chargeback as well. So they'd missed out on that, but you called it. So I'm so fantastic. I am genuinely smiling. I love this. This is why I do it, right? And absolutely wonderful. I'm just going for everyone listening, just want to just do a little bit technical nerdy

43:28Martin Lewis:because I think this is interesting. So section 75 that Mark was talking about is where if you buy something on a credit card that costs between£100 and£30 ,000, the credit card company is jointly liable with the retailer. So if the company goes bust, you can go to the credit card company for it. If I remember, in your case, it was over£30 ,000, wasn't it? It was, but I was trying to argue because there was distinct stage payments in there. But they didn't accept. So you could have gone to the ombudsman with that. But I had said, I think if I remember rightly at the time, I said I thought it was unlikely the ombudsman would award because there's a hard rule over£30 ,000.

44:07Martin Lewis:And your transaction was over£30 ,000 for your building. Well, I did it as well. And you were right. The ombudsman rejected it. I had to try everything. Yeah, quite right. But now what's really interesting, now, Section 75 is much meatier than chargeback because it's a legal right. Chargeback is a sort of a term and condition of Visa, MasterCard or Amex. So like as an internal dispute resolution process as opposed to a law. but actually if you have a chance to charge back they tend to be in some cases more successful because you if it's section 75 and if you had let's say you had a case with section 75 mns bank would have had to pay and it might have tried to fight you because it doesn't want to pay but if you're doing a chargeback mns bank suddenly becomes your agent on your side because it's going, well, actually, he's probably got a case for a Section 75 if he doesn't do a chargeback, but we'd far prefer that he does a chargeback because then he gets the money off the vendor's bank rather than off hers and we don't have to pay out.

45:14Martin Lewis:So there's an argument that chargeback is in the interest of your card or bank to do because they're not the one shelling out. So often, if you have both cases, what you should always do is you should put in a note. You've done this. I know, Mark, I know you've done yours, but just for everyone. if you do i would probably start with a chargeback but say if the chargeback doesn't work i reserve the right to do a section 75 you know and put that in and i want to put a note that i would like you to try both and that way you actually give them a sort of a vested interest in helping you which is exactly what happened in this case and i am delighted so are you how did you get with the building work did i did they half do it do i remember they made a start they hadn't done very much so we've just been waiting really to you know to get the outcome of this before we could restart it so we're just about to get going again so the job is back on great stuff I wish you all joy and happiness with it and thank you so much for getting back in touch we love a success like this it's brilliant thank you I had to was I had to say thank you because it's it was obviously beyond what we'd expected so so thanks again so yeah that's on the question time podcast it's available on BBC Sounds and anywhere else that you get good podcasts, do have a listen.

46:28Martin Lewis:It's a different feel to this podcast, I have to say. If you're wondering why there's no reply from Adrian, that's because I'm just doing this bit by myself at the end. Yes, we're in the podcast-only bit, but as we were recording this particular podcast, not live, we were doing it just for the podcast. There isn't a podcast-only bit because the whole thing was podcast-only, although just to be really confusing, while it was podcast-only, it will be played out on Five Live, but it'll be the podcast played out on 5 Live rather than the 5 Live played out going into the podcast. I think that's probably where I stop.

46:58Martin Lewis:That's it for this week. We tend to put out a new episode every Thursday and Monday. The Mondays is the Question Time podcast of which you've just heard a little bit. That's where you can ask me absolutely anything and everything, open brackets within reason, closed brackets. If you've enjoyed it today, please do tell your friends you've been listening to the Martin Lewis podcast. And why not subscribe as well? That way your pockets will be pleased with you. And if you haven't enjoyed it and you've been listening this long, I'm shrugging my shoulders. I mean, what do you want from me? You chose to keep listening.

47:31Martin Lewis:I think we should just leave it here.

47:50Martin Lewis is the founder of MoneySavingExpert.com. But of course, other consumer and price comparison websites are available. You can get in touch with Martin's podcast production team by emailing martinlewispodcast at bbc.co.uk. The offers and rates mentioned in the podcast are correct at the time of recording. However, if you are listening on demand, it's worth double-checking as details can date. Remember to subscribe on BBC Sounds and leave us a review however you listen.

48:20Bye.