Question Time: Will my new husband need to pay for my daughter’s uni? Do high interest savings beat cash ISAs?

0:00Hello and welcome to the cunningly named The Martin Lewis Podcast. I do wonder what that's going to be about. This is our question time episode in which I answer your questions about absolutely anything and everything. Brackets within reason. Close brackets. This week, you asked me, does a cash ISA beat high interest savings accounts? I've just got married. Will this impact my daughter's student finance? Spoiler, yes. The system is broken. Makes me angry. I'm moving house. Do I have to pay another 19 months on my existing broadband contract for them to let me go? Is there a way to jemmy the system to get paid cash bonuses for transferring ISAs?

0:41Spoiler, I think so, yes. How do you open savings accounts with limited ID? And you also asked me, or Matt put to me, spaghetti hoops versus alphabetti spaghetti. Play the theme tune. I got meals, I gotta pay. So I'm going to work for the world and everything I got a mouth I got a feet So I'm going to make sure everybody eats Right, welcome. Joining me is producer Matt. He is the curator of questions, which is what I called you last week. I'm not sure I should say this. And then I worked out I was going to do the acronym of it and start calling you that. And then I realized I really couldn't do that if you're curator of questions, Matt.

1:24So I'm going to call you... Keep calling. curator of questions and i wasn't deliberate that was purely accidental no i know your brain works just like that you did that on purpose i did not do it but i wouldn't do it on purpose i didn't do it on purpose but i was amused when i found out so so and so matt you what are you giving me today what's our first question i've just written that you have i also just want to i just want to say There is an RAF Red Arrow outside the studio. Just one parked outside because obviously I record this in Salford. You're in London. Yeah. Yeah, just sat there. I keep looking at it.

2:01I would look at it too. Yeah, it's just a Red Arrow. Anyway, shall we do a question? There's no Red Arrows here. How weird that would be if I had a Red Arrow too. Anyway, let's get on with it. First question from Kieran. I'm on a low income and I want to start putting money away to save for a car as I'm learning to drive. is it better to put my money in a high interest savings account or a cash ISA? First of all, bravo to you. By far the best way to pay for anything is to save up for it in advance out of money you earn each month and earn interest on the money that you've saved and then pay for it as opposed to pay for it then to have to pay out of your income each month for debt and you have to pay them interest on top.

2:40So you're absolutely doing it the right way round, Kieran. I'm sort of guessing you're a younger person that you're asking that question. Now, as for is it a high interest savings or a cash ISA, they're actually the same things. A cash ISA is just a savings account that you don't pay tax on. Nothing clever. It just means you can put£20 ,000 away in a cash ISA each year. You have all the same choices. You can have easy access where you can put your money in and out. You can have fixed. You can have no notice, just like other savings account. Just that money is not taxable. So it doesn't count to the amount of money you earn each year.

3:13It's just not taxable income. So the key is in either you want a high interest savings account. Now, my suspicion if this is your first savings and you're a lower earner is actually you would not be paying tax on savings anyway. So the tax-free status of a cash ISA doesn't matter to you. But there are some cases, especially in easy access, where cash ISAs pay more than normal savings. So, I mean, there's very little in it at the moment. It's like 4.53 % in the top cash ISA and 4.55 % in normal savings. Last week, it was 4.5%. But if the top cash ISA, easy access, and that's what you want, pays more than the top normal savings, well, even though you won't get the tax gain, it's just a savings account you don't pay tax on.

3:58Go for the highest interest. So, both are absolutely fine. I think you should be saving if you're trying to put money for a car you don't want to be investing because it's for the short term. There is one other thing I would point out. You say you're on a low income. Again, just from the nature of the question, I'm assuming that you're probably a young single man. You're probably not eligible for universal credit. If you were eligible for universal credit, then there is a product called Help to Save, which you can open only if you're on universal credit and working, but it doesn't matter how much you earn.

4:31If you're working, it just means you're doing some work and you're doing some earnings. And once you open it, even if you're no longer on Universal Credit in future, you can keep it. With help to save, you can save up to£50 a month, and then you get a bonus of 50 % based on the highest amount of savings you had in the first two months. So say you put it at£600 and then you had to withdraw it, you'd still get a£300 bonus at the end of the two years. That's unbeatable. So if you are on UC, that would beat either of the other two. If not, you just want the highest interest rate possible in a UK-regulated savings account or cash ISA.

5:03I don't care. It doesn't really matter. Hope that helps. So basically, either. Whichever one pays the most interest. Fair enough. And has the right terms. You might want to fix, you might not. I mean, there are some other differences. If you're fixing, then you're able to take, which is where you lock money away for guaranteed time, then you can actually take money out of a cash ISA. You can't take money out of normal savings because of the rules, but you'd have to pay an interest rate penalty. But I think people overcomplicate cash ISAs like it's something different. It's a tax wrapper. The product doesn't change.

5:30There's just a wrapper around it that stops you having to pay tax. OK, Matt, it's second question of the show, which in the Matt format means, is it a caller? Of course. We've got Marika from Manchester, Dr Marika, and she has a question for you. Hi, Marika. Hello. Hello, Marika. What are you a doctor of? Physics, particle physics. OK. How interesting. OK, so it's not going to be a problem if we get into some sort of techie stuff going on here then. Well, as long as no one has a heart attack, it'll be fine. I will try not to mew on during this conversation. I shouldn't have done that. Carry on.

6:07Right. What can do for you? So I was wondering if you could offer me some advice about my daughter going to university. She's 16, nearly 17. So we're a year away and I'm just panicking about it all the time. So I've brought them up as a single mom. I've got two kids, but I have remarried and my husband has got two kids of his own. he's an academic so he earns a really good salary but he's not going to be contributing to my kids if you see what I mean. I understand. So I'm really worried that the fact that he's got a really good salary and is my... I know exactly what this issue is yes. Yeah I just don't know if you know what support I'll be eligible for for my kids.

6:49So yes I was wondering about that because basically I work in well I'm a scientist I work in the arts I work on a science festival so it's quite low paid sector of work and I struggle every month basically practically no disposable income just to get through the month so that's what I'm panicking about. Okay so there is some validity to your panic but not total validity to your panic so let's just go through this. I'm sounding a bit prescient today because I mentioned earlier in the pod that I've spoken to Ofcom about an issue I was actually in with the Chancellor last week and one of the points I raised to her was about student living loans and one of the points i raised was the nightmare scenario that needs to be fixed that when someone has a partner move in with them that affects their child's living loan even though the new partner was in no way going to be contributing towards that child's living loan and i'll be honest the chancellor pulled a face like oh that's awful and um and i was suggesting that we try and fix it but it won't be quick when we bring in the lifelong learning entitlement that's likely to come in.

7:54I think it's 2027, 2028. You know, it's not going to be quick. It's not going to help you. I need to be blunt. And even then, I'm not sure it's going to be fixed. But this is absolutely on my radar. So let's just go through the basics. When your daughter goes to university, her tuition fees will be paid for her upfront by the student loan company. And she will only repay that once she leaves and she's earning over at current rates£25 ,000. and she'll repay 9 % of everything she earns, over£25 ,000, a bit like a graduate tax, for 40 years unless she clears what she borrows. The interest rate is set at the rate of inflation, so there's what's called no real interest.

8:32There is interest, but it's set at the rate of inflation. And that's her business, not your business. OK? Yeah, OK. So fee's all OK. Fee's all OK. Did you know that? No, no, but it is the living expenses now that I'm worrying about, yeah. And that's what I want to bring in. the living expenses is your issue right yeah this is where it gets more difficult so you don't have to worry about fees and you shouldn't be trying to fund the fees for her you don't have the money to do it being blunt right and you shouldn't be and i hope her fees will cost her a fortune because that means she's earning a fortune afterwards so she's having to pay back a lot right so that's all that's all good and that's when you go to i'm just i should have checked i presume you sound like you're in england and you're english residents yeah because the system does depend on which UK nation you're in.

9:17Just to say to everybody listening, I am talking about the English system under what's called Plan 5 loans. In every other UK nation for students starting in the future, it is a different system and the numbers are different, but on the English system. When you go to university in England, you are given a loan, and this loan just adds to that other loan I talked about that you repay only in the April following when you leave university at 9 % above£25 ,000. It's the same student loan. It goes on top of the tuition fees. You are giving a loan for living costs. And that loan for living costs, this is the problem.

9:51It is means tested based on family income, which tends to be a proxy for parental income. But in your case, that will include your husband. So it will be your total income. Now, there are some slight amendments made because there are other dependent children in the household. But all that effectively does is reduce what's called your residual income for the assessment by about£1 ,000 per child. So instead of it adding up that you earn£80 ,000, you've got four kids, it would add up that you earn£76 ,000. It's that type of scale of magnitude. It really isn't enough. And so there is a real problem here.

10:25Again, I mentioned to the Chancellor, one of my big issues with this is that the amount, the point where the loan starts to be reduced is at earnings of£25 ,000. And that has been the same since 2008. And at the same time, it should have gone up by 67%. It should be nearly£40 ,000 now. And it's absolutely outrageous. It's a family income assessment that's basically set up a single person minimum wage is where you start to lose it. It is totally unaffordable. But I can't change any of those things because those are the rules. Now, I'm not going to go. The way it works is basically and it does depend whether your daughter lives at home or away from home or in London.

11:01but the way it works is from£25 ,000 you start to lose some maintenance loan up to around very roughly£65 ,000 where you get the minimum loan. I'm guessing from what you said your total income with your husband is above£65 ,000. It will be, yeah, yeah. Right, so let's be blunt, you're going to get the minimum loan. If you are living at home with parents, the maximum loan is£8 ,900, the minimum loan is around£4 ,000. So that would be a shortfall of£4 ,900 if you got the minimum loan. If you're living away from parents outside London, the maximum loan is£10 ,500. The minimum loan is£4 ,900, which means a maximum shortfall in the loan or maximum parental contribution, if you like, of£5 ,600.

11:51And the gap is even bigger if you're living away from home in London. and that's per academic year. Do we know, is your daughter planning to live at home or away from home? I think her plan is to live away, ideally, I think. I mean, I'm going to say something horrible now that I hate saying because one of my whole principles behind the way that student funding should work is that you should be making a decision based on what the best course is for you, not based on the financials. But there is an argument here that living at home would be a lot cheaper. Just saying. But if we ignore that, So there's basically about four and a half, five grand a year shortfall.

12:27And that would just take her up to the living loan that someone on the lowest income would get. And I would call that the parental contribution. So for being very blunt, that's around£5 ,000 a year roughly per year of university, which is around£15 ,000. And that would take her up to the subsistence living level that the full loan is. now of course these days it is perfectly expected that when she's at university she will get a job as well and she could be saving up for it you there are grants out there that you can apply for and you should get on the student grant websites and you should be looking that up you should be talking to whichever university she's going for welfare's fund to see if there are any other student funds and welfare funds out there but ultimately even to the subsistence loan there is a£5 ,000 a year shortfall.

13:16Yep. Right. And I am clenching my buttocks that I'm having to tell you that because I don't like it because the system should not be working like that. But it does. Good thing is you're asking me now, not when she's going to university. So at least you've got a couple of years that if you can put anything away, and I know that's difficult, that may help. Yeah. Right. Yeah. Where are you compared to the start of the conversation? better or worse you've got tuition fees as a relief hopefully but this is yeah so i was hoping that you were going to say something like oh you can appeal on the grounds that your husband isn't involved in you know paying for your kids but i guess there's not an appeal process on that and it is what it is so that's bad news i suppose yeah i mean there isn't an appeal process on that the only time that you could appeal is if there were to be a substantial drop in your income heaven forbid your husband lost his job which none of us want then you could then apply to have a current year assessment done if it's over a 15 % drop in income.

14:15But there isn't an appeal. The system is broken. It should not work like this. It's done to stop parents jemmying the system and doing all types of tricks so that they get away from the contribution. But I hear this more and more. The way that our society works now, there are many blended families and the whole student finance system is anti-blended families. I mean, ultimately, you're stuck in this horrible position. you don't want to ask your husband for the money but if we're being blunt and I can be blunt, you can't it's his income that means that your daughter is getting far less maintenance loan than she would otherwise get and that puts you all in a terrible situation and it isn't good for your family dynamic and I feel uncomfortable even saying it here but that is the truth of the system Oh man that's really harsh but thanks for the info about the grant website I'll look into that and I think contacting the uni and looking at welfare funds is good advice as well.

15:11And something else that goes into this. So just a subtle move here. Right. We want your daughter to go to the university that's right for her and is best for her. Right. Hopefully that university is going to give her the right career and the right future. But there isn't always going to be one university. Now, if there isn't one where you live, I think in your situation, it really becomes important that you are studying the cost of living of wherever she is studying, that you are looking at what are typical student rents around that university town or village. You know, London is very expensive, but there are university areas where the cost of living is much lower.

15:50So I think that has to become a factor in the course choice. You know, she needs to look at six or seven courses that she really wants to do at the universities that she wants to do. And then you need to do some proper research on the cost of living, not the university itself, because all the tuition fees are all set at the maximum level. That's irrelevant. but how much is a typical hall of residence there? How much, you know, what is it going to cost out where? And then if those six are all much of a muchness, you perhaps need to prioritise the ones that have the lower cost as well. That's wicked advice.

16:18Thank you. Thank you. And I wish, I feel, I wish, I've been campaigning and talking about student finance for so many years and this breaks my heart because this is not how the system should work. It's not how it should work. It's not fair. Keep fighting for us. Thank you. And just as a final thought on that, In case anyone's thinking, well, they shouldn't have got married, they could have done it a different... It doesn't work like that. It's about the fact that they're living together as a couple. Even if they weren't married, exactly the same rules would apply.

16:48Oh, dear. It's sometimes quite difficult. I mean, I hope that the answer helps, even though it's not an answer that someone wants to hear. Good to get an answer as well. Right. What have you got next? Maybe we can do a better answer here. OK, another question. at Vaisgax on X. There are banks offering rewards for transferring a cash isa to them, but their rates are way lower than average. How feasible is it to transfer a cash isa to them, get the reward and transfer again to another bank with better rates? Is there any penalty? I like the cut of your jib, Vaisgax. That is my type of thinking. OK.

17:28So, you're right. A few providers, I can think of Barclays. Barclays offers cash back on transfers as long as you've got at least£25 ,000. I think it's£100 at£25 ,000 more if you're transferring more. But the rate is less than 3%, whereas the top cash is pay over 4.5%. And on£25 ,000, that£100 will not make up the difference over a year. So you are definitely better off to go in the highest interest rate. But you're asking me not that. You're not asking me, should I go for the cash back or should I go for the interest? You're saying, Martin, can I jemmy it to get both? Technically, the answer is yes.

18:06So I'm not aware, I would have to double check that there is any rule in the Barclays transfer or in other firms transfers that say you have to keep it a certain amount of time to get the cash back. They might only pay after a month or two months. So you might, you know, have to look at is there a time limited period, but I don't believe there is. And if there is, it's likely to only be a month or two. So you could take your current cash iso if it's over 25 grand, transfer it across, get the£100 cash, wait until you're paid, and then cash iso rules mean you're always free to leave, and then transfer it again to a payer at 4.5%.

18:42Now clearly in the interim period you'd be sacrificing interest, but if you're only doing that for a month or two, the interest rate you're sacrificing should easily be covered by the transfer fee. so yeah it's a hassle but I think you could do it I've not checked out and dotted the I's and crossed the T but I can't see any reason you couldn't do it I would need to do a double check I like that idea I may do some research into it he's following in your footsteps right that's that one done what are you doing next Matt? I want to go to a funny one okay go on Adam Reeve is asking spaghetti hoops or alphabetti spaghetti?

19:22I mean, it has to be spaghetti hoops because I once spilt a can of Alphabetti spaghetti on the floor and it spelt disaster. Hey, come on. Here or there. Next. That was terrible. It was not terrible. It was quick. I would. Right, come on. Off the cuff. Give me a break. Right, let's go to another question. Oh, dear. I thought it was very good. Rude.

19:56Are you sitting there thinking, oh, I know what I wanted to ask him? Well, this is your opportunity. If you've got a question, then just send them in to martinlewispodcast at bbc.co.uk. And please do start them, dear Martin. No, dear Matt. Dear Martin. Dear Matt. All right, Matt, what do you have for me next? Following my lovely workflow I like to use, we've got a caller on the line, Dee in Bexley Heath. Oh, hi, Martin. Hello. Hello. What can I do for you? Well, I'm hoping you can help me with a little problem we've got regarding our broadband supplier. Yeah. So we changed broadband provider in April this year with a 24 month contract.

20:42And we've been really, really happy with the service, actually. So, you know, that was good. and that was actually on one of your recommendations so that was also really good thank you we'll be now moving and we wanted to take oh I know where this is going, go on we wanted to take it with us but they don't cover the area we're moving to who is it? which provider? oh Community Fibre who are one of the local alt nets that's the whole thing is they're not national but if you're in one of their areas they tend to be fast and relatively cheap yeah yeah carry on yeah anyway anyway so i've spoken to them about that and um they're telling us we've got to pay the remaining eight months of the contract um offering a 50 discount it still leaves about 300 pounds of pay um do you know if we really have to do that short answer yes oh we don't are okay let me give you the longer answer right okay fascinatingly I was in a meeting with Ofcom last week and it was primarily to discuss the O2 issue but we moved on to other issues over broadband and mobile and one of the things they were talking about is you know we need to look at making sure that people invest so that we get the best services and I said but one of the biggest problems you have is if people don't get the service they want or that they're moving they have no rights and the industry is unfair and that's because you have no rights now there should be a contractual term that states you know what the exit penalty is if you leave early through whatever reason.

22:17I mean, if it were faulty service, it's slightly different, but it's not faulty service. You've told me it was great service. And I believe, and you've just confirmed it for me, that Community Fibre have a 50 % discount for early termination, but that's their standard rule. So if we're talking rights, you have none. Okay? So that's the first thing. There's things that you could ask them for. I have no guarantee any of these will work, and it depends how much effort you want to put in. you could go back and say to them look look we get we've got no rights we loved your service it's been really good we hope at some point you'll come to our hour and we'll do it again is there any chance of a bigger discount is there any chance you can give us a credit note that we might be able to use in five years time if your service started in our area for the amount that we're going to pay you and we could get that back i have no idea if they will do it i mean zero i'm making it up as i talk to you but these are the type of things i would ask for in that situation and the most important thing I can tell you and this is, it sounds trite but it isn't, as you don't have any rights your only ask is goodwill right, so your only weapon is goodwill because you don't have the law on your side so therefore you have to and once you get that in your head there's no point in me fighting being rude or saying this is outrageous because I'm not going to win it legally then you approach it in a charm way we love you, you see what I mean and that's what I'd be trying but whether you can be bothered or not because it's just a pain.

23:42And that is a problem with alternets. If you're going to go for a network that has limited national range, then the risk of leaving... I presume you didn't know you were going to move home when you signed up for it. No, that's right, yeah. Yeah. Well, is it a nice new house? Are you happy? Is it a good thing? It's a lovely good thing. It's a lovely move because we're moving up near our daughter. So that's perfect. In that case, you know what? We'll stamp our feet a little bit about this one, but we'll smile because it sounds like your quality of life is going to be improving and it's a happy time you get to be near your daughter.

24:13So I wish you all luck and joy in whatever the future brings you. Oh, thank you so much. Take care. And thank you for the answer. Thank you.

24:23Okay, what's next? Question from Corey. He's emailed it in to martinnewspodcast at bbc.co.uk. Hi, Martin. I'm trying to help my 81-year-old mother open a cash ISA to help her manage her money, which is currently in a basic NatWest saving account. Unfortunately, my mother does not have a valid passport. She's never driven. And the only form of ID she has is her bus pass and some postal bank statements. Is there a way for her to be able to open an easy access cash ISA with a competitive interest rate with the ID options she already has? Well, I'd like to say I'm good, but I'm not that good that I can answer that off the top of my head.

24:58Understanding rates and the rules of cash ISAs I can do. Understanding the individual ID requirements for every provider I can't. So this is a question I was asked before and I've held to do the research. I say do the research. My brilliant researcher Rosie has been out trying to find somewhere that would suit. And Rosie has found the Skipton Building Society that has two cash ISAs, one 2.3%, not that good, one 3.9%, which has more limited access. You can only access it up to four times a year. But for most people, that's absolutely fine in the cash ISA. That's at 3.9%. So that's the one I would be looking at.

25:30It's called quadruple access or something like that. Skipton will allow you to open an account with a bus pass and bank statements. You will need an email, but hopefully your mother has an email. If she doesn't have an email, clearly you're doing this with her and you have a trusted relationship. Of course, it's up to her to trust you, not you to trust her because it's her money. Then you could set her up a Gmail that should be able to do this through or another similar type of email address and that should be able to work it. So yes, that is a researched answer rather than an off the top of my head answer.

26:02I hope that one helps. And that is it for this week's Question Time. Don't forget to subscribe so you know when we release a new episode. We put out a new Question Time episode each Monday alongside the regular podcast, which is on Thursdays. Aren't you lucky? Two doses of money-saving tips and tricks a week. Do make sure you send in your questions. You can email martinlewispodcast at bbc.co.uk. I got bills. I got paid. So I'm going to work, work, work every day. I got a mouth, I got a feet, so I'm going to make sure everybody eats. Martin Lewis is the founder of moneysavingexpert.com. But of course, other consumer and price comparison websites are available.

26:49You 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.