The Salary Calculator

Cryptocurrency: Facts, figures and potential dangers

by Madaline Dunn

These days, it feels like talk of cryptocurrency is everywhere. It can be easy to think that cryptocurrency is a straightforward investment, with adverts saying “It’s time to buy” and “Be your own bank.” However, cryptocurrency is a lot more complicated than one might first think, and as with any investment, it’s important to be aware of the risks and dangers.

At The Salary Calculator, we’ll guide you through:

• What cryptocurrency is
• What Britcoin is, and what the Bank of England’s consultation means
• Why you should be wary of cryptocurrency
• How to keep your wits about you

What is cryptocurrency?

Cryptocurrency is a form of digital currency which is typically decentralised and with which people can use to make transactions and invest. However, what makes it unique is that it is secured by cryptography, meaning that transactions are entirely untraceable, and you don’t need a third party, like a bank or credit card company, to oversee purchases.

The most well-known form of cryptocurrency is Bitcoin which was created back in 2009 and uses peer-to-peer technology, allowing users to buy or sell directly with another user. It uses blockchain technology, which is also known as Distributed Ledger Technology (DLT).

As of 2021, there are reportedly 300 million crypto users across the globe.

What is Britcoin?

The Bank of England has reportedly launched a consultation into Britcoin, Britain’s own digital currency. That said, it would not technically be a cryptocurrency because, unlike Bitcoin, it would be issued by the bank.

As a result, Britcoin would be a Central Bank Digital Currency (CBDC), and, as outlined by the Bank of England, £10 of Britcoin would hold the same value as a £10 note.

Speaking about the consultation, the bank’s deputy governor for financial stability, Jon Cunliffe, said: “The plan to publish a consultation next year on CBDC is a crucial step in our policy development, especially as we further our thinking on the pressing issues at hand.”

“What it will do is provide a platform for interested parties and relevant groups to engage with the key questions on the merits of CBDC, and whether the public sector should advance to a development phase.”

England isn’t the first place to be exploring the possibilities of this kind of digital currency; the Bahamas has the Sand Dollar, while China launched pilots of CBDC in 2020.

According to the Bank of England, there will be no launch before 2025.

Why you should be wary of cryptocurrency

There are a number of reasons why you should be wary of cryptocurrency. One key aspect of cryptocurrency is that it is incredibly volatile. While, on the 10th November, Bitcoin reached an all-time high reaching above $68,000, on 16th November, there was a market-wide crash, whereby the overall crypto market dropped by over $200 billion to approximately $2.6 trillion.

It’s also important to note that cryptocurrencies are unregulated, which means that there’s no watchdog or regulator to oversee the security of transactions and guarantee safety and security – which is another issue.

Although cryptocurrency is decentralised, meaning you own your own money, crypto exchanges and hot wallets (cryptocurrency wallets) can be hacked, and hacks happen all the time. This is why, when trading, it’s important to have a ‘cold wallet,’ too, which can’t be accessed through the internet.

Cryptocurrency ads and keeping your wits about you

You may have found yourself noticing more and more advertisements for cryptocurrency. With these advertisements becoming more mainstream, appearing on TfL buses and trains, one may believe these are regulated, conventional and safe forms of investment.

It’s for this exact reason that the Advertising Standards Authority (ASA) banned advertisement from crypto exchange service, Luno, which told people it was “time to buy.” Explaining the reasoning behind its decision, the ASA said: “We understood that bitcoin investment was complex, volatile, and could expose investors to losses and considered that stood in contrast to the impression given by the ad, that investment was simple and conventional.”

Adding: “We concluded that the ad irresponsibly suggested that engaging in bitcoin investment through Luno was straightforward and easy, particularly given that the audience it addressed.”

Now, further appeals for bans of crypto ads have been made, especially in relation to TfL posters advertising Floki Inu, another crypto product. Advertisements for this product ran for three weeks, and TfL has admitted that they do not know who is behind the funding of the posters.

If you decide you want to take things further with cryptocurrency, here are some tips on how to keep safe:

• Research, research, and research some more. Keep up-to-date with cryptocurrency exchanges, and even reach out to experienced investors for guidance and advice.
• Diversify. Putting all your money into cryptocurrency, especially considering how volatile it is, is potentially very dangerous. Make sure you don’t get caught out.
• Look into different cryptocurrency wallets to ensure your investments and purchases are safe or as safe as they can be.

Tags: Britcoin, cryptocurrency, Currency, Economy, investment

How the budget will affect personal finance

by Madaline Dunn

Chancellor Rishi Sunak recently delivered his “wide-ranging” 2021 Budget, and personal finances will be affected in a number of ways. From the national minimum wage to the price of a pint, millions will see changes to the amount of money in their pockets.

So just what is changing? At The Salary Calculator, we’ll give you the rundown. In this article, we’ll explain:

• What changes are being made to the National Minimum Wage and the Living Wage
• How much money will those who claim Universal Credit take home
• What’s going on with alcohol duty
• How travel costs will change

National Minimum Wage and Living Wage changes

The UK’s National Minimum and Living Wage are set to rise, and these changes will come into effect in the next tax year, in April 2022.

The National Living Wage, which refers to the minimum wage those aged 23 and over can earn an hour, will increase by 6.6% from £8.91 to £9.50 an hour. The National Minimum Wage, meanwhile, will increase from £4.62 to £4.81 for those under the age of 18, and from £6.56 to £6.83 for those aged 18 to 20.

Those aged between 20 and 21 will also benefit from a slight increase, with hourly wages rising from £8.36 to £9.18.

Those working as apprentices will see a small increase in their take-home pay, too, with hourly pay increasing from £4.30 to £4.81.

Although Sunak has said that this increase “ensures “the government is “making work pay” and “keeps us on track to meet our target to end low pay by the end of this parliament.” That said, if you think that this wage increase isn’t enough, you’re not alone.

Bridget Phillipson, the shadow chief secretary to the Treasury, has said that the increase is “underwhelming” and, in fact, works out as “£1,000 a year less than Labour’s existing plans for a minimum wage of at least £10 per hour for people working full-time.”

Adding: “Much of it will be swallowed up by the government’s tax rises, universal credit cuts and failure to get a grip on energy bills.”

Similar sentiments have been expressed by the Institute for Fiscal Studies, which has said that the increase won’t be truly felt due to inflation.

Universal credit take home

Following the government’s cut to the Universal Credit boost, which benefited 5.5 million people, Sunak announced there will be changes to the amount of money claimants take home.

Under the current taper rate, for every £1 earned above a threshold for the benefit, a worker misses out on 63p. This is being cut by 8%, meaning it now rests at 55%, down from 63%.

So, according to the government, that means that Universal Credit claimants will keep more of their payment when they find work or receive an increase in their hours. That said, this change benefits just a third of claimants who are worse off since the £20 cut.

The price of a pint

Considering the increase in living costs, cuts to Universal Credit, and the like, news that alcohol duty is being cut is unlikely to feel as exciting as Rishi Sunak has made it sound. Still, from February 2023, there will be what Sunak calls “the most radical simplification of alcohol duties for 140 years.”

This means a pint at your local will, according to the Treasury, will be 3p less dear. Rose, fruit ciders, ‘lower strength,’ beers and wines and liqueurs will also be cheaper.

This change has been made in part to get more people to go out for drinks rather than staying at home.

Changes to travel costs

While the tax on petrol and diesel remains unchanged for the 12th year, at 57.95p per litre, those looking to set their sights a little further than France or Spain are likely to see flight prices hiked. This is because flights over 5,500 miles will see Air Passenger Duty (APD) rise. This is a levy airlines pay, which passengers fund through the cost of plane tickets.

However, duty on domestic flights from April 2023 will be lower, meaning it’s likely that it will be cheaper to fly across the UK.

Tags: Alcohol Duty, Economy, national minimum wage, savings, Travel, Universal credit

A guide to ‘Buy Now, Pay Later,’ deals, the dangers and safeguards

by Madaline Dunn

In recent years, ‘Buy Now, Pay Later’ deals (BNPL) have become increasingly popular and were particularly boosted by the pandemic, which created a significant increase in online shopping. Data from the FCA recently revealed that in 2020, the use of BNPL nearly quadrupled and is now at £2.7bn.

These deals offer buyers the option to pay for their purchase over a period of time, rather than all at once, and have been dubbed by some as “the future of millennial finance.” However, while this once niche form of credit has benefits, it’s not without its dangers. More and more people are raising concerns that it encourages unsustainable spending, leaving many with debts they can’t pay off. 

At The Salary Calculator, we’ll help you understand:

• The ins and outs of BNPL
• Why BNPL deals can be dangerous
• The safeguards out there to protect you from harm 

What is ‘Buy Now, Pay Later’?

Buy Now Pay Later (BNPL) agreements allow buyers to purchase items on credit and pay for them later down the line, typically through interest-free instalments. For many, this seems like a relatively hassle-free payment method and has been primarily adopted by the under 30’s demographic.

There are a few different types of BNPL deals, the first works on the basis of a buyer splitting their payments into segments, typically with an upfront payment. Following the first payment, the buyer agrees for the provider to take the rest of the money over an agreed period of time. 

Another example of a BNPL deal works by the buyer delaying their payment for purchase for a set number of days, usually between 14-30 days.

The final form of BNPL involves arranging a formal payment plan at the point of purchase, and the buyer may have to pay interest and may have their means-tested.

Some examples of BNPL providers include Clearpay, Laybuy and Klarn, the biggest provider.

Speaking about the draw of BNPL to The Guardian, one BNPL investor said: “It increases the basket size, and it also reduces dropped baskets.”

Why are BNPL deals dangerous? 

Of course, as with anything, there are drawbacks to BNPL deals, and they have the potential to put consumers at significant risk.

Speaking about the dangers associated with BNPL deals, Sue Anderson from StepChange, a debt charity, said: “Buy now, pay later services don’t give individuals enough time or protection to stop, pause and understand the consequences of their purchase. Sometimes this even means people end up using BNPL at the online checkout without actually realising they have signed up.”

She added: “Second, affordability checks are only used by some BNPL lenders, and protections against taking out multiple BNPL loans are lacking. Finally, due to a lack of regulation, it’s not clear whether these services are treating customers fairly and in a way that is consistent with other credit products.”

Meanwhile, Citizens Advice likened BNPL deals to “quicksand” in that they’re “easy to slip into” but “very difficult to get out of”.

Of course, BNPL deals don’t take into consideration circumstance changes either.

This year, in response to these concerns, the government announced this area would be regulated by the Financial Conduct Authority (FCA) due to the risk posed to consumers. Now a consultation is underway to assess how to navigate the regulation issue.

What safeguards are out there to protect buyers from harm?

For a long time, personal finance experts have called for regulation around BNPL deals, and now it appears the government is finally taking heed with their consultation.

Going forward, the government is proposing that BNPL users should have the ability to take complaints to the independent Financial Ombudsman Service. On top of this, the government has also proposed that advertising and promotions relating to BNPL should be regulated by, for example, the Advertising Standards Authority or the Committees of Advertising Practice.

Moreover, the government says that statutory protection should be outlined under Section 75 of the Consumer Credit Act. Further protections have been suggested in the form of compulsory credit checks so that those who wish to take on BNPL products can afford to do so. 

The consultation ends at the beginning of next year, so it’s unlikely we’ll see any immediate changes. That said, in the meantime, when encountering BNPL products, it’s important to ask yourself the following questions:

• Can I afford the repayments?
• Are there better options out there regarding borrowing?
• Am I interested in buying this item because of the BNPL offer?

Tags: Loans, Money, savings, The Salary Calculator