The Salary Calculator

Whether you’re opening a bank account for the first time, heading off to university or just looking to switch things up, when it comes to choosing the right bank for you, there’s a lot to weigh up.

At The Salary Calculator, we’ll guide you through the process. In this week’s article, we’ll explore:

• Reasons to switch banks
• Banks’ ESG and CSR considerations
• Which banks offer the best digital services
• How to make the switch

Why you might be thinking of changing banks

According to recent statistics, the number of people with current accounts switching banks has surged as of late, increasing by more than 70% in the first three months of 2023. In fact, 341,075 switches occurred between January and March 2023. So, why are so many choosing to switch banks? Well, reasons vary. Many are looking for better deals, stronger customer service, sign-on bonuses, and increasingly more environmentally and socially conscious organisations.

According to a survey conducted by MoneySuperMarket, one of the main reasons people switch is to access higher interest; the survey showed that 41% of customers made the change to boost savings. Following behind this were cashback and benefits (20%), overdrafts (14%), and finally, customer service (5%).

Of course, there are also some people to whom switching banks hasn’t occurred to and those who don’t know that there are alternative routes to take. Indeed, a Frost Bank survey found that only 11% felt a sense of ‘financial belonging’ with their current banks, and yet, nearly half (44%) said they wouldn’t change banks. So, let’s break that down.

The ESG and CSR considerations

There’s no denying that conscious consumers are on the rise. Never before have so many people put so much thought into how their purchasing decisions affect others, animals and the planet. This extends to where people house their money, too, with more and more people waking up to the reality of how banks operate.

Research shows that these days, 82% of consumers want a brand’s views to align with their own, 76% won’t give their money to those brands that don’t, and a quarter of people having a zero-tolerance policy for ‘unethical behaviour.’ Further to this, recent data has revealed that 75% of banking customers now want more information about their bank’s carbon impact; 48% want a bank that helps them in making more environmentally-friendly purchasing decisions.

Barclays has been found to be one of the largest investors in fossil fuels, investing over $144.9 billion in fossil fuels in 2020. Triodos, on the other hand, has been identified as one of the leading banks for lower carbon emissions, as have Monzo and Starling. Indeed, research from MotherTree found that moving £5,767 from Barclays to Triodos can cut your carbon footprint by a massive 1.7 tonnes per year!

Digital banks with features that give them an edge

While banking is becoming more and more digitalised, not every bank is on the same level just yet. These days the majority of apps offer basic digital services, but some are still catching up when it comes to smartphone apps, digital wallets, personal financial planning, security notifications and face and voice biometrics.

Some of the top digital banks include Revolut, which provides smart budgeting tools, with built-in analytical tools. Monzo is another, which equips customers with real-time notifications, virtual cards, spending budgets and saving pots. Starling similarly gives customers spending insights and assists with savings goals.

Of course, this all comes down to preference and you may prefer brick-and-mortar banks, although, as we’ll discuss in our next section, these days, they’re few and far between.

Branch locations

Digital features might add a bit of pizazz to your banking experience, but maybe you prefer dealing with your finances face-to-face. Indeed, a third of Brits still prefer to do banking in person. In this case, it’s likely your switch will be informed by the proximity of your closest bank.

Interestingly, it’s not just older customers who prefer to visit a branch; although 44% do choose in-person interaction, a fifth of 18-34-year-olds also prefer to do all their banking in person.

Unfortunately, despite this preference, bank branches are dropping like flies. The recent figures show that 5,162 bank and building society branches have closed since January 2015. Further, according to Which? an additional 206 branches are set to close by the end of the year. So, this may not be as pertinent a consideration as it once was for customers.

How to make the switch

The hardest part of the switch is finding a bank that aligns with your ethics, gives you the rates you’re looking for and offers the features you need. In this decision-making process: compare, compare, compare.

Here, the following might be useful:

• MoneySuperMarket
• USwitch
• GoCompare

It’s also important to make sure that you don’t miss the small print and that you’re up to date with all the Ts and Cs.

Once you’ve decided to make sure you have a smooth transition, make a note of all your automatic payments and deposits, and prepare them for the switch, so you don’t end up missing any payments.

Finally, enrol, and be sure not to close your old account until your new account is active and ready to use.

Interest rates are going up again, with the Bank of England (BoE) taking its base interest rate to the highest level in more than a decade; this is the twelfth time it’s been hiked. While this means higher mortgage rates and borrowing costs, it should be good for savers, however, UK banks are being accused of short-changing customers.

This week at The Salary Calculator, we’ll walk through how to navigate savings accounts amid the hullabaloo and cover the following:

• Where can savers get better returns?
• Can savers get better returns?
• Should you lock your money in a savings account?
• Is it time to go flexible?

What’s going on with interest rates?

Back in February, the chief executives of the four biggest banks in the UK – Lloyds, NatWest, HSBC and Barclays – came before the Treasury Committee to discuss their low rates. Harriett Baldwin, who chairs the committee, concluded that the nation’s biggest banks need to “up their game and encourage saving.”

Baldwin noted that while other products are available to those who hunt, these banks are offering “measly easy access rates” and further noted that loyal customers are being squeezed to “bolster bank profit margins.” Elderly and vulnerable customers who rely on High Street bank branches were identified as those most vulnerable to what she called the “loyalty penalty.”

Indeed, Which? recently published data from its analysis of three years’ worth of savings rates and found that despite the base rate rising, many high street banks are still offering less than 1% on instant-access accounts.

Indeed, the City watchdog, the Financial Conduct Authority, recently warned banks that it would consider taking “onerous intervention” if savers don’t start to benefit from interest rates.

Can savers get better returns?

According to MoneySavingExpert, anyone with a savings account should not be earning less than 3% interest “at the very minimum.” And, when it comes to rates, Saffron’s new product has been deemed market-leading, offering a fixed 9% interest rate.

However, while this is a great deal, it’s only available to those who have been with the bank for a year or more – ruling out a lot of people. Similarly, Skipton building society is not far behind with its rate of 7.5%. But, again, this deal is only up for grabs to those who joined before May 31st, and allows customers to save up to £3000 a year.

Plus, while these regular savings accounts look attractive, it’s important to note that not all that glitters is gold; there will be restrictions on how much you can pay in, plus, the headline rate is only paid on the first month. After this, you’ll typically end up with just over half the advertised rate.

Should you lock your money in a savings account?

When criticised by the Treasury Committee over easy access rates, Nationwide BS and Virgin Money said the reason banks are more comfortable with higher rates for fixed-term products is that they provide more “certainty and stability.” This is, of course, the attraction of fixed-term rates, you can get more bang for your buck, so to say. Indeed, fixed-term rates are now almost double what they were this time last year. This explains why savers invested nearly £40bn into fixed-term savings accounts in the first quarter of 2023. Plus, by preventing you from accessing your money, you won’t be tempted to dip in.

Some of the best rates right now – at the time of writing – include Tandem Bank’s 5.35% rate, paid over a five-year term, accessible with just £1; National Bank of Egypt, meanwhile, offers 5.25% if you lock up your money for a year, however while you’ll have access to your money sooner, you’ll need to save a minimum of £10,000.

With a global recession looming, however, some suggest that, for the short-term at least, fixed-term deals could be more secure, especially if you’re saving for something in particular that requires a deposit or the like.

Of course, you’ll need to weigh up some of the disadvantages of being locked in. Alongside not having access to your money for a set period of time, when better deals crop up, you won’t be able to switch and make the most of them.

Is it time to go flexible?

Flexible rates have the advantage of letting you take out money when you want to, but you will pay for this benefit with lower rates. Plus, rates are variable, which means that they can either go up or down.

Right now, the top two rates on the market are delivered by West Brom Building Society and Principality Building Society, offering 4% and 3.88%, respectively. However, both only allow two withdrawals a year, so while technically flexible, they are more restrictive than, say, Secure Trust Bank, which offers 3.85% and unlimited withdrawals. Tesco Bank, meanwhile, offers 3.45% with a bonus of 2.45% for 12 months.

Ultimately, your decision should be informed by your circumstances, and you should think about whether you’ll need more flexibility in terms of access.

In an article for The Guardian, a UK Finance spokesperson said that the instant rate market is more competitive, “with a range of fixed and variable rate products available and encouraged customers to shop around for the product and interest rate.”

Life’s not been too easy on the bank balance as of late. From sky-high rent to eye-watering energy costs, for many, day-to-day living has never felt so expensive. Food prices are, of course, also rising dramatically and, over the last year, have reached record highs.

When food shops are so expensive, it’s understandable that you might feel less able to assemble healthy, nutritious meals. But, at The Salary Calculator, we’re here to help. In this week’s article, we’ll walk you through:

• What’s going on with food price inflation
• Top tips for affordable healthy eating
• How switching to plant-based can save you money, keep you healthy and protect the planet

Food price inflation

According to reports, food prices in the four weeks to May were 17.2% higher than they were a year ago. There are a number of reasons for this, the Russia-Ukraine war impacting energy, high animal feed and fertiliser prices, supply chain issues, extreme weather affecting harvests, and Brexit. While prices have dropped slightly since April, as Fraser McKevitt, the head of retail and consumer insight at Kantar, says, it’s still “incredibly high” and only down 0.1 percentage points.

Currently, inflation in the UK is higher than in other countries, such as Germany, 7.6%, France, 6.9%; and the US, 4.9%. Overall, food prices have risen at twice the rate of overall inflation, with dairy particularly affected, rising three times faster than other items. Four pints of milk, for example, is now 30p higher than this time last year at £1.60, while a 400g block of cheddar cheese is up 39%. But, across the board, groceries are costing more:

• 1 kg of granulated sugar is up 47%,
• 1kg of potatoes is up 28%.
• Olive oil is up 46.4%
• Sauces, condiments, salt, herbs and spices are 33.9%

It’s no wonder then that people are feeling the pinch, and the impact has been wide-reaching, with shoppers trying to make savings wherever they can. Research shows that own-label item purchases have shot up by 15.2 per cent, and more people are also shopping at budget supermarkets like Aldi. Aldi, for example, saw a 24 per cent sales increase, making it the fastest-growing grocer this month, while Lidl’s sales increased by 23.2 per cent.

However, you might be wondering why supermarket prices are still high despite costs coming down. Well, some believe that retailers are trying to make up for their fall in margins last year.

Regardless of why, consumer group Which? has called on the government to undertake its review of food pricing rules as quickly as possible. Rocio Concha, the Which? Director of Policy and Advocacy said: “It’s good news the government has committed to reviewing pricing rules, but this must be undertaken as soon as possible as much clearer pricing is vital in enabling shoppers to compare prices and find the best value products.”

Adding: “Supermarkets should also be making it easier for people by urgently committing to stocking essential budget ranges in all their stores, particularly in areas where people are most in need.”

Tips for healthy eating while prices are high

Considering the above, it’s understandable if you’re struggling to keep your weekly shop costs low, but below, we’ve got some tips for you.

Buy seasonal: Buying seasonally is cheaper because seasonal foods are more easily available in supermarkets and often not imported, which is a big plus from an environmental perspective, too, as it means your food travels fewer food miles. Seasonal food is also often fresher.

So, what’s seasonal? Well, for example, broccoli is seasonal from August to October, leeks from September to March, and cauliflower, from January to April. For fruit, you’ll get apples between September and February, tomatoes from June to October, and rhubarb, from January to June. If you live near to a local farm stand or farmer’s market , this could be a good go-to. For more information about seasonal food, click here, or for recipe inspiration, check this out.

Buy own-brand, “value” or “essential” or “basic” label: Buying supermarket own-brand products can save you a ton of money and these days, more and more supermarkets are coming out with their own value selection, even Co-op, which was a little late to the game. Head over here to review some of the best own-brand products.

Keep your eyes peeled for yellow stickers: While not always helpful for all items, it’s always worth checking out a supermarket’s yellow sticker selection, which features an assortment of reduced items often near to their best before or sell-by date. ​

According to the site SkintDad, the best time to go yellow-sticker-hunting at Tesco is around 8 pm or around 30 minutes before smaller stores close, while at Sainsbury’s, it’s 7 pm, and at Morrison’s, it’s 6 pm.

Freeze your bread: Freezing your bread can make it last a lot longer, for months, even. Plus, freezing bread doesn’t mean compromising on texture or flavour when sealed and thawed correctly.

Meal planning: Meal planning saves both time and money. When you have a plan while shopping, you’ll avoid buying unnecessary groceries, and, plus, you won’t have to step inside a shop during the week, meaning you won’t be tempted to waste money on things you don’t need.

Make your own sauces & soups: It might be tempting when you’re feeling lazy to buy a tomato sauce rather than make one yourself but making sauces from scratch can be a lot cheaper, plus you can make them in bulk and freeze them. The same goes for soups and dressings.

Saving pennies with plant-based power

Plant-based diets have really become popular in recent years for a number of reasons, including as part of a vegan lifestyle, informed by concerns for animal welfare and the planet’s health. Learn more about that here and here. Alongside these benefits, going plant-based can actually be a lot cheaper, too. Especially considering that inflation has hit meat and animal products nearly twice the rate of vegetables.

There’s a misconception that plant-based diets are expensive, and while that might apply to some vegan alternatives, such as processed plant-based meats and cheeses, eating whole foods can save you a pretty penny while still being delicious and packed full of flavour, whether that’s beans, lentils, tofu, or tempeh.

Research by Oxford University, for example, found that those following a vegan diet could reduce grocery bills by as much as 34 per cent compared to the costs associated with a typical Western diet.

Where many people struggle with vegan diets is missing cheese. Vegan cheese company Violife found that it’s the main reason holding around 45% of people back from making the switch. It’s not surprising, either, considering that cheese contains large amounts of protein casein, which triggers the same part of the brain as hard drugs!

However, this is where nutritional yeast flakes come in, or Nooch, as they’re more appetisingly known. These cheesy-flavoured flakes are high in B12, zinc and protein and can be sprinkled over plant-based meals to satisfy your cravings for a cheesy hit and in a more nutritionally balanced way.

For some recipe ideas, check out the following links:

• Ela Vegan 
• The Vegan Society 
• Veganuary 
• Vegan Food & Living 

Back in 2020, as the Covid-19 virus took hold of the world, working from home became compulsory for those who were able to do so. And so, for many, came the rise of endless Zoom calls and Teams meetings, virtual social lunches, much more time at home, and fewer hours commuting.

However, as the world has slowly gained back control over the virus, WFH has endured in many workplaces. That said, the majority of people still never work from home (63.9%), 21.4% work in a hybrid model, and only 7.8% of workers permanently work from home.

Yet, despite the above figures, and many who choose to work from home touting the benefits of doing so, recently Chancellor Jeremy Hunt, speaking at the British Chambers of Commerce conference, said workers should return to the office unless they had a “good reason not to.” One of the main reasons he cited included that WFH stifles creativity.

So, what’s the basis behind his argument, is there any truth in it, and what does the workforce think? In this week’s article at The Salary Calculator, we’ll walk you through:

• The statistics on productivity,
• How creativity is faring at home versus the office,
• How WFH impacts mental health and relationship building,
• What workers’ preferences are.

Variability in productivity

When it comes to productivity and WFH, depending on who you talk to or which sources you scan through, you’ll get a very different picture painted. For example, a study conducted by Stanford, which surveyed 16,000 workers over a nine-month period, found that for those working from home, their productivity was boosted by around 13%. A few contributing factors included having a quieter and more convenient place to work in and working more due to fewer breaks. Further, it wasn’t just productivity that was boosted; workers also said they felt more satisfied, and attrition rates were even cut by half.

This is supplemented by research from TechTalk which found that 55% of the 2,000 work professionals it surveyed concentrated better when working from home. Similarly, Gitlab found that 4 in 5 workers would recommend remote working to a friend, and 81% of people surveyed felt satisfied with remote working.

That being said, while individual productivity might be thriving in some cases, surveys show that teamwork isn’t faring so well. Gitlab, for example, found that only 37% said the organisation they work for does a” good job” of aligning work across projects.

Creativity in the workplace versus WFH

One of the main reasons Hunt has cited for a return to the office is his concern about creativity or lack thereof. However, while there is no definitive data, some research shows that employees can be just as creative, if not more so when working from home. Research from Better Up found that people were 56% more creative and thought more innovatively when working remotely.

Some of the reasons that the research team gave for explaining these results were that long commutes and excessive meetings, more time being alone and thoughtful, and being in a place of safety and strength contributed to more creativity. However, there are two sides to this, and research published in Nature on a field experiment across five countries actually found that more video-conferencing, something more prevalent in remote working, in fact, inhibit the production of creative ideas. Indeed, some workers are worried about this, with around 18% concerned about their creative output outside the office.

One of the common arguments regarding this is that without being in the office, workers don’t have the opportunity to bounce ideas off each other or spark up conversations that lead them down the road of innovation. There are no so-called “water cooler moments.” However, it really comes down to an individual’s working style.

Mental health and relationship building

A core issue often explored when discussing the WFH dynamic is how it affects mental health, well-being and relationships. Again, as with all of these areas, there’s a huge level of variability.

That said, isolation is often a common concern for those working from home. One study found that 81% of younger workers said they would feel more isolated solely working from home, while another study found that 60% of workers felt less connected to colleagues.

Further, many workplaces appear to be failing to provide their employees with additional resources to cope with these new challenges. In fact, one study found that under 30% (29%) are doing so. At the same time, around 19% of workers like WFH because it allows them to avoid office politics.

It’s not just work relationships that can be negatively impacted by working from home, though, according to experts, it can also put a strain on home relationships, for example, with a partner. This is often put down to being “physically present” but “unavailable” or due to letting work seep into home life.

Linked with this is the question of work-life balance. Living and working in the same space can make switching off difficult, with a reported 32% of workers finding it difficult to do so. This is especially true for those working in their bedrooms (17%) and living rooms (27%). Working in the former can also be bad for productivity and negatively affect workers’ ability to sleep. According to Hubble research, Gen Z reportedly struggles with this the most.

What are workers’ preferences, and what does the future hold?

So, all things considered, what are workers’ preferences? Do people enjoy WFH, hybrid or office-based working? Well, a wide range of contributing factors affect this, and it appears that age group also has a part to play.

According to Deloitte, 77% of Gen Zs and 71% of Millennials would consider looking for a new job if told they had to return to the office full-time. Meanwhile, another piece of research found that two-thirds (66 per cent) of workers aged over 55 years old prefer hybrid working.

Elsewhere, a study by Hubble found that, interestingly, Gen Z were the most “pro-office” group, while Gen X and Baby Boomers were more “pro-WFH.”

It’s likely that preferences will also depend on whether or not workers have young children; after all, WFH allows much more flexible scheduling (perceived as the main benefit for 50% of workers). Likewise, another factor is how far away a worker lives from their place of work; lack of commute is the secondary draw to WFH for 43% of respondents after flexible scheduling – this comes with big savings, too, a draw for 33% of people.

While the research shows that different groups might prefer different models of working, a key insight from research in this area is that workers like flexibility and the option to choose where and how they work.

Looking ahead, while the likes of Hunt may consider WFH to be detrimental to employees’ performance, it looks like it won’t be going anywhere anytime soon. Moreover, leaked Labour policy documents reveal that the party is even planning to make flexible working a legal right. So, watch this space.

There’s no denying that times are tough right now, and for many, it feels difficult to find respite. The cost of living crisis is squeezing everyone and from seemingly every angle.

According to Citizens Advice, it has been supporting more people than ever before with aid and referrals. The charity called it the “bleakest ever” start to the year and has facilitated 94,000 people with food bank referrals and access to emergency charitable grants. That’s a 178 per cent increase from the same period in 2020.

Figures show that in the first four months of 2023, it helped more people than the entirety of 2019.

Further to this, recent data from Which? revealed that hundreds of thousands of people across the UK missed payments on household bills in April.

At The Salary Calculator, we understand that it’s a challenging time and that many are looking for guidance on where to turn, so in this week’s article, we’ll walk you through the following:

• The scale of the rent and mortgage payment issue
• How people are responding to tightened finances
• How to form a plan of action and where you can find support

700,000 missed household bills in April

Which? estimates from April reveal a deeply concerning trend of financial strain across the country. The consumer choice and advice company shared that according to its estimates, in April, 700,000 people across the country missed rent and mortgage payments.

These estimates were made by combining the company’s survey data with the data from the Office for National Statistics (ONS). Specifically, it was found that renters, in particular, defaulted on rent payments, with one in 20 (5.2%) unable to pay their monthly rent to their landlord. Comparatively, 3.1% of mortgage holders missed payments.

More broadly, two million households (7.3%) missed or defaulted on at least one mortgage payment, rent payment, loan, credit card, or bill.

The situation is being informed by a number of factors, but crucially, as outlined by Which? Mortgages have jumped significantly. Last year, the average two-year fix in April 2022 was 2.86%, in April 2023, it was 5.35% – meaning remortgaging will be leaving thousands with much more expensive monthly bills. For many renters, this is being passed down from landlords, with one in five tenants in privately rented properties seeing monthly rent prices hiked by 10% or more between February last year and February 2023. This is occurring alongside food prices rising at their fastest pace ever, and sky-high energy bills.

Making more financial adjustments

To cope with the financial blows of the cost of living crisis, millions are having to rethink their finances and make adjustments and cutbacks. According to Which? around six in 10 people have had to make “at least one” financial adjustment in order to be able to afford essentials.

Which? shared that this covered everything from selling their possessions to dipping into savings. This comes to an estimated 16.6 million households across the country – a figure 35% higher than two years ago.

These figures are supported by data from Barclays, which found that increasing household bills has led to half (54%) of consumers cutting back on discretionary spending. Likewise, in order to save, people have been switching from nights out and restaurant meals to nights in, with research from KPMG finding that 63 per cent of people have been cutting back by making fewer trips to restaurants. More nights in have also led to an increase in spending on subscription services such as Netflix and NowTV.

Forming a plan of action for rent and mortgage payments

With mounting bills and pressure from lenders and landlords, it’s understandable that you might be feeling stressed – and while people deal with stress in different ways, the temptation to try and avoid the issue is often strong. Many also shoulder a lot of the stress alone. In fact, according to research by Lowell Financial, a whopping 69% of people who are in debt don’t talk about it with anyone.

But however tempting that might be, when it comes to rent and mortgage payments, it’s important to deal with the situation head-on.

With rent, while it’s always a top priority to put enough money aside to pay your landlord or letting agent, it’s not always possible. After all, right now, rent prices are increasing at their fastest rate in 13 years. But, you must act straight away.

It’s also important to remember that a landlord can start the eviction process straight away, and if you’ve previously missed or been late on payments, you’re already in arrears or you’ve come to the end of your fixed term period.

Citizens Advice also recommends that you reach out immediately if you’ve not paid rent for eight weeks or more, your landlord has initiated court procedures to have you evicted, you’ve received court papers, or you’re expecting bailiffs.

An important point of action is to assess your finances and see how much you can realistically pay, even if it’s not the full amount. Then, initiate a conversation with your landlord and propose these terms. It’s key to see what you’re entitled to and see if you can apply for Discretionary housing payments (DHPs) or certain benefits. You should also be aware that landlords can ask to make deductions from your benefits.

Below are some key contacts to reach out to when dealing with rent arrears:

• MoneyHelper
• Shelter
• Citizens Advice

If you’re having difficulty paying your mortgage or are in arrears, while lenders typically wait around 15 days after a missed payment to reach out, you should reach out straight away. However, prior to doing that, as with rent arrears, it’s important to calculate a budget of what you can afford to pay, which you can share when you contact them. If this feels difficult, speak to an adviser at your nearest Citizens Advice.

It’s also important to be honest, and assess whether or not the situation is likely to be temporary or long-term. If the former, they may suggest making a temporary payment arrangement or an interest-only mortgage – find out more about that here.

If the situation is not looking like it will be temporary, there are other routes you can take. For example, you may be eligible for certain benefits or Support for Mortgage Interest (SMI) and be sure to look into mortgage rescue schemes, for example, the Breathing Space scheme.