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Brexit Day means no change for your finances

Some relief over new sky-high overdrafts, are auto-save apps any good, Brexit update, Boots up to 70% off clearance sale and self-assessment deadline. These are our Money Saving Expert Martin Lewis’ Tips of the Week.

Remember, deals can change quickly, even while I’m on the programme. So always double-check the terms and conditions before spending. Plus, while I hope these deals will save you cash, don’t spend if you can’t afford it, don’t need it, or won’t use it.

Banks get a slap on the wrist: If you’re an overdraft prisoner there may be welcome relief

From April, most of the big banks have announced they’ll be charging a new interest rate of around 40% - some even more - on their chargeable overdrafts, instead of charging fixed fees or mix of both interest and fees. This is on the back of the regulator, the Financial Conduct Authority (FCA) imposing new changes in the hope it’ll make things fairer and easier for customers.

And while it has worked in many ways – a single interest rate does make things far easier to compare – it’s failed to boost competition. They’re virtually the same rate, and it’s a hideously high one, which will mean many prisoners of authorised overdrafts will pay far more – and that was unintended.

So this week the FCA made a much welcome announcement to help. After I and many others complained, the FCA has written to major banks slapping them on the wrists forcing them to provide evidence of how they’ve arrived at charging such high-interest rates. After all while there is no accusation of collusion in pricing, the fact they are all so similar does seem like it and so it wants them to prove the justification for their rates.

Plus it’s gone even further to say that banks must help those most vulnerable customers who’ll be hit hardest by the change in overdraft costs.

This is a welcome relief for those who these changes will hit hardest – those trapped in with high amounts of authorised overdrafts. For example, someone with a £2,000 authorised overdraft could see their costs more than triple, from around £180 a year to around £680. The FCA has followed our call to tell banks to provide alternative, cheaper arrangements to those who these changes put in financial hardship.

This is crucial. It means formally complain and if your bank doesn’t help you can take it further to the free Financial Ombudsman. And as the ombudsman doesn't just look at the law but also looks at standard industry practice – the fact the regulator has said this effectively defines this standard industry practice, meaning consumers can expect cases to be looked at favourably.

Can you auto-save your way to £1,000s?

There’s a growth in auto-save apps, and I’m getting flooded with questions like Phillip who tweeted “@MartinSLewis is the money box app worth using to save a little. What are your thoughts on this?” So I thought I’d give you a quick run-down on my opinion…

Auto-save apps try to squirrel away some of your cash without you noticing. Most use clever tech and data to figure out what you can afford to save, then move money from your current account to your savings or investment accounts with them automatically.

While I think the idea is good, and many do love them as they’re an easy way to get into the savings habit, especially for app-happy, confident new savers, but the problem is that the interest earned in its savings accounts is often poor and they're not without issues. In brief, the top apps include…

Chip: It uses an algorithm to work out what to save for you every 4 days. You earn no interest on its savings account, and your money is held in a ring-fenced Barclays account (though in the unlikely event Barclays went bust your cash isn't protected). Tandem: Works in a similar to Chip, and also lets you set up regular deposits, make one-off deposits and offers 'round-ups' eg if you buy a £2.70 coffee it’ll put 30p in your savings. It gives 0.5% interest and Tandem is a fully regulated UK bank so savings up to £85,000 are protected. Plum: It works out what you can afford to put away and moves it to your Plum account. There’s no interest on savings, but you can invest in stocks and shares – that’s its big feature, that it’s about investing not saving, which in the long run if it does well will outperform savings and if it does badly you’ll lose money. MoneyBox: This was the pioneer of round-ups (ie spend £4.82 and it saves 18p) and focuses on that rather than auto-savings, but the big boon here is it offers two decent savings options (it offers investments too). Those aged 18-39 can get it to move money to the market's top cash Lifetime ISA at 1.4%, which is great for first-time buyers, and it also has a 95-day notice account paying 1.65%. While these apps may be good to get you into the savings habit, don't leave your savings sitting in their accounts - Chip and Tandem especially pay low interest and money sat in Chip and Plum accounts hasn't the strongest protection either. So unless you've chosen to invest (ie in stocks and shares) or are with MoneyBox’s LISA or notice account, I'd suggest every few months you move the savings money out into normal top savings, eg Marcus Bank which pays 1.35% AER variable easy access.

Martin’s Quickies:

Boots up to 70% clearance: We’re in dregs of the sale, and usually at this time of year shops up their sale discount to get rid of last seasons failing stock. And tomorrow Boots have confirmed it’s boosting its current ‘up-to 50% off’ sale to up-to 70% off in-store only on selected skincare, make-up, electrical and fragrances. So if items are still in stock tomorrow, you could get a decent discount, for example you could get a Ted Baker Ultimate Harmony set for £13.50 (currently £20.25 in 'up to 50% off sale'), normally £45 and Soap & Glory Sweet Tin-Tations set for £18 (currently £27 in 'up to 50% off sale'), normally £60. There are no guarantees, it’s a case of ‘can you find them’ – bigger stores tend to have more.

2018-2019 final self-assessment deadline reminder: I warned you about this a few week ago, and if you’ve still not done it you better get your skates on – a huge 2.8m still haven’t filed their 2018-2019 tax return. If you have been asked to do self-assessment, you must complete it online (the post return has long gone) by 11.59pm tomorrow night (Friday 31 January) and pay any tax due or you face a £100 fine plus interest on any underpayments. GET ON WITH IT!

Brexit Day means NO CHANGE for your finances: We formally leave the EU tomorrow (Friday) and while it’s a big political day, it’s not a big practical day for UK consumers. Whether it's mortgages, savings, travel rights or more, all are simply moved to the new transitional rules - designed to provide unchanged continuity. In other words, today's rules will still stand on Saturday. The key change will be when the transition finishes at the year's end. What happens after that is up in the air, as it depends solely on if and what deal we get with the EU. Of course, meantime as always there will be exchange rate and market fluctuations depending how various deal announcement updates are viewed.

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