Pod Insights The Martin Lewis Podcast The cheapest way to spend abroad, stop paying to pay! And find old pensions worth £10,000s! About this episode With £31 billion in lost or unclaimed pensions in the UK, Martin tells you how to find your old pensions - which could be worth £10,000s! Plus, Martin’s top holiday money need-to-knows to help you stop paying when you spend abroad and get the most bang for your (Vietnamese) dong. And you tell us the worst financial advice you were given by your parents and grandparents.
Transcript 12,252 words · 8 speakers
Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 Speaker 00 This BBC podcast is supported by ads outside the UK.
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0:38 Speaker 02 Welcome to The Haunted Library. Join me, Colin Morgan, as I read Frankenstein by Mary Shelley. A story of science and ambition, loneliness and longing, and what it truly means to be human.
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1:10 Martin Lewis? Hello, I'm Martin Lewis and this is the cunningly named The Martin Lewis Podcast. I do wonder what that's going to be about. Now, usually, much of it comes from my BBC Radio 5 live show with Adrian Charles, but don't worry, there's bonus money-saving tips and extras just for you lucky, lucky podcast listeners. I did the intro so well in today's live show, so I think we should just jump straight there. Play the theme tune.
1:50 Speaker 05 Martin Lewis, what have you got for us, Martin?
1:53 Martin Lewis? We have a smorgasbord of savings for you today. We're going to be starting off with the fact there's over £30 billion of money in lost pensions, average £10,000 a person. So do you have an old and lost pension that you can track down and get oodles back? The big subject though today is a holiday money Q and A. Summer is approaching. Millions of people will be going abroad. So how do you get the most buck for your bang? How do you stop paying to pay when you go out abroad? How do you max out your dollars, your euros, your ringits, your colons or your dong? You always want to get all the dong you pay for, don't you, Adrian?
2:29 Speaker 05 Did you say colons?
2:31 Martin Lewis? Colons.
2:31 Speaker 05 Where's that?
2:32 Martin Lewis? Uh, it's Malaysia ringits. Oh, I've just forgotten the colon. Costa Rican colon.
2:36 Speaker 05 Right.
2:36 Martin Lewis? The Costa Rican colon, yes.
2:38 Speaker 05 And why not?
2:38 Martin Lewis? Always good when you're eating out, when you phone home from, when you phone home from Malaysia, you want to ring it and you do whatever you want with your dong in Vietnam. So we've also, let's move on swiftly before we say something on air that we shouldn't. Jaffa cake gate update. Big hot news. When we talked about shrinkflation in the tellers a couple of months ago, the big question was have, has the amount of Jaffa on a Jaffa cake shrunk? We now have a definitive answer on that. This week's tellers though, we often talk about the best wisdom from parents or grandparents, but today we're going rogue. What's the worst financial information you were ever given by parents and grandparents? When was it and why was it so bad? And this week's mastermind, Adrian, I know you've missed mastermind the last couple of weeks,
3:22 Martin Lewis? is on workplace pensions.
3:27 Speaker 05 Oh, blimey.
3:27 Martin Lewis? All I'm giving you.
3:28 Speaker 05 I'm confident. I'm all across them. All across it.
3:34 Speaker 05 So how the devil are you then, Martin?
3:37 Martin Lewis? I've got a bad foot.
3:38 Speaker 05 Oh, no.
3:38 Martin Lewis? I've done a couple of runs this week, which is a bit more than normal and something has gone in my ankle. I believe it is a symptom of 53ism.
3:44 Speaker 05 Yes.
3:45 Martin Lewis? I think it is part of my 53 condition. I iced it, yes, and I've taken some of my Bupren and that enabled me to do a bit of walking. Regular listeners will know I try and average 25,000 steps a day. Today is going to be a struggle. I'm only on about 7,500 so far, but I will get there. But what? What interests me is there I am suffering from fifty-three-ism and you're you're a bit further on than that, but you're about to lose your Glastonbury virginity.
4:08 Speaker 05 I'm losing my Glastonbury virginity. I have.
4:10 Martin Lewis? Does anyone else, does any, listen, do you like the idea of Adrian at Glastonbury? I don't know why that appeals to me.
4:15 Speaker 05 Adrian doesn't like the idea of Adrian at Glastonbury. I wrote a piece how I'd never got to Glastonbury in The Guardian a few years ago and they've been badgering me ever since to go to Glastonbury and I've I've I've finally, I've finally relented. I'm having, I'm having awful stress dreams about it. I can't tell you how, I'm sort of beginning to look forward to it, but I'm so trepidatious, I just don't know the road. I dreamt that I was dragged on stage forcibly in order to introduce self-esteem, which is so random because self-esteem's not paying.
4:48 Martin Lewis? She's never had self-esteem in the first place.
4:49 Speaker 05 No, no, I didn't. I just, I think she's in my head because I interviewed her on on Five Live once because I think her dad listens to Five Live, so she always came on.
4:57 Martin Lewis? I'm going to declare, I don't know who self-esteem is.
4:59 Speaker 05 Right.
4:59 Martin Lewis? I have no.
5:00 Speaker 05 Oh, she's great.
5:00 Martin Lewis? I mean, you going to Glastonbury is one thing. Me who doesn't listen to music going to Glastonbury would be a whole different level of weird. I've never been to Glastonbury. I have no intention of going to Glastonbury.
5:10 Speaker 05 But why would you want to go?
5:11 Martin Lewis? Why would not? Because I don't listen to music. I mean, I'm just not into music, particularly. The only reason I'm into music is my daughter is incredibly musical and has an amazing singing voice. So I've had to learn a little bit more about music in the last few years because I love her. But I'm just, music's never really been, that's why I do Five Live, you know. First thing I turn on on the radio is Five Live. If nothing's on there, I go to Radio Four and after that it's other speech radio. Music radio just wouldn't turn it on.
5:34 Speaker 05 I mean, are there financial tips that you need for Glastonbury? Do you get ripped off with the food offer? Can you pay extra? Is there a bidding system for access to clean toilets?
5:44 Martin Lewis? Well, it's not this week's Tellers, but I think I, if you forgive me doing it, I would like to say, what tips, listeners, do you have for Adrian going to Glastonbury? What should, what should this old fellow next to me know on his first Glastonbury trip?
5:57 Speaker 05 And don't worry, I don't need to be told not to dad dance. I won't be moving in any kind of rhythmic fashion at all. I'll just be, I'll just be existing.
6:08 Martin Lewis? There cannot be more potentially profitable uses of your time than searching for a lost pension, especially for people who've worked for lots of different firms over many years. More than 3 million pensions are thought to have gone astray with an average inum of nine and a half grand each, so some can be bigger. So it is a very good use of your time to try and find them. Let me just give you some inspirations to start with. Vicky emailed me, "Love your site and TikTok and often use your tips." Yes, I am on TikTok, you see, so maybe I'm not that uncool after all. "I decided to trace my pensions and they have come back to say they have found one from the 1990s, which I'd only paid a very small amount into for around five years, as I recall.
6:48 Martin Lewis? This pension is going to pay me around £160 a month for the rest of my life. If I manage to get to 75, that's a lot of money." Well, I've estimated that could be worth £40,000 to her if she does live to a typical life expectancy, which it is wise worth many people double checking that they haven't lost a pension. And even if you only thought, put a few quid in it, if it was a good investment, with the compounding of the growth over the years, it can be worth a lot more than you thought.
7:21 Speaker 05 So it sounds the height of carelessness to lose a pension, but thinking about it, it's probably surprisingly easily done.
7:31 Martin Lewis? Yeah, so it's not like it can drop out of your pocket, but there are common causes. The big ones are you've moved house without updating your details with the pension provider. You've changed jobs, especially if you've done it a lot, because workplace pensions are often with different providers. So each workplace, you may well have a pension with a different provider. Or your old pension provider has merged or rebranded, and this can make it difficult to know which firm to contact. So they would be the sort of three big scenarios or a combination of all of them, or just general carelessness. You know, it's many people, they worked 25 years ago for a small firm for a couple of years. They had money going into the pension they didn't really think about. They got a better job, they moved on and it's sort of, they lost the consciousness of that pension because it wasn't much money. It might have been a grand at the time, but a grand 25 years ago can be a lot more now if the investment was decent.
8:17 Speaker 05 I think we've got a caller on this, do we? Andrea in Weston Super Mayor. How are you Andrea?
8:24 Speaker 06 I'm good, thank you.
8:25 Speaker 05 Hiya Andrea. May I ask how Weston Super Mayor is today? Is it full of Brummies?
8:31 Speaker 06 Um. No, it's a weekday, so we're okay.
8:34 Speaker 05 Okay.
8:36 Speaker 05 No, what you mean is, no, it's quiet at the moment and I'm looking forward to seeing them at the weekend. I think that's what you meant to say, isn't it, Andrea?
8:44 Speaker 06 Uh, I'm not gonna be here at the weekend, so unfortunately I shall miss them.
8:47 Speaker 05 Okay, so, um, okay, the matter at hand then, um, yes, go on, pensions.
8:53 Speaker 06 Well, I've had pensions from the age of twenty two, but now twenty seven years on, I have a few dotted around in different surnames as well from marriage and all that sort of shenanigans. I need to find them and sort them out.
9:07 Speaker 05 Talk, Andrea, marriage and those shenanigans, marriage as shenanigans.
9:13 Martin Lewis? It's life, isn't it? Basically, you asked before, how did you lose a pension? The answer is life.
9:18 Speaker 05 Yeah.
9:18 Speaker 06 Life, yeah, yes.
9:20 Speaker 05 Go on.
9:20 Speaker 06 Yeah, I just need to find them and sort them out. So that's, that's really what it is, but it just seems very insurmountable. So basically I've done nothing about it.
9:28 Speaker 05 Okay, so what kind of pension, you say you, you acquired them, it's something that one of your shenanigan husbands led to you setting up or a job that you had or what, what, what would they would have been, workplace pensions?
9:42 Speaker 06 Yes, yes, so, um, so they're all workplace pensions. I know one of them is a final salary scheme and the rest I have absolutely no idea about. And every time I change job, I think I should do something about it, but I haven't.
9:54 Martin Lewis? Okay, so look, let, let me be plain, there are, there are two main methods to do this, but it takes some work. But you know, you heard my introduction before the forty thousand pounds found. I mean, this is potentially enormous amounts of money. I mean, we're generally talking in the five figures. I've had people who found money in the substantial six figures and I had someone who got about a hundred and eighty grand back. You know, it is absolutely worth, I'm not suggesting you do this, but just that conceptually, it would be worth you taking a day off work to do it. Certainly, if you know what I mean, if you look at the financial value. So there are two main ways to do this. The first one is, if possible, just go through. Start by making a list of all your former employers and pension schemes to see if you know what they are.
10:39 Martin Lewis? I mean, do you remember where you worked? Could you list every place that you had worked in order?
10:43 Speaker 06 Oh, definitely.
10:44 Martin Lewis? Okay, well then, I mean, once you know where they are, the first thing to do is contact, if they were workplace, contact the HR departments at the old employers to see whether they can help you find the details of your workplace pensions. If you're struggling with that, the next thing that you do is you use the gov.uk Pension Tracing Service tool. So this is on gov.uk, the government's website. There you can search by an employer name and it has details of over 200,000 different schemes and it'll give you the contact details for the pension provider, but it won't tell you if you've got a pension there, but at least it tells you, because those pension schemes can have changed, at least you then know what the pension provider you need to contact is called. Once you've got those details, you need to contact the company
11:26 Martin Lewis? yourself. Many will have an email address or a contract form on the website. You will not be the only person in this situation. You'll generally need your national insurance number, or possibly a passport to driving licence number, and then they'll marry you up with your pension. That's the standard way. Does that all sound doable?
11:44 Speaker 06 Yes, so what was the government website again?
11:47 Martin Lewis? It's go to gov.uk and when you're in gov.uk, search Pension Tracing Service.
11:55 Speaker 06 Brilliant, thank you.
11:56 Martin Lewis? Now, I'm just going to give you a second option if you struggled there. I have a feeling because you know your employer's name, this one isn't necessarily for you, but it may well be for other people. If you hadn't mentioned your employer's names or you're not having any luck, then there is a fintech firm called Gretel, which is also free. It doesn't have as many firms on its database as the Pension Tracing Service, but it works a very different way. So what Gretel does, which is spelt G-R-E-T-E-L, it does a soft search on your credit report, which means it accesses your credit file, but it doesn't leave a mark on your credit file to check your identity. And then it tries to match you with prior addresses where you may have had accounts registered, so you don't need to remember to do this.
12:40 Martin Lewis? But if you remember that any that weren't on your credit report, that helps. And then it tries to track down dormant assets, including pensions, but also investments, bank accounts, shares, life insurance, child trust funds and things. Now, it's free because financial firms pay it because they have a legal duty to try and track down people who have, who aren't connected to their assets. And it's more cheap for them to pay Gretel than it is for them to do it themselves. But it's not the same range as the Pension Tracing Service, but essentially it's two-step. If you know your employer and you've got your details, go to the Pension Tracing Service or go to the old employer if you can find them. If not, Gretel is useful because it's sort of like doing a spray search. And what's interesting with it is if your old employer isn't on now, but were to join
13:23 Martin Lewis? in the future, then it will then notify you at that point. So Pension Tracing Service first, Gretel second. Does that work?
13:32 Speaker 06 That's brilliant, thank you.
13:34 Martin Lewis? But there's a cost, there's a charge for this information. When you find them, which I hope you will, you have to come back and tell us how the experience was.
13:43 Speaker 06 Okey dokey, I can do that.
13:45 Martin Lewis? All right, and we'll get the producer. Keep in touch with the producer, that's very caring of you, thank you.
13:48 Speaker 05 Have you ever been to Glastonbury, Andrea?
13:51 Speaker 06 Only when the festival's not on.
13:54 Martin Lewis? That's the right way to do it.
13:57 Speaker 06 I was there last Saturday.
13:58 Speaker 05 All right, okay.
14:00 Martin Lewis? How was it?
14:01 Speaker 05 Okay, I might go next Saturday, actually. But yeah, okay, all right, thanks very much.
14:06 Martin Lewis? I think Andrea should be here every week.
14:08 Speaker 05 I'm going to look up Andrea in when I'm next in. I like the Cotterwell Gym. Somebody's just texted in some advice for me at Glastonbury, which only leads me to believe I am so far in out of my depth that I can barely see light above the wall. I can't even tell you, I can't even tell you what the text says.
14:27 Martin Lewis? All right, well, you'll have to show them when you're off.
14:29 Speaker 05 Yeah, look, I don't do that stuff, Shane, is all I'm saying, all right? All right.
14:36 Speaker 05 I'm not judging you for doing it, I don't do it, and that's the end of it.
14:40 Speaker 05 Brian says, I'm failing to find out whether I paid into a pension scheme as an apprentice back in the 70s despite doing a company register search and finding an old company that changed names and ownership many times. How do I find out who might hold the money and make the claim?
14:54 Martin Lewis? Well, I mean, if you haven't tried the Pension Tracing Service, do try that because if you have the company's old name, it should be able to track down who has the current pension assets. I mean, that would, that would be your strongest suit. If you've been through all that, then it's difficult.
15:08 Speaker 05 Do we move on to holiday money?
15:09 Martin Lewis? Absolutely, yeah.
15:11 Speaker 05 Okay, do you know what? I'd like to do an impromptu mastermind with you.
15:15 Martin Lewis? Uh oh.
15:15 Speaker 05 Okay, if a Costa Rican colón
15:20 Martin Lewis? Yeah.
15:22 Speaker 05 is worth naught point naught naught one five pounds.
15:27 Martin Lewis? Naught, naught.
15:29 Speaker 05 One five.
15:30 Martin Lewis? Five pounds.
15:31 Speaker 05 Yes, so naught point naught naught one five pounds. So, how many colons are there in a pound?
15:39 Martin Lewis? So it's a fifteenth of a penny, so about about 600.
15:43 Speaker 05 No idea whether that's right or not. Actually, I just trust you. I'm not even checking. I assume it's right.
15:47 Martin Lewis? Yeah, naught point naught naught one five.
15:51 Martin Lewis? Yeah, just over 650 is my guess.
15:53 Speaker 05 Okay, good. So there you have it. This is not an official recommendation.
15:56 Martin Lewis? I don't like the mastermind either way. I may have got a digit wrong. I may be a naught out. We'll check it half time.
16:00 Speaker 05 No, you have it. It's 600. This isn't official. This is a ballpark figure if you're changing your pounds for colons. 689 Costa Rican colons to the pound.
16:10 Martin Lewis? And I estimated 650 live on air with no calculator. I'm fine, we'll move on.
16:14 Speaker 05 Okay.
16:18 Speaker 05 Right, so, de pica, de pica? Which card is best for holidays, please? This must mean, well, what does it mean? Credit card, debit card?
16:27 Martin Lewis? Well, that's, well, both. And I think there's a really important place to point. We're talking about holiday money. And we're talking about in far too often, you pay to pay when you go on holiday. Summer's coming, now's the time to prep. So let's start with the basics of what happens when you spend on plastic. When you go abroad, whether you're spending on a debit card, a credit card or a prepaid card, prepaid has some slight exceptions on this. What happens is you spend abroad, your card gets a near perfect Visa, Mastercard or American Express exchange rate. Now, the perfect exchange rate at any moment is what's called the spot FX rate on the FX market, the foreign exchange markets. That's what FX stands for. The spot rate is the perfect rate. You're paying as near as damn it, your card company gets that rate.
17:11 Martin Lewis? I mean, a very smidgen above it, but not a smidgen that's noticeable in the amount that it costs us. But what Most plastic then does is adds what is called a non sterling, makes sense, exchange rate fee, which is normally about 2.75 or 3%. So in practice, that means if you buy something on the card that costs £100 worth of euros or £100 worth of dong, doesn't make any difference, at that moment's spot rate, you pay £103 for it. Makes sense? Yeah. So we're making it exchange rate neutral, by the way, I've just phrased it. £100 worth of euros at that rate costs you £103.
17:51 Martin Lewis? Now, what we're looking for is there are a lot, quite a lot of them these days, a range of specialist cards that do not add a non sterling exchange rate. So then £100 of euros costs you £100, i.e. you get the perfect or the same near perfect exchange rate that Visa, Mastercard and American Express offer. And there are a lot of them out there. So how do we differentiate between the best ones? Well, first of all, we have to look at other fees. And second, we have to look at can you get cash back? And there is a card at the moment that has no other fees and gives you cash back. And it's called the Barclaycard Rewards Visa Card. Now, it is
18:36 Martin Lewis? a credit card, so you're going to pay on it and then pay afterwards, but you need to make sure, block your ears, everyone, that you pay off the card in full every month, so there's no interest. You're just going to do your spending on the card. It works that way. Now, what it currently does is that those who sign up for it now get a half a percent cash back on all spending in the UK and abroad. So when you go abroad, not only do you get a perfect exchange rate, you get half a percent cash back. So you're actually effectively getting a better rate than the spot exchange rate. It's interest free on spending on the card, as long as you pay off in full in the month. You can make up to £500 a day of withdrawals from a cash machine with no fee and
19:18 Martin Lewis? Bizarrely, some credit cards, if you withdraw cash on them, will still charge you interest even if you pay off in full. This one doesn't. So as long as you pay off in full, you won't pay cash withdrawal interest. Now, I would put as the top credit card, Barclaycard Rewards is my overall top pick. There's an argument that MBNA Cashback Visa, which gives quarter of a percent cash back and is guaranteed cash back for three years, has longevity on its cashback deal. Barclaycard, we don't know how long it will last. Barclaycard's half a percent now, it'll go to half, quarter of a percent in November. But you pay fees on cash withdrawal there. Also, the Virgin Everyday Cashback Mastercard pays 1% cashback this summer, so more than Barclaycard, but only for three months. And again, you pay
20:01 Martin Lewis? cash withdrawal fees. So if you weren't going to use a cash machine, Virgin would beat it this summer. But either way, all of those are easy to get, as long as you pass the credit score, cashback credit cards that also give you near-perfect exchange rate. And that smacks the pants of any Bureau of Change rate you will get.
20:18 Speaker 05 And what about drawing cash?
20:20 Martin Lewis? So that's why the Barclaycard, you can draw cash up to £500 a day, fee-free with no interest. The other two cards, the MBNA and Virgin, will charge you quite a whack if you withdraw cash on it. So that's why Barclaycard is my overall top pick. But if you weren't withdrawing cash, the other two come into it. It's worth saying, overseas cash machines may still charge you a fee. So let's say you've got the Barclaycard, you're on an overseas cash machine. The cash machine might charge you two or three euros, whatever card you use, but Barclaycard won't add to that.
20:49 Speaker 05 But so if you choose a card on that basis to go away with, will it all... how do you know it's always going to be good for it? So for example, I think on your advice, I went out and got that one.
21:02 Martin Lewis? Halifax Clarity.
21:03 Speaker 05 Yes. Is that still good?
21:05 Martin Lewis? Halifax Clarity is a top pick specialist card. In fact, I should probably say Halifax Clarity is currently a specialist card. You get perfect exchange rates, near-perfect exchange rate on your spending. You just don't get the cash back. Right, so and that's really
21:19 Speaker 05 And what about cash, can I withdraw cash on that?
21:20 Martin Lewis? You can, I think that one charges you interest on cash withdrawals, not a fee. So some charge a fee and interest. So on that card, you're better to spend, but it's not prohibitive if you withdraw cash as long as you pay off in full. But I mean, just to put that in perspective, I'm going to mention quite a lot of cards. You know, there's Club Lloyds, there's Halifax Clarity, there's Monzo, there's some Nation My Debit cards, there's some NatWest Credit cards, there's Starling, there's lots of cards out there that are specialist and are good. If you have a specialist card, I'm not urging you to switch. But if you're asking me, what is the top credit card at the moment? Barclaycard giving half a percent cash back on top of near perfect exchange rates beats your card because of the cash back. So you may as well choose that. But is it worth you switching for half a percent cash back? It's only a small gain, would be my answer.
22:05 Speaker 05 After Dominican Republic later this year, unofficial mastermind, what's the, what's the currency? Sorry, it don't matter, you don't have to tell me, I'm only joking. Is it, is it credit or debit or credit card that's best? And is it prudent to use a different card for holiday to what you normally use in case there are any fraud issues? Though it's an all-inclusive holiday, how do you deal with tips if going cashless, as it seems you tip for the majority of things there?
22:31 Martin Lewis? Okay, so let's start with debit or credit card. I deliberately only mentioned credit card before because I knew the first two questions that were coming and I wanted to cut up debit cards separately. The big advantage of a credit card abroad is what's called section 75 protection. That's where by law, credit cards are jointly liable with the retailer if you buy something costing between £100 and £30,000. That's very valuable abroad because even if you had a fault with something you'd bought abroad, well, you're not going to take it back. So you have the ability to go to your credit card firm here. But there are some good debit cards as well. And of course, one of the advantages with one of them, which is the Chase debit card, which is an app-only bank that you do not have to switch to get and only does a soft
23:12 Martin Lewis? credit score, so virtually everybody can get it as long as you're passing the ID check. Unlike the credit cards where you need to pass a credit check to get it, so it's much easier to get. You have the Chase debit card, which doesn't have section 75 protection because it's a debit card, but that gives you near Perfect exchange rates abroad and virtually everyone can get it. You can also get that really quickly. For example, if you are listening to Five Live and you are on holiday abroad now and you do not have a specialist card, you can actually sign up to Chase and within about 10 minutes, assuming you're accepted, you have a Chase account. You can then put a virtual Chase card into your Android, Google Pay or your iPhone Pay app within 10 minutes and you could use it abroad within 10 minutes and get near perfect exchange rates.
23:57 Martin Lewis? So that's a very, that's all about functionality rather than rate. It doesn't have the cash back. They used to have cash back abroad, it doesn't have it anymore abroad. You also have, worth me noting, if you were willing to switch bank, then you've got First Direct's free £175 deal at the moment. It pays you to switch bank. It has top rated for service and it has a near perfect exchange rate debit card. So if you wanted to switch bank, you could get paid £175. Say you're going on holiday in a month, that's £175 towards your holiday spending and you get a near perfect card. They don't have, if you ask me purely to go on what is the very best card in isolation, I would go for Barclaycard Reward at the moment.
24:39 Martin Lewis? If you want to look at other things like ease to get, there's Chase. If you want to switch bank, I would go for First Direct. So that all wraps it up. As for cash for tipping, actually generally, both the debit cards don't charge you any fees for withdrawing from an ATM. I would tend to find the best route for that would be, once you get to Dominican Republic at the airport, get your specialist card out, put it in the card machine, get yourself some cash out.
25:03 Speaker 05 Just on the Glastonbury tips, Mary in Lancashire, top tip, take earplugs. I assume that's not to sleep rather than stop the music.
25:13 Martin Lewis? Protect your aged ears.
25:14 Speaker 05 Yeah, Rob sweetly says, it's my first time. I'm 49 today. Happy birthday, Rob.
25:21 Martin Lewis? Happy birthday.
25:22 Speaker 05 And he's more nervous than excited too about going to.
25:25 Martin Lewis? Maybe you and Rob should meet up and have a cup of tea.
25:26 Speaker 05 Yes, we certainly should. And I've got another one which just says, baby wipes, baby wipes. And more baby wipes. But what am I wiping? I need to know.
25:37 Martin Lewis? Everything. Don't worry, I'll be answering lots more of your holiday money questions in a moment.
25:44 Speaker 05 We just want to look back at when we talked about shrinkflation, where foods, groceries, cosmetics, cleaning products, et cetera, when you notice they're being served in smaller portions. You've got an update on that for us, Martin?
25:54 Martin Lewis? Yeah, I think, I hope we've got a clip of when we discussed it last time, don't we?
25:58 Speaker 05 Yeah, with Karen in Durham, this was on Jaffa cakes.
26:01 Speaker 06 So I grew up in the 70s and 80s, and I'm certain the Jaffa cakes were in boxes of at least 15. So as an adult, doing my own shopping, I've seen packs of 12 being reduced to 10. And earlier this week in Home Bargains, I saw a twin pack containing 18. That's nine per pack. I can easy eat nine myself in one go.
26:24 Martin Lewis? Now, but what we went on there to take it further was I started to speculate, as well as there being less Jaffa cakes in a pack, was there less Jaffa in a Jaffa cake? This is Jaffa Cake Gate. And we put it out to the listeners. We didn't get an answer at the time. And of course, this is serious investigative journalism. This is what you pay your licence fee for, everybody. If you do, because you might not be listening on the podcast, where you don't legally have to pay your licence fee to listen on the podcast. I digress, I should get back to the main subject. We have actually got an answer now. Cindy got in touch and had this insight about how her husband had been instructed to put less Jaffa on a Jaffa cake.
27:09 Martin Lewis? I was telling my husband about shrinkflation the other day after listening to your podcast. And before I even mentioned the word Jaffa cakes, he said, yes, just like Jaffa cakes. I said, what? He said, I worked on Jaffa cakes. And that was happening in the 90s. Basically, he had to do the calculations on the updated Jaffa machine for their factory that puts the Jaffa onto the Jaffa cakes. Also, they wanted the Jaffa to be placed more centrally. It was the most depressing job that he's ever done. Oh dear. Well, I'm sorry for your husband, but thank you very much. And you did confirm in what you emailed that there was less Jaffa, or your husband says there was less Jaffa
27:52 Martin Lewis? put on a Jaffa cake. Therefore, we know there was Jaffa shrinkflation. Just think, I can't do it.
27:59 Speaker 05 We had to give them a right of reply, so we got in touch with the Jaffa, the boss at Jaffa.
28:06 Martin Lewis? The Jaffa gaffer.
28:07 Speaker 05 The Jaffa gaffer. And it's McVitie's sent us this response that our producer Paige has voiced up for us.
28:15 Speaker 03 Like many manufacturers in the UK and around the world, we continue to see our input costs increase. Despite this, we are working hard to minimise the impact on our products and to keep our prices affordable. This is why we've made the decision to slightly reduce the weight of our Jaffa cakes products whilst ensuring each cake still includes plenty of our signature crackly chocolate and orangey centre.
28:43 Martin Lewis? I do love that we have to do these right of replies. I mean, it's Jaffa cakes, everyone knows about shrinkflation. It's not like we're going, McVitie's, you're the scourge of Britain, no other confectioner out there.
28:52 Speaker 05 I mean, that was the implication, that wasn't it?
28:54 Martin Lewis? Well, it has reduced it. So Jaffa cake gate, we now have an answer. There is less Jaffa on a Jaffa cake and less Jaffa in a pack of biscuits. But hey, maybe the price hasn't gone up and that's just a way of them hiding the fact rather than putting the prices up. Hey, I don't know what I'm defending. We had a full conversation on this. Shall we move on?
29:11 Speaker 05 Joanne, we have a Revolut card which we use when we go abroad. Is this still a good choice? Would be better off switching to a Chase card instead?
29:20 Martin Lewis? So, couple of differences. Revolut is a prepaid card where you load up the money in advance as opposed to a card like Chase, which is a debit card where you have the money coming out of your account when you spend on it. Revolut is probably the top pick of the prepaid cards. It gives near perfect rates, Monday to Friday on up to a thousand pounds a month. There's a 1% fee on weekends. The first five ATM withdrawals are free each month, up to 200 quid, then there's a 2% fee after. So if you're doing it in the free periods, it's good. If not, well, it is beatable by a Chase card. You can always have both. One advantage of a Revolut card, though, that you don't get on debit or credit cards, is you can opt to get the exchange rate at the time you load money
30:05 Martin Lewis? on to it. So remember, we talked earlier that with credit and debit cards, you get the rate at the moment you spend. With a prepaid card, you have a choice, with some of them anyway, that you can get the rate on the moment you load up. So you might say, I'm going to put 500 quid on it today. The euro rate looks good to me. I'm locking that rate in. And then you've got all your euros when you spend on them at that rate. Now, clearly, the problem with that is rates can go up and they can go down, and nobody knows, or you'd be making billions of pounds on the foreign exchange market as to what was actually going to happen. Yet, locking in a rate, the benefit is, if you go, actually, the euro rate looks pretty good now, I'm going to lock in at that rate, just in case, because I want it, that would
30:47 Martin Lewis? make it affordable for me, and I'm going to close my eyes to what happens afterwards, because I'm doing it, a bit like fixing on an energy tariff or a mortgage. I'm going to fix my rate now, because it looks decent, and I don't care what happens afterwards, because this is a decent rate. That's not a bad idea. Or you could hedge your bets. I mean, here's an idea. You've got a Revolut card, you're asking about a Chase card. You could get half of the money you need for your holiday on a Revolut card, locking in the rate now. And the rest, you could do spending on your Chase card at the perfect rate on the day. If the rate gets worse meantime, well, at least you've locked in half at the better rate. And if the rate gets better, half your money is at the good rate, and that's a way to hedge your bets. There is no perfect answer there. Revolut is probably the best rate prepaid card, though.
31:30 Speaker 05 More on the Costa Rican currency.
31:32 Martin Lewis? Yes.
31:33 Speaker 05 Somebody's texted in to correct our pronunciation.
31:35 Martin Lewis? Colón.
31:36 Speaker 05 No, I don't think it's that. We're not to pronounce it like a digestive organ. It is colon.
31:43 Martin Lewis? Colon?
31:44 Speaker 05 Not colon.
31:46 Martin Lewis? Okay, okay.
31:47 Speaker 05 Colon.
31:48 Martin Lewis? Colon, but that's not as fun.
31:50 Speaker 05 No, but if you do go to Costa Rica, then, you know, you don't want to upset people by asking them for colons. It's, they're colons, or that won't be the plural, I suppose.
31:59 Martin Lewis? I think, I'm going to, you asked me before, and I think it's the Dominican Republic peso.
32:05 Speaker 05 Okay, I'll get Sue's.
32:07 Martin Lewis? But I may be wrong. I may be wrong. That's what I'm going for.
32:11 Speaker 05 Shall we do, actually, a number of people have texted in, David in Northampton and John in Lincoln, and someone's been in touch with you as well. When you take money out of a cash point abroad, it says, do you want it in, do you want it in your own currency, effectively? Do you want it in GB pounds? Or do you accept our rate?
32:31 Martin Lewis? This is one of my golden rules. Okay. So let me do Y first, and then I'm going to do a very, very plain, easy way for you to remember this. What's being asked is who do you want to do the conversion? If you pay in the local currency, because you have a pound account, if you pay in the local currency, your card will do the conversion because you've paid in euros or whatever it is. If you pay in pounds, that machine or that shop, that cash machine or that shop will do the conversion. So that's your choice. Do I want the conversion to be done by my card? Or do I want it to be done by the overseas machine? Now, we've talked about specialist UK cards.
33:15 Martin Lewis? If you have a specialist UK card, the whole point is it gives you a near-perfect exchange rate. So why on earth would you want somebody else to do the conversion when you have a guaranteed near-perfect exchange rate on your card? In other words, the answer to that is paying the overseas currency. If you don't have a specialist card, you're going to pay a 2.75% exchange rate fee. You may also pay cash withdrawal fees, but you'll pay them anyway, even if you change it into pounds. And I have done copious amounts of experiments and films abroad where I have gone. I mean, many people go abroad and they do a pub crawl. I go abroad and I do an ATM crawl. And genuinely, I mean, it's not as exciting a life, but I have done this and I always do it. I have never found an overseas ATM or shop
33:59 Martin Lewis? that gives as good a rate as a bad credit or debit card in the UK. So even the bad ones, the non-specialist cards, are giving a better rate than the conversion you get abroad. And there's proof in this. You know, when you go abroad and it says, would you like us to convert the currency? If you say no, it says, are you sure? If you don't, we can't be responsible. You say no, and they go, are you absolutely blooming sure? You don't want us to do the conversion? Seriously, are you crackers? They're not doing that because it's for you. They're doing that because they make a lot of money if they do the conversion. So the golden, solid, locked-in, don't risk it unless you have a lot of research that is above and beyond what I've ever done and never seen in all the times I have ever done it.
34:42 Martin Lewis? Always pay in the local currency. If you're in Europe, pay in euros. If you're in dollars, pay in dollars.
34:49 Speaker 05 If you're in Costa Rica.
34:50 Martin Lewis? If you're in Costa Rica, pay in colons.
34:52 Speaker 05 Yes.
34:53 Martin Lewis? If you're in Vietnam, pay in...
34:56 Speaker 05 Uh, forgot.
34:57 Martin Lewis? Dong.
34:57 Speaker 05 Dong, that's right.
34:59 Martin Lewis? Pay in dong.
34:59 Speaker 05 And if you're in the Dominican Republic, you play in Dominican peso.
35:04 Martin Lewis? Pay in peso. That is the answer. Always, always, always pay in the local currency. And if you are in a shop, the Brits, let's band together abroad. If you are in a shop, and I've done it myself, and I have seen a Brit who's ahead of me, being asked, do you want to pay in euros or in pounds? And they say, uh, I'm like, euros. I'm answering for euros. Sometimes, if they don't notice me, they might think it's a bit weird. If they notice me, then they've got a story to tell. But I can't cope. I can't cope with the concept of people paying in pounds abroad, because it is just a mistake. Hopefully that answers your question. Now, just to interrupt this podcast, because you had so many holiday money questions, I wanted to answer more. But I'm no longer with Adrian. I'm now with podcast producer
35:47 Martin Lewis? Matt, who's standing in for podcast producer Simon. Hello, podcast producer Matt. Maybe I'll just call you Matt. Hello, hello. Thank you for having me back again. So what have you got for me? Right, some more questions. First one, Catherine is asking, my 17-year-old is going on holiday to Greece next week with her friends. They're all 18 and using cash cards, but I think they're only for over 18s. Can you advise the best way for her to spend her money there, please? She's got a Santander bank account with a debit card, and I'm worried about any charges if she uses it abroad. Uh, depending on which Santander debit card depends whether it does or doesn't have charges. You'll have to look that up. You're looking for the non-stirring exchange rate fee and ATM charges. Assuming it is not a card that's a specialist overseas travel
36:29 Martin Lewis? card, there are some easy options for you. Because there are cards available, prepaid cards for kids, that also have near-perfect exchange rates. So probably the easiest one to get is a Hyperjar card, which is a free card if you use the virtual card. But if you want an actual hard card, then it's a £5 card delivery fee. There can be small fees if you top up over 10 times a month, or you top up for less than £10, but most people won't do that. It's available for 6- to 17-year-olds. The parents must download the free app. I know she's 17, it's not such an issue. But you can get this at age 17. It gives near-perfect exchange rates on spending, although you can't withdraw from Cash machines abroad on it. There's also similar, the Nationwide Flex One debit card
37:10 Martin Lewis? as part of a children's bank account for 11 to 17 year olds. And that does give fee free ATM withdrawals as well. Under 13s will have to apply in branch with a parent, 11 to 17 year olds can apply themselves. And there's the Starling Kite free prepaid card as well, but parents must have a Starling current account. If your child, and so this is generic, probably not for your 17 year old daughter, but if your child has a GoHenry prepaid card, which is a fee paying card that you'd have, so you have to pay four pound a month fee, then that is also near perfect exchange rates if you use it abroad, if you already have one of those. And Revolut customers, you can get your child a Revolut under 18 prepaid card,
37:52 Martin Lewis? which gives near perfect exchange rates, but only on up to 500 pounds a month and fee free ATM withdrawals up to 100 quid a month. So there's a whole host of different cards out there that you can use and you can give to your kids if you're going abroad, because obviously, just like we tend to be moving towards a cashless society for many people when they travel, children need access to the same thing. And if you want to give them their spending money when they go abroad, especially teenagers, these cards are the way to do it. There is Richard, he's asking about haggling. Richard, hello, welcome. You have a holiday money question for me, I believe. What is it?
38:24 Speaker 07 Martin, I wanted to know, do you think it's easier to haggle with cash or card while you're abroad? And should that influence people's choices when they're planning?
38:33 Martin Lewis? So where are you thinking of haggling? So you're clearly not, you're not talking about going to a supermarket in Spain?
38:40 Speaker 07 Well, I'm thinking Spain, but I'm thinking more of the market stalls.
38:44 Martin Lewis? So look, generally, you often find people will haggle better in cash, you know, but it is always a case by case situation. I wouldn't that let me influence how I do it, though. If I were going to haggle in Spain in a market, I would probably get myself a specialist card with perfect exchange rates. When I was there, before I went to the market, I'd go to an ATM, I'd take my cash out of the ATM at those perfect exchange rates, and I would use the cash for haggling there. I wouldn't just take cash in advance. So I would, I would always be going with a specialist card. Does that make sense?
39:18 Speaker 07 It does, yeah.
39:19 Speaker 05 Yeah, yeah.
39:20 Martin Lewis? But as for the haggling, I mean, it just depends on the sophistication level and what they want. And frankly, I suspect the tax regime, if we're being honest. Because one of the reasons that paying in cash is often cheaper in some areas is because people aren't paying tax on it. So you might also say it depends on your ethical idea of what the taxation situation should be, which I'm not going to ask you on air.
39:42 Speaker 05 Well, as a fraud investigator, I'm always keen to pay my tax.
39:46 Martin Lewis? Oh, are you a fraud investigator? Okay, so then, well, it's a really interesting one, isn't it? What the haggling derivation. But I think sometimes having the cash ready there, even as a prop when you're involved in haggling in these type of places, you know, and wherever in the world you are, having that, I'm ready to pay, I've got the money to pay, but I only want to give you this amount, can be very useful. But I wouldn't let that put me off getting a specialist card.
40:06 Speaker 05 That makes sense.
40:07 Martin Lewis? All right. Thank you for calling. Nice to chat to you.
40:09 Speaker 05 Thank you.
40:10 Martin Lewis? Okay. Helen is asking, she's going to Thailand and she needs to pay in the local currency. She wants to know the best way to change money. Get it from an ATM or take sterling and change it while she's there in the resort. So I think you've probably got the best and the worst option there, and you've missed out the middle option in those three. Now, I have to, I have to say that I'm not talking specifically for Thailand, as I don't know the situation in Thailand. I'm talking more generically, if you want cash when you go abroad. The best way to do it is on a top specialist card. Just getting your money out of a cash machine once you arrive and making sure it's one of the top specialist cards that doesn't charge you an ATM fee will generally
40:52 Martin Lewis? be your winner, because you're getting that near perfect exchange rate. Of course, as I've already mentioned, you are therefore somewhat at the mercy of the fact that exchange rates move. So do you take it out at a good or a bad moment? But there is no way to know that. My second option, if you want cash, would be to go on to a travel money comparison site in the UK before you go, and to find who is giving you the best travel money rates. Now, certainly changing at the airport is bad, and high street rates aren't that good. But there are, there are a couple of travel money comparison sites out there that you can use, which will tell you who's giving you the best exchange rates for the currency you want and the amount that you're using, once you factor in all fees and the exchange
41:32 Martin Lewis? rate. And that will generally be better than taking money abroad and changing it once you get there. Now, I say generally, because it's very simple logic.
41:45 Martin Lewis? When you go abroad, you're probably going to only have a very limited choice of one or two bureaus near you who will change the money for you, and therefore it is not a particularly competitive market. Whereas when you're, before you're going here, if you go into a comparison site, you're comparing the very best rates from 20, 30, 40 different bureau de change agencies, and the rates can actually have quite a big variation between them. So the cheapest will want, tend to be one that's trying to be top of that comparison site, and therefore is giving special rates to attracting new customers and will give you a good rate. Now, that's not to say that there might not be somewhere in the world, a bureau abroad that gives an even better rate, but it's just, it would be incredible happenstance and luck if you happen to find upon it.
42:29 Martin Lewis? Now, if you're going somewhere that you've been regularly before and you know there's a really good bureau de change, and you know it has exceptionally good rates, I'm not saying don't use it, but that would take local knowledge before you went and a decent comparison to know if it was worth it. So, use a card if you can. If you can't use a card, I would get the money before you go from the best bureau de change here, only otherwise would I get it from the best bureau there. But just read me the last sentence, Matt, if you wouldn't mind of that question. So she said, what's the best way to change money at an ATM or take sterling and change at the resort? Now, I suspect from the resort, you're meaning sort of at the hotel.
43:11 Martin Lewis? If you're meaning resort to mean a local town or area where there may be a few bureaus, that's one thing. If you're meaning resort because you're going on an all-inclusive place where it's a specific hotel, or you're, you're in a locked-in monopoly situation with the bureau de change, and the rate will almost certainly be abysmal, as bad as changing at the airport, if not worse. So generally, the worst place to ever change your money is at the hotel. Hotels are not bureau de change, and they do not give good rates. They charge you for the convenience of doing it at the hotel. So, well, I think I've been through it. Card first, comparison second, leaving it till when you get there third, but making sure that you're going to a good decent local bureau, just not doing it in the hotel or the, or the resort's own bureau de change. Okay.
43:56 Martin Lewis? Sarah is going to Dubai, and she wants to know- Should she take cash or use a travel card? Dubai is virtually universal acceptance of plastic when you're there and I would take a specialist plastic travel card with me and if you need to get cash when you're there, you just put your card in the cash machine and you get some cash out. Similar question, Nikki is going to Cyprus. She wants to potentially go cashless. Do you think that she should go cashless or she should take cash? I mean, I can't see any reason, unless someone has some specialist knowledge about Cyprus, that I'm missing any reason that you couldn't go cashless in Cyprus. They will tend to take cards and there'll be enough cash machines that you could take money out if you needed to get money when you got there, as long as you have a specialist card giving you the great rate.
44:42 Martin Lewis? And cruising, Sylvia is going on a cruise. She's got a Revolut and she's going to use that when they're at port. Most of the ports are euros, but Norway is the kroner? Am I pronouncing that right? Yeah, that'll do. Kroner. Is it better to pay in euros there or kroner? As I've been told, they accept both. Well, if they accept both, I would tend to pay in the currency that they're pricing in. If they're pricing in both, then I would simply get online and go and do a conversion between the two to see if there's any difference and whichever one works out to be cheaper, when you do the conversion online into pounds, I would then use your specialist card and Revolut gives you the near perfect exchange rates, weekdays anyway, I would use your
45:24 Martin Lewis? Revolut card to pay in whichever currency is cheaper. I simply can't know if they're pricing in both at a specific port that takes cruises, which one would be cheaper, but it's really easy to do. Just do a currency conversion at the time.
45:35 Speaker 05 Do you want to do more holiday or some tell us? What do you fancy?
45:38 Martin Lewis? Let's do, the tell us is amazing this week. The tell us is, we often talk about the best wisdom from parents or grandparents, but let's go rogue. What's the worst financial information you were given by parents and grandparents? When was it and why was it so bad? And just some really interesting answers here. I've got the ax ones, you've got the Facebook. Samantha?
45:58 Martin Lewis? My dad telling me only the rich and wealthy go to university and it would have been free at that time. Oh, terrible, terrible lack of aspiration coming from that.
46:09 Speaker 05 Tommy, when I started work at eighteen, my dad told me not to bother with the work's final salary pension as it was a con. I ended up joining a pension, not final salary, when I was twenty-six and now as a forty-three year old, frantically trying to catch up on those lost years.
46:23 Martin Lewis? I mean, final salary pensions, they were the gold-plated pensions. Oh, Laura, my mum said, if you don't spend it, I won't give you any more, when she realised I was saving my pocket money. What a moral hazard. I mean, you're actually rewarding your child for being profligate and not understanding about delayed gratification. Oh, Laura, hopefully, well, the fact that you know it wasn't good for you, hopefully means that you weren't fiscally scarred by it. Well, sorry for telling off all the parents and grandparents here. Go on, Adrian.
46:50 Speaker 05 Someone says they were told house prices are not going to keep going up as they have to come back down, and this was said in nineteen ninety-eight.
46:58 Martin Lewis? Yeah, and there is no law of gravity on house prices. They can come back down, though. Property is not as safe as houses, but they don't have to come back down at any period. Audrey, my parents said I didn't need a pension as I was a woman. I did pay for full state pension from fifteen, but the government kept changing the goalposts. Oh, dear.
47:19 Speaker 05 Another someone else said they had advice to keep savings as safe, inverted commas, cash, rather than put in longer-term savings into risky stocks and shares. But if your grandparent might have just been stung on something, and then that's where that's come from, and it didn't make it good advice.
47:40 Martin Lewis? It has, the problem is, well, but that's, you know, that's confirmation bias. The fact that you've had something not go well for you doesn't mean it's wrong to do it in the future. Look, we actually have a massive British economic problem with this, and I'm partially to blame. I'm moving on to something slightly more serious, but I think it's an interesting discussion. You know, one of the reasons that the Chancellor is looking at reducing the amount of money people can put in the cash ISA potentially in the budget in September is to try and encourage people to put money in and invest more. And she wants to do that to invest in British assets. Whether people investing in an ISA are investing in British assets is another question, and I don't think it's the right way. It's not the right policy to encourage investing. But we have an attitude in this country that many people... Don't invest and don't realise that over the long term, the stock market will
48:22 Martin Lewis? outperform savings. And I think one of the main people to blame from this is sitting opposite across the desk from you right now. And I'd sort of something I'm very conscious of and very aware of, and I've been doing a lot of thinking about, you know, personal musing on. The reason is, I cannot talk about investing because it is a regulated area. And it is also not my expertise. I don't talk about risk products. But it does not mean I am anti investing, any more than I'm anti, you know, getting treatment from a doctor. I'm just not a doctor. It's just not my subject. I wouldn't talk about it. But because I talk about savings a lot, which is my subject, people make the read that savings are therefore the right thing to do and investing isn't. And I've been trying to change and be, I mean, I've always said this, but I'd be much more conscious
49:05 Martin Lewis? in the last year, whenever I talk about savings, to put in investment as an option people should be looking at. Because, I'm sorry, I'm going to self aggrandize here, and that's not the point I'm trying to make. But as I've got bigger in the sector, and you know, I am the loudest voice by quite a substantial way in this consumer finance area. That means more and more people get the message about savings, but not about investing. And I don't have an investment person, I wish there was an investment person out there who had a loud voice, who could influence towards that. And so I do think we have a critical problem here. And I am concerned about the drop in the cash ISA limit that may come, because I think that's a mistake. I don't think people will simply say, well, you're going to tax me on my savings, so I'm going to invest it instead. I don't, it's like saying, do you want a steak or do you want a Coca Cola? The two things aren't the same. But
49:49 Martin Lewis? I think we do have to educate far more about investing in this country. Anyway, let's get back to the tellers. That wasn't the point. Actually, I do one, Claire.
49:56 Speaker 05 Okay.
49:57 Martin Lewis? My ex mother in law's foolish, wise words included, you don't have to buy a house. We were saving and could afford a mortgage. So why would any parent actively discourage it? And you don't have to have a pension. Decades later, her younger son is turning 40, and has never held down a decent job, maybe because he's had his mother telling him, you don't have to.
50:15 Speaker 05 I'll say, get yourself an endowment mortgage, you'll get enough back to pay your house off and buy a luxury car too.
50:24 Martin Lewis? Yeah, well, a lot of people actually, endowment mortgages, one of the biggest areas here, you know, quite often, commonly missold, the idea it'd clear your mortgage, it was a very lack of transparent form of investing in down with mortgages, we could talk about that for details away. Jackie, my stepdad used to get cross with me when I told him I had something new as an adult, he would say, you Blairite children, you spend what you haven't got, I'd got double glazing to reduce the efficiency, the energy usage of the home, I presume, on interest free credit, God rest his soul.
50:56 Speaker 05 Alistair, put your food shop and petrol on a credit card, then pay it off at the end of the month, didn't pay it off.
51:04 Martin Lewis? Okay, the advice was good, though. The advice was good, but it's a very interesting one for me, because of course, that's the get rewards and payoff in full philosophy, but I always talk about the risk of credit cards is you can only do this if you trust yourself, and if you're a self trustworthy, you have to have, and that has to be part of that discussion. I love this from Fiona. My grandfather sold me his car for its alleged market value. After a mechanical incident caused an accident, the insurance company told me he'd charge me half as much again as it was worth. Fifty percent markup to profit from your apprenticeship earning granddaughter. Valuable lesson learnt, never trust dad or his side of the family.
51:46 Speaker 05 Sean says, when I was 18, my mom said, you're 18 now, that means you can get a credit card. I learnt so much from doing that so young, but again, you can't really say it's the wrong.
52:00 Martin Lewis? No, because, and listen, and I had one in here somewhere where someone said their parents told them never ever to borrow, and I've got it somewhere, talk amongst yourselves, everybody, never, never ever to borrow. And the problem with this, I often talk about when I do education stuff for kids, is if you follow the grandparental wisdom of neither a borrower nor a lender be. Well, that doesn't work in our modern world because if you're going to get a house, you're going to have to borrow. If you want to go to university, you're going to have to get what we call a loan. So a prohibition on all lending doesn't work because when you break that prohibition, what we haven't done is differentiated between good debt and bad debt. And there is good debt and bad debt. Most people listening will have had
52:41 Martin Lewis? or have a mortgage at some point. Many people listening will have got what we call a loan when they go to university. And arguably done right, they are good debts because they're investments in your future and they can enable you to go on in life. Going and getting a payday loan for a holiday is a nightmare debt. So just what we have to do with young people is you put the prohibition is terrible because it's not going to work, it's not practical. Actually, we have to start educating about when you should get a debt, when you shouldn't get a debt. Now, this is now in the national curriculum. Sadly, less than 50% of schools follow the national curriculum. It is in the financial education textbook that I've provided via the Young Money charity that can people download. But it is actually a really important conceptual thing.
53:26 Martin Lewis? It's time to play that theme tune.
53:34 Martin Lewis? Yes, welcome everybody to Money Mastermind. The current score is Adrian has got 10 right and 17 wrong. You got the last one right, you're keeping your head above random chance water, which would involve only getting a third right. You're a little bit above that.
53:50 Speaker 05 Now, I'll settle for that. I've got low expectations of myself.
53:54 Martin Lewis? He's got, you see, hear the notepad clicking there, everyone.
53:56 Speaker 05 I don't know why I get it out. I just doodle anxiously.
54:00 Martin Lewis? Now, do congratulate Adrian listeners. He has won a very prestigious prize drawn by random lots. The BBC tech department has managed to create the world's first time machine, and Adrian was selected as the first person to use it. He's decided to revert back to when he was 21 and just starting out in his career. He thinks he could probably do better second time around. Let's hear that time machine transition.
54:32 Speaker 00 Gentlemen, thank you very much. That's it for Match of the Day 2 this evening. Good afternoon. Welcome to Working Lunch. I'm Adrian.
54:39 Speaker 05 The director of the
54:42 Speaker 05 Good morning, the big boys in the personal computer.
54:48 Martin Lewis? So everyone, please picture a young, handsome, strapping, charming, whip-smart, keen young man with a West Midlands accent.
54:56 Speaker 05 I was none of those things, but one of them.
54:58 Martin Lewis? And sitting next to him is a 21-year-old Adrian Childs.
55:03 Martin Lewis? You broke the joke.
55:05 Speaker 05 I'm sorry.
55:05 Martin Lewis? Here we go, my question, Adrian. Does a 21-year-old, starting full-time work, earning exactly £19,999 a year, automatically get opted into a workplace pension, including employer's contribution? So, does a 21-year-old, starting full-time work, earning exactly £19,999 a year in that workplace, automatically get opted into a workplace pension? A: Yes, indeedy. B: No, it's too young. C: No, it's not enough earnings.
55:47 Speaker 05 Well, I'm probably falling for the trap you've so skillfully set here, but the way you said £19,999 precisely makes me think that... I know you're setting me a trap, so I don't know why, but just to please you, I'm going to fall into it. So, I don't think...
56:03 Martin Lewis? Three options again. Yes, indeedy, too young, not enough earnings.
56:07 Speaker 05 I don't think it's enough earnings. I think it's probably...
56:11 Speaker 05 But I'm assuming it's there's a 20,000 threshold, unless you're just being naughty and saying all this £19,999 precisely just so I can... Just so I can blunder. Blunder into it for your obvious amusement.
56:24 Martin Lewis? Would I do that?
56:25 Speaker 05 Yes, you would.
56:26 Martin Lewis? Would I do that only for my own amusement?
56:27 Speaker 05 Yes, you would.
56:28 Martin Lewis? I think it's fair to say I would, but that doesn't mean I have.
56:30 Speaker 05 Yeah, well, that's my answer, anyway.
56:32 Martin Lewis? So your answer is C, no, not enough earnings. Okay.
56:38 Martin Lewis? So employers, employees who are aged between 22 and 66, who earn at least £10,000 a year are automatically opted in to the Pension Auto Enrollment Scheme at their workplace, which means as long as they contribute a minimum 5% of their salary, their employer will have to add 3% on top. That is aged 22 to 66, earning £10,000. For those aged 21 or younger, or 67 or older, state pension age or older, you are not automatically opted in. So let's have the uh-uh.
57:21 Martin Lewis? The correct answer here was no, but not because of the earnings, because the threshold is £10,000, not £20,000.
57:27 Speaker 05 Yeah, that was naughty then. You shouldn't have gone on that precisely.
57:30 Martin Lewis? I didn't, I didn't say precisely.
57:31 Speaker 05 No, you said precisely.
57:33 Martin Lewis? And we're going to have to play that back because I think I just said £19,999 a year. I don't think I added the word precisely.
57:40 Speaker 05 Exactly.
57:41 Martin Lewis? But that's how much they earned and it's precisely how much they earned. It's not precise. So the answer here is they were too young, but there's a really important point in this question, as there always is. There are two points to the mastermind question. One, so I can enjoy myself at Adrian's expense. And two, because there's an important, important money point that I need to make at the same time. As I've got a little bit more time in the podcast, I want to explain it in some detail. This is actually really important for many younger or older people. For those who are aged under 22 or over state pension age, you are not automatically enrolled in your employer's pension if you are working. The default setting is to be opted out of Pension Auto Enrollment.
58:25 Martin Lewis? However, what not everybody knows is you can choose to be a part of it. And in possibly the majority of cases, your firm cannot refuse you. And let's remember, what we're talking about with auto enrollment is not just that some of your salary goes to pay for a pension. It's that your money goes to pay for a pension and your employer must add on top. Now, the way the minimum contribution works, or the firms can do more, is it's an eight percent total contribution going towards your private pension, of which you put in five percent of your salary and your employer puts in three percent of your salary, well, up to a certain limit, just over fifty thousand pounds of earnings, anyway that is.
59:06 Martin Lewis? Now, the thing to understand about a pension, an auto enrolment pension, is effectively everyone who is in it is getting a pay rise as your employer is giving you extra money you would not have otherwise got, even though that extra money is not immediately usable. It's also worth saying, everybody who is in it will get less take-home pay because to get that extra money, you're saving from your current salary, so your disposable income, the amount you can spend each month, is reduced. But in general rules, I always say to people, do not opt out of your auto enrolment pension if you're automatically opted in because you're getting that pay rise and it's an incredibly lucrative way to save towards your old age.
59:48 Martin Lewis? Now, when we're talking to those who are aged under twenty-two, specifically aged sixteen to twenty-one, the last day of your twenty-first birthday, if you earn over six thousand two hundred and forty pounds a year, now remember in the question I gave Adrian, it was someone earning around twenty grand a year, you can opt into your pension and your employer must by law do those matching or semi-matching contributions. It must put money into your pension as well. So if you're a twenty-one-year-old earning twenty grand a year, let's say you might be living at home with limited expenses, you probably have, you know, relative to your age and life status, that's a huge amount of disposable income.
1:00:32 Martin Lewis? And the important thing to understand about saving to a pension, the earlier you start... The better. In fact, there's a rule I have. Take the age when you start contributing to your pension, halve it, and that's the percentage of your salary you want going into your pension for the rest of your life to have a decent retirement, including your employer's contribution. So if you start at age 20, you're talking 10%. If you start at age 30, you're talking 15%. Start at age 40, it's 20%. So if you're a 20-year-old earning 20 grand a year, absolutely get your 5% in, get the 3% added on top by your employer, and it is a really good head start in life that you should be looking at. Now, for those
1:01:14 Martin Lewis? who are the other end of the scale, you're over state pension aged and up to age 74, you have the same rule. If you earn over £6,240 a year, you can contribute and opt in to the employer's pension and it must contribute too. And in many cases, that's not a bad idea, as long as you have the money to do it. So that was the real reason for the slightly technical question I gave Adrian. There's such an important message. I always talk about those who are automatically opted into their pension should generally stay there. But there are many people who aren't automatically opted into their pension because of their age, who might want to consider it too. Crucial information, and worth talking to any young people you know about that one. Adrian, though, back to the time machine. You're back to, how old are you?
1:01:55 Speaker 05 Old, 58 and a half.
1:01:57 Martin Lewis? You're back to 58.
1:01:57 Speaker 05 And I'm off to Glasgow, man.
1:01:59 Martin Lewis? Woo!
1:02:03 Martin Lewis? That's it for this week. If you enjoyed it, please tell your friends you've been listening to the Martin Lewis podcast. We tend to put a new episode out every Thursday. Do subscribe to keep up to date and let your pockets be pleased with you. And if you haven't enjoyed it...
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