Eight money changes that could affect your bank account in May

Young couple planning their budget
Young couple planning their budget -Credit:shironosov

May is set to bring a raft of financial changes that will impact many people. Eight significant money and Cost of Living adjustments are on the horizon this May 2024, affecting everything from bank accounts to the pockets of individuals across the UK.

Department for Work and Pensions (DWP) claimants, along with Universal Credit recipients, are among those who should brace for these updates. For those reliant on regular payments such as Universal Credit, Personal Independence Payments (PIP), Employment and Support Allowance (ESA), and other DWP benefits, it's crucial to note that payment dates may shift.

This is due to the DWP's policy of not issuing payments on bank holidays, and May features two such holidays which could affect when the money hits accounts. In addition to the altered payment schedules, households will face other financial shifts this month.

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Benefit payment dates are set to change this year

This year sees the early May bank holiday falling on Monday, May 6, while the later May bank holiday occurs on Monday, May 27. Payments that are due on May 6 should land in bank accounts on Friday, May 3, while those due on May 27 should arrive on Friday, May 24.

Natwest announces plans to start winding down Buy Now, Pay Later accounts

From May 7 of this year, NatWest, a bank with over 18 million users, is expected to begin phasing out BNPL customer accounts according to a report from The Sun. This decision has been driven by the lower than anticipated uptake of the service, despite its initial high-profile launch.

Speaking to Finextra regarding the changes, a spokesperson for NatWest said:"We are focusing on our core lending products, helping customers spread the cost of their purchases through our credit cards, overdrafts and loans. This means our Buy Now Pay Later proposition will be closing."

Probate fees rising

One notable change is the increase in probate fees, which are set to rise by 10 per cent to £300. This hike comes at a time when families are already experiencing lengthy waits, averaging more than three months, to complete this essential process following a bereavement. Despite recent months showing little improvement, the average application time remains at 13.7 weeks, reports Birmingham Live.

Commenting on the situation, Jo Summers, representing the STEP organisation for inheritance professionals, highlighted the unpredictability of the probate process. "It's a bit of a lottery how long any particular application now takes before the probate is granted," Summers remarked, having recently provided evidence and suggestions for improvements to MPs at a hearing.

"More complex applications, particularly those done on paper, definitely take longer than the simpler digital applications. However, you can also send two similar applications at the same time and one takes far longer than the other. 'There is no certain answer we can give people when they ask us how long the process will take."

Decision on interest rates

Although inflation still remains above the government's 2% target, it now appears to be gradually coming under control. In March, the Consumer Price Index (CPI) reading was recorded as 3.2%, indicating a drop from a peak of 11.1% in October 2022.

There's a buzz around the potential for the Bank of England to slash the base rate this year as inflation begins to ease. Yet market sentiment has recently shifted towards a "higher for longer" interest rate outlook.

The Bank of England's Monetary Policy Committee convenes eight times annually to decide on the base rate, with meetings spaced out at approximately six-week intervals. The next gathering is scheduled for May 9.

Extra childcare support is now up for grabs

Parents with 2 year olds can apply for 15 hours of free childcare each week for 38 weeks of the year, coinciding with school term times. From September 2024, this offer extends to children from the age of 9 months for working parents, with applications opening on May 12.

For those with kids aged between 3 and 4, there's the possibility of securing 30 hours of free childcare weekly for 38 weeks per year, also during term time. Some may even stretch this to cover up to 52 weeks by opting for fewer hours spread across more weeks.

It's worth checking with your childcare provider to see if they can accommodate this arrangement.

An update for Universal Credit claimants

The Government has introduced regulations to increase the Administrative Earnings Threshold to £892 for individual claimants and £1437 for couples in Great Britain. This change is set to take effect from May 13, 2024.

Work and Pensions Secretary Mel Stride has emphasised the transformative impact of welfare reforms as the government introduces the next generation of changes, stating, "I believe our welfare system is about far more than benefit payments; it is about changing lives for the better. That is why we're bringing forward the next generation of welfare reforms."

"We've already overhauled the outdated benefit system by introducing Universal Credit, and now we are building a new welfare settlement for Britain one where no one gets left behind."

Santander accounts

Santander has announced a reduction in interest rate for its popular Easy Access Saver account from 5.2% to 4.2% effective May 20, 2024. The new rate will apply to existing holders of the Easy Access Saver Limited Edition (Issue 3), which is currently closed to new applications.

Energy Price Cap

Under the name Energy Price Cap announcement, it has been announced that the next quarterly review for the energy price cap will take place on May 28, 2024, with the new rates applicable from July 1 to September 30, 2024. Energy consultancy firm Cornwall Insight anticipates the energy price cap to decrease once again in July.

Based on their accurate predictions throughout the energy crisis, they expect May's announcement to reflect a 7.7% (£130) reduction in the cap, taking the annual energy cost to £1,560. However, they also forecast a subsequent 4.5% (£71) rise in the cap come October.

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