Martin Lewis’ stark warning about ‘financial time-bomb’ that’s set to EXPLODE – how to prepare now
MARTIN LEWIS has issued a stark warning about a 'financial time-bomb' that's set to explode in September.
In an open letter to the remaining Tory leadership candidates the founder of MoneySavingExpert said that urgent action was needed to "a national financial cataclysm".
The latest forecasts show that the price cap is set to increase to more than £3,000 in October, putting more pressure on family finances.
In a video, Martin said the candidates are "ignoring" a "financial time bomb that's due to explode" just as the new Prime Minister takes power.
He added: ";I speak directly to those candidates: this cost of living issue needs to be at the front and centre of the debate.
"More intervention and action is needed and it needs to be quick.
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"This is a hard deadline coming."
Martin warned the wannabe PMs that "without more action, I worry lives could be lost."
The campaigner warned that energy bills are set to rise again in October.
'Sickening' energy bill rises ahead
He said: "...On the 5 September, when our new Prime Minister is scheduled to take office, the direct debits will already be increasing by 65%.
"Someone who pays £100 a month now will start to pay £165 a month. Somebody who pays £200 a month now will start to pay £330 a month."
He warned that the £400 energy bill rebate has already been swallowed up by rises and that people will be panicking and this could affect their mental health.
Mr Lewis also warned that some home owners will face much higher bills - and some may even end up being unable to switch.
This is due to cheap fixed deals disappearing and millions of those on fixed tariffs which are due to end this year.
He also warned that many people are unable to afford their debts.
Mr Lewis added: "It's no surprise, credit card debt is rising.
"And I suspect after the 1 October, it will explode.
"And an explosion of consumer debt is crippling to individuals and the economy.
"It means many people just about managing things will turn into people not managing at all."
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The energy price cap is set by Ofgem twice a year and reflects the wholesale costs of gas and electric.
The cap limits the per unit price of energy suppliers can charge, and means the typical dual fuel bill is £1,971 - though you can pay more or less depending on usage.
How to prepare your finances
Martin Lewis urged the potential new leaders to take action - but it's worth checking our tips to prepare your finances now.
Batten down the hatches with your finances: Re-do your budgets and plan for how much your bills are going to go up. Start saving extra if you can and be prepared to dip into it.
Fix your mortgage asap and plan for higher costs: As Martin says, the cheapest fixes back in October were just below 1%. Now they’re just below 3%, adding £200 a month to a £200,000 mortgage. Millions of deals will end this year, and many more next year. You can lock in a deal six months before your current one ends. Don't delay - as many may end up paying £100s extra.
In September, energy direct debits will rise 65% as the PM takes power: Prepare now, start saving extra. Also check that your supplier doesn't hike your direct debit too much - or too little.
If in debt, seek help NOW: If you're in trouble, don't delay, get help now. Waiting will only make things worse, if you can't afford bills then firms must give you 'breathing space' and help you. A debt adviser can help you sort it out - and they won't charge you. Find a free one like Stepchange, National Debtline or Citizens Advice.
Energy bill help
There are schemes offered by suppliers, local councils, charities and the government that could help.
If you're struggling with energy costs or other bills there are plenty of organisations where you can seek advice for free, including:
- - 0808 808 4000
- - 0800 138 1111
- - 0808 800 9060
You should speak to your energy supplier in the first instance as they have schemes in place to help with bills and arrears, including hardship funds and grants.
For example, British Gas and Octopus have set up funds worth up to £750 to help customers who are struggling with their bills.
Your local council may also be able to help with cash and grants if you are struggling with bills through the Household Support Scheme.
You should also check that you're getting all the benefits you're entitled to.
Use an online benefits calculator to make sure you're not missing out on any extra cash.
Similarly, you can that help you pay for gas and electricity bills.
There's more help from the government on the way too, later in the year in the form of one-off cost of living payments worth as much as £1,500 depending on your circumstances.
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The £300 is on top of the annual winter fuel payment where those getting the state pension can get between £100 and £300 to offset the cost of keeping their homes warm over the colder months.
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Low income households can get a one-off £150 payment under the existing warm home discount scheme - applications open in the autumn.