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Have you found yourself spending more money over the last few months than you did throughout the entire lockdown? If so, you’re definitely not alone! Around the UK, consumers have once again been reaching for the trusty credit card as their spending habits have changed.

A survey by Hargreaves Lansdown reveals that over the last few months, Brits have borrowed £700 million in consumer credit! Furthermore, £600 million of this was borrowed on credit cards, which means that credit card debt is down just 3.2% this year.

Could this mean that the savings habits we adopted over lockdown are out of the window? Here’s how UK money habits have changed post-lockdown.

Credit cards have made a comeback

Over the last few months, credit cards have made a significant comeback with Brits borrowing £600 million in September and October 2021. This is in stark contrast to what was seen during lockdown when Brits managed to pay off credit card debts at the fastest rate since records began.

As well as this, new savings in the UK have dropped to £5.5 billion. This signals a sharp turn away from the saving habits we adopted during the height of Covid-19. During this time, Brits built up the second-highest savings levels since 1963.

It seems that the costs of post-lockdown life are taking their toll. Brits who previously preached budgeting and saving money are now relying on borrowed credit to fund their newfound freedom.

Causes of the spike in consumer credit

It is no coincidence that the popularity of credit cards has shot up over the last few months. According to Sarah Coles, Senior Personal Finance Analyst at Hargreaves Lansdown, it is the ‘spending squeeze’ that has thrown saving habits out of the window.

The spending squeeze refers to the huge increases in the cost of living that Brits have faced since emerging from lockdown. 

Rising inflation

In October, CPI inflation rose to 4.2%. This means that the average price of goods consumed by each household in the UK rose by 4.2%. As a result, Brits have found themselves spending more than they did previously on everyday essentials.

Most people don’t factor inflation into their budget plan. Because of this, many Brits who used to save each month can quickly find themselves at a loss and unable to make monthly savings.

Post-lockdown temptations

No one can deny feeling a little caged-up during lockdown. For this reason, it is understandable that much of our recent spending has been on social activities that were put on hold during the pandemic.

The nationwide lockdown sparked a serious wave of FOMO, which has caused many Brits to fill their social schedules with as many activities and opportunities as possible. This all comes at a price! The average night out with friends in the UK can cost anywhere between £60 and £100 and many Brits are doing this two or three times a week.

Christmas came early this year!

If the toilet roll panic of 2020 taught us anything, it’s that stock can sell out quickly! As a result of concerns over shelf shortages, many people have started their Christmas shopping early this year.

While these keen shoppers may have been saved from stock issues, the early Christmas shopping saw a surge in credit card purchases. As well as this, one in 10 Brits will be using ‘buy now pay later’ schemes to fund their buying splurge as Christmas approaches.

Unappealing savings accounts

Perhaps a big part of the problem is that UK savings accounts are experiencing a slump. According to Hargreaves Lansdown, the average easy access savings rate is stuck at a record low of 0.09%.

For many, this makes saving into an account seem pointless. Instead, Brits would rather get instant gratification by purchasing consumer goods or spending their money on social activities.

The financial demands of post-Covid life outweigh the interest that is offered by savings accounts. This has made it appealng for Brits to ditch their savings and spend, spend, spend!

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Some offers on The Motley Fool UK site are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.

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Though Covid-19 vaccines are available, the government has had to act fast following the emergence of the Omicron variant. The prime minister has confirmed new temporary and preventive measures that could result in fines of up to £6,400 if flouted. Here’s what you need to know.

What new measures came into effect on 30 November 2021?

The Omicron variant of the virus is more transmissible than previous variants, and so far, 32 cases have been reported in the UK. The government introduced the following measures to slow down its spread as work continues to fully understand how these mutations are changing the behaviour of the virus:

• Face coverings have now been made compulsory in shops, banks, post offices, hairdressers and transport hubs like railway stations and airports, and on public transport.
• The same rule applies in tattoo studios, nail bars, pharmacies, takeaways, auction houses and taxis, and during driving lessons.
• It’s now mandatory for all international travellers to take a PCR test on day two after arrival in the UK. They must also self-isolate until they receive a negative result.
• If you’re contacted by NHS Test and Trace, especially for Omicron, you must self-isolate regardless of your age or vaccination status.

Keep in mind that these measures are temporary and will be reviewed every three weeks.

What fines could you face for flouting mask-wearing rules?

When masks first became compulsory, Brits faced fines of up to £100. According to the National Police Chiefs’ Council (NPCC), 2,306 fixed penalty notices were issued in England and Wales in the year to July. Of these, 641 individuals were fined for failing to wear a mask on public transport.

Currently, Brits who flout mask-wearing rules face fines starting at £200 for a first offence. However, if you pay your penalty within 14 days, then it is halved to £100.

That’s not all! If you’re caught a second time, the fine rises to £400. And it rises again to £800 if you’re caught the third time. If you continuously flout the rules, you could face fines of up to a whooping £6,400!

Are there other fines to worry about?

In a word, yes. Failing to self-isolate, especially after being notified that you have come into contact with an Omicron variant case, could lead to a £1,000 fine. And if you’re a repeat offender, you could face a fine of up to £10,000!

Take home

The government has confirmed that the Covid-19 vaccine is the best line of defence so far, but this does not mean you can’t still catch the virus. And with new variants creeping in unpredictably, it’s essential to stay safe and protect yourself and others.

Also, if you’re planning to travel, it’s wise to check how the new Omicron variant could impact your plans. A number of countries have already been added to the government’s red list:

• South Africa
• Botswana
• Lesotho
• Zimbabwe
• Eswatini (formerly Swaziland)
• Namibia
• Malawi
• Mozambique
• Zambia
• Angola 

Stay up to date with the latest FDCO guidance so that you don’t get caught out and incur expenses you have not budgeted for.

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Some offers on The Motley Fool UK site are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.

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Investors watching their portfolios in recent days have likely been horrified to see many UK shares taking a nosedive. Since last Friday, it’s been volatility central, thanks to the rising fears of another round of lockdowns.

The recently discovered Omicron Covid-19 variant has started popping up all over the world. And as of yesterday, it’s also emerged in the US, causing the Dow Jones index to fall as much as 1,000 points.  But is the situation really as bad as most people seem to think? If so, which stocks should I be avoiding? And more importantly, which ones now look like bargains for my portfolio? Let’s take a deep dive into the situation.

The Omicron variant – what we know so far

Despite the panic behaviour of the investing community, there remains little known information about the danger this variant poses. The World Health Organisation has labelled Omicron as a “variant of concern”. However, scientists are still analysing data to determine whether it’s as threatening as Delta or if it will simply fade out like six of the seven other variants before it.

One of the biggest fears, beyond the potential of Omicron being more transmissible, symptomatic, and even deadly, is whether existing vaccines can counter it. The media continues to speculate on the worst-case scenario, which hardly helps calm the nerves of panicking investors. But for those looking for a glimmer of hope, early data is coming out of South Africa, which shows Omicron only causes mild symptoms (so far).

As a precaution, governments worldwide have begun taking pre-emptive countermeasures. Here in the UK, PCR tests are once again mandatory for international travellers, along with more strict quarantine rules. Meanwhile, other nations, like Japan, have outright closed their border to foreign visitors. Even if Omicron turns out to be less harmful than currently expected by the market, these decisions have already started having a tangible impact on some industries.

With that in mind, which UK shares am I now avoiding?

A sector under siege: UK travel & leisure shares

Given what happened in 2020, it’s hardly surprising to see stocks like Carnival, TUI, and IAG tumble off a cliff. All three UK shares have suffered double-digit declines over the past couple of days. Consequently, the recovery progress of these stocks has been partially wiped out. Looking at the last 12 months, they’re down around 17%, 21%, and 20%, respectively.

In my experience, sudden price drops often present exciting buying opportunities for my portfolio. After all, as a long-term investor, short-term fluctuations aren’t a primary concern. However, even though the current volatility is being triggered by panic and speculation, travel stocks could be in serious trouble.

Throughout 2021, the travel sector has made tremendous progress in returning to pre-pandemic normality. Cruise ships are sailing the seas again, and planes are returning to the skies, both with increasing passenger numbers. And in my opinion, the recent re-introduction of UK travel restrictions doesn’t appear to jeopardise this. At least, not yet. However, if Omicron is confirmed as a dangerous strain in the coming weeks, that will likely change. Suppose more governments, including the UK, decide to start closing borders again? In that case, the entire travel sector will probably hit a roadblock in its recovery.

With cash flow once again being disrupted in this scenario and massive piles of newly acquired debt to contend with, the risk of bankruptcy seen in the early day of the pandemic could return. This seemingly binary outcome isn’t something I find particularly enticing. And it has the potential to spread to other industries like aerospace, which is already dealing with supply chain problems. Needless to say, I’m not interested in exposing my portfolio to this sort of risk. But are there other more promising opportunities to be found elsewhere?

Volatility breeds opportunity for UK shares

As a long-term investor, I’m not interested in simply buying stocks that will see a quick bounce-back. Why? Because this strategy often invites individuals to try and catch falling knives. Instead, I’m on the prowl for businesses that not only aren’t going to be significantly disrupted by Omicron but that will also continue to thrive long after the pandemic comes to an end.

One potential candidate that meets this description to my mind is XP Power (LSE:XPP). Shares of this UK company are already recovering from Omicron’s punch to the face. The firm manufactures power converters used for specialist equipment in the healthcare, industrial, and semiconductor industries. Making and selling electrical components is hardly the fanciest sounding business. But the long-term demand for these products isn’t likely to disappear any time soon. In fact, it’s actually forecast to skyrocket as technologies like 5G and IoT continue to be rolled out worldwide.

Assuming Omicron is confirmed as a serious threat, I think it would be foolish to deny that further supply chain disruptions are likely to emerge. That’s obviously bad news for this business. However, XP Power is not dependent on a single supplier for most of the raw materials needed for its products. And that should provide ample means to mitigate this potential impact. I believe that with plenty of long-term growth potential, and resistance to short-term Covid disruptions, XP Power could be one of many UK shares currently trading at bargain prices.

Final thoughts

Omicron has the potential to derail some of the recovery progress made by many UK shares disrupted by this pandemic. However, with such limited information, I think it’s fair to say investors may be getting a bit too excited about humanity’s impending doom. I intend to use this volatility to increase my existing positions and potentially find new ones while stocks remain on sale.

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A mum has claimed that Klarna has wrecked her “20-year-old good credit rating over £5”. Writing on the UK parenting forum, Mumsnet, she says, “Despite the glossy marketing, I think they are totally untrustworthy.”

With more of us using Klarna and other buy now pay later sites, it’s a scary thought that we could accidentally damage our credit rating. Let’s take a look at why she was caught out and how you can avoid wrecking your credit rating.

How Klarna damaged my credit rating

The UK based mum explains, “A few months back, I used Klarna for the first time to purchase some clothing from two retailers. It all went fine – payments taken automatically and all getting paid off.”

But things took a turn for the worse when she bought a new phone for her teenage son. She says, “The option to pay interest free with Klarna was cheaper than a new phone contract, so we went with that.”

She thought all was well. But then, she says, “I received a credit alert to say my credit rating had changed. For 20 years it’s been ‘good/excellent’, so, panicking, I logged in.”

It turned out that the UK-based mum had accidentally “missed a £5 payment to Klarna.” And this has immediately affected her credit rating and possibly made it harder for her to get other finance in the future.

Autopay is not automatic on the Klarna website

The mum, who writes under the Mumsnet name of Bluebellberry, uncovered a little known catch on the Klarna website.

The phone she bought was classed as finance rather than an order. She explains, “Apparently, I was meant to press ‘enable Autopay’.” But at the time, she didn’t realise that she needed to do this on the Klarna website and assumed the payment would be set up to auto-pay just like her previous purchases.

The stressed mum exclaims, “How on Earth was I meant to know this? Not once had Klarna said, ‘By the way, for this phone order, you need to comb through the app to find Autopay’. The other payments had been automatic, so why think different?”

The Klarna website confirms that there are several steps to enable an autopayment on a finance purchase.

You need to:

• Go to your profile settings and click on ‘Payment methods’
• Or select ‘Purchases’ or ‘Payments’ and find the purchase you’d like to set up automatic payments for
• Add your bank account or card information, and click the button labelled ‘Autopay’
• If set up successfully, the ‘Autopay’ button will turn green

Extra interest and fees now due

The stressed Mum is worried that she will now have extra costs as, “Klarna have also added interest and told me to pay a fee or my account will revert to 18% interest.”

She adds, “At no point did Klarna tell me this before, during or even after ordering the phone. In fact, if it wasn’t for the credit alert, I’d still have no idea.”

Be careful and read the small print

It just shows how easy it is to get a bad credit rating, even over something small. It’s all too tempting to click through quickly when we’re making a purchase and forget to read the small print. I know I’ve done it!  It’s a lesson to us all to sort out auto-payment on all Klarna orders, including those on finance.

The mum hopes that others can learn from her mistake. She says, “If this post stops one person getting into this situation, then it did something.”

And she warns, “If you do already have finance with them, make sure Autopay is on – even if you’ve auto-paid before.”

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Some offers on The Motley Fool UK site are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.

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Zog Energy is no longer trading, which is unwelcome news for the energy firm’s 11,700 UK customers. But what happens when an energy firm goes bust? And is your power supply safe? Let’s take a look. 

The Zog Energy collapse

Zog Energy stopped trading on 1 December 2021. So if you were a Zog customer, the firm isn’t your supplier anymore. Don’t worry, though – here’s what happens next.

• First, Ofgem, the UK’s energy regulator, will find a new supplier for all Zog Energy customers.
• In the meantime, you won’t lose your energy supply. 
• What’s more, you’ll keep your credit balance, if you have one. 

So, although it’s unhappy news, customers won’t notice any real changes right now. 

How many energy suppliers have gone bust in 2021?

Unfortunately, Zog Energy is far from the only firm to go under this year. So far, we’ve lost over 20 energy firms in 2021, including:

• PFP Energy
• Utility Point
• Avro Energy
• Bulb

Why are we losing so many energy suppliers, though? Well, we can blame stubbornly high wholesale gas prices, the energy price cap and price promises. 

In short, it now costs more for suppliers to buy gas than they can charge customers due to price promises and fixed deals. Since suppliers can’t pass on the extra charges to consumers, they’re running at a loss.

While some larger energy firms can weather the storm and stay afloat, smaller firms like Zog Energy are struggling, which is why we’re losing so many in a short space of time. 

What should Zog Energy customers do now?

If you’re a Zog Energy customer, there’s no need to do anything. You’ll still have an energy supply, for one thing, so there’s no need to worry about losing power.

That said, it could take a few weeks for Ofgem to find a new supplier, so there are a few things you might do to prepare.

• Take a picture of your meter reading. You’re less likely to be overcharged if you can provide the most up-to-date reading available.
• Make sure you’ve got a copy of your most recent utility bill. Again, the more information you can give your new supplier, the easier it’ll be to ensure you’re on the right tariff for your needs.
• If you pay by direct debit, there’s no need to cancel your payments just yet. You can wait until you set up an account with your new supplier. 

Once you have a new energy provider in place, they’ll contact you to explain what happens next.  

What if you’re unhappy with your new supplier?

If you’re not happy with your new supplier, don’t worry. You’re not obliged to stay with them if you’re unhappy with what’s on offer.

• If you’re happy with the supplier but not the tariff, ask them if they have other deals available. 
• If you don’t want to stay with the supplier, you can always shop around for other tariffs elsewhere. 

Just remember that since energy prices are high right now, it might be hard to find a competitive deal by shopping around. However, there’s no harm in exploring your options. 

Takeaway

The Zog Energy collapse is alarming news for all consumers. However, the good news is that customers won’t lose power, so there’s no need to panic about the electricity supply.

Here’s a final tip to bear in mind before you go: switching tariffs isn’t the only way to save money on energy. You can also reduce your energy bills by making simple changes like using the heating less or turning the thermostat down. 

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Some offers on The Motley Fool UK site are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.

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