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Cost of living – frequently asked questions
We understand that you might be worried about the rising cost of living. We’ve answered some common questions, which could help you to:
- Manage your household bills.
- Work out the impact of higher interest rates.
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There’s no single reason the cost of living is increasing. Factors include:
- Social and economic turmoil caused by Covid-19.
- Worldwide demand for oil and gas to power homes, manufacturing and distribution.
- The war in Ukraine limiting access to fuel and grain.
- Political and economic uncertainty.
All of this can affect everyday costs, from groceries to household bills. Because wages haven’t risen to match, many people are feeling the pinch.
Inflation is likely to peak at a certain point, but that doesn’t mean prices will go down. It could just slow the pace of future increases.
Check out our guides to managing your money to help you budget and borrow effectively.
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The Bank of England defines inflation as:
‘The term we use to describe rising prices. How quickly prices go up is called the rate of inflation’.
While inflation is high, the faster prices and the overall cost of living will increase.
The buying power of your savings will also decrease – if you spent that money, it wouldn’t go as far as it did. Read our inflation guide to learn more and work out the impact.
Inflation can increase the interest rate you earn on your savings.
Charting the rate of inflation
The Office of National Statistics (ONS) monitors the cost of over 700 goods and services which consumers commonly put into their shopping ‘basket’.
Updated monthly, this creates a Consumer Prices Index (CPI). Prices are compared year on year to define the rate of inflation.
Managing inflation
The Bank of England aims to keep the rate of inflation at around 2% each year. Although at the moment, it’s much higher than that.
The main way to control inflation is through interest. That’s the amount of money you pay when you borrow, or earn when you save.
When interest rates are low:
- There’s less motivation to save money.
- Borrowing is cheaper, so people might spend more.
- The rate of inflation starts to rise.
When interest rates are high:
- People are incentivised to save by earning higher interest.
- It costs more to borrow, so people tend to spend less.
- Inflation drops and price rises slow down.
Check out our guides to managing your money to help you budget and borrow effectively.
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Struggling with your payments?
It’s important to ask for help now, so you can get back on track – see how we can help.
An arranged overdraft can be handy as a short-term safety-net, helping you to manage unexpected bills, or keep your cashflow going until pay-day.
Just remember you could be charged daily interest, as detailed in the terms and conditions of your current account.
Borrowing short-term
If you use your overdraft, we won’t charge you any interest if you bring your account back into credit by the end of the same day. Do that by moving money from another account, or paying money in at a branch.
Longer-term borrowing
An overdraft might not be a cost-effective borrowing option over a long period of time. Get an idea of the costs using our overdraft calculator.
We offer other borrowing options that might suit your needs better long term.
Manage your overdraft online
You can do most things online, either using Online Banking or the Mobile Banking app. That includes:
- Changing your overdraft limit, or cancelling it altogether.
- Online Banking: From the account menu select ‘Need help with your debt or payments?’.
- Mobile Banking app: Log on to the app, then use the three dots ‘More’ menu to find ‘Need help with your debt or payments?'.
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Struggling with your payments?
It’s important to ask for help now, so you can get back on track – see how we can help.
While there’s an outstanding balance on your credit card, you need to make at least the minimum payment each month.
By making payments on time, you’ll avoid:
- Losing introductory or promotional interest rates.
- Any negative impact to your credit score.
- Extra fees and charges.
You should try to repay as much as you can each month, to reduce your balance and the amount of interest you’ll pay. This could also help you avoid falling into persistent debt.
Manage your credit card online
You can do most things online, either using Online Banking or the Mobile Banking app. Both give you access to support:
Online Banking: From the account menu select ‘Need help with your debt or payments?’.
Mobile Banking app: Log on to the app, then use the three dots ‘More’ menu to find ‘Need help with your debt or payments?'.
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Struggling with your payments?
It’s important to ask for help now, so you can get back on track – see how we can help.
Loans offer a structured way to borrow, with regular payments and a fixed loan term.
If your interest rates are fixed, your monthly loan repayments will be too. That makes it easier to keep track and understand your borrowing costs.
Some lenders offer personal loans with variable interest rates. If you’ve got one of those, just be aware that your payments could change over time.
Cutting the costs
You might be able to make extra payments on some loans without extra charges for early repayment. This could cut the term and amount of interest you’ll pay overall.
Check your loan terms and conditions for more details.
Need a break?
Halifax customers might be able to apply for up to two repayment holidays of one month in a 12 month rolling period, depending on approval. Just be aware you’ll pay more interest overall and your loan term could increase.
Manage your loan online
You can do most things online, either using Online Banking or the Mobile Banking app. Both give you access to support:
Online Banking: From the account menu select ‘Need help with your debt or payments?’.
Mobile Banking app: Log on to the app, then use the three dots ‘More’ menu to find ‘Need help with your debt or payments?'.
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Struggling with your payments?
It’s important to ask for help now, so you can get back on track – see how we can help.
You can also get online support with your mortgage. Fill in a short form to get started.
Mortgages offer a structured way to borrow, with monthly repayments that could be fixed or variable.
If you have a fixed interest rate, your monthly mortgage payments will be fixed too. That makes it easier to keep track and understand your borrowing costs, at least until your fixed rate ends.
If your mortgage is on a variable interest rate, your monthly payments could change over time. To understand how changes in the Bank of England base rate might affect your mortgage, try our rate change calculator.
You could lose your home if you don’t keep up your mortgage repayments.
Cutting the costs
You might be able to make extra payments on some mortgages without early repayment charges. This could reduce the term and amount of interest you pay.
Check your mortgage terms and conditions for more details.
Switching to a new mortgage deal
If your current Halifax mortgage is coming to an end, here’s the quickest way to set up your new deal.
Need a break?
Halifax customers might be able to apply for a mortgage repayment holiday, depending on approval. Just be aware the interest will still be added to your account so the amount you owe overall will increase.
Changing your mortgage term
You may be able to amend the term of your mortgage to help manage your monthly payments. Just bear in mind that the longer you take to repay your mortgage, the more interest you'll be charged.
Manage your mortgage online
You can do most things online, either using Online Banking or the Mobile Banking app. Both give you access to support:
Online Banking: From the account menu select ‘Need help with your debt or payments?’.
Mobile Banking app: Log on to the app, then use the three dots ‘More’ menu to find ‘Need help with your debt or payments?'.
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Visit our free independent help and advice page to find support on government benefits or grants, debt advice, housing, general advice and online digital training.
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If you’re out of work, cannot work or on a low income, you may qualify for financial support from the government in the form of Universal Credit.
Turn2us is a national charity that helps people in financial hardship to gain access to welfare benefits, charitable grants and support services.
Use their free and confidential benefits calculator to find out what benefits you are entitled to claim.
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It’s always helpful to plan out your spending, keeping track of what’s coming in and going out.
Find tools and tips on our managing your money page, including a guide to budgeting and a budget calculator.
By following a budget, you could:
- Avoid impulsive purchases.
- Repay debts faster, saving on borrowing costs.
- Focus on saving, making it easier to manage future challenges.
- Avoid unnecessary and persistent debt, or financial difficulties.
- Have money in your pocket to take advantage of any price reductions or offers.
- Feel less stressed and not argue about money.
- Feel more in control.
Review your budget whenever:
- Your income goes up or down.
- Your regular expenses change.
- You’re planning a large purchase.
- You’ve paid off a debt – how will you use any extra money?
Get help with compulsive spending
If you think you’re spending compulsively or you’re worried about your spending habits, we can help. Take a look at our guide on compulsive spending for tips on how to stop spending money.
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Find tools and tips on our managing your money page, including a guide to helping you get your bills under control.
You could also use our Home Energy Saving Tool to see how making your home energy-efficient can save you money.
If you’re already struggling, ask for help now so you can get back on track – see how we can help.
You can also find out about organisations offering free independent help and advice.
Page last updated: November 2022.
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