Three things you could do with your PPI claim money

Have you ever heard about PPI claims? It stands for payment protection insurance, and if you were sold a mortgage or a loan with PPI, there is a good chance you can claim the PPI amount back, on the ground that it was mis-sold to you. According to the Telegraph, the average amount you can claim is £2,600. That is no small change! Here are a few ideas what to do with such a windfall.

 

Home improvements

 

Your PPI claim probably came from amounts you paid on top of your primary home’s mortgage. So it was money you were ready to put into your house in the first place. Why not use it to make some improvements on your house? Improvements do not have to cost a lot of money, and they can go a long way in bringing extra value to your home.

Insulation comes to mind, and as a bonus, you will be able to lower your electric or heating bill. A fresh coat of paint will make your house look new at a low cost. If you are a bit more comfortable with DIY, you could try changing the kitchen cabinets, or remodeling the attic so you get an extra bed room.

 

Fund your ISA

 

Have you maxed out your ISA this tax year? You have until April 5th to do so, and any amount you do not put into your cash ISA or stock and shares ISA is lost forever. A tax free savings account is one of the best way to start building wealth while keeping the proceeds away from the tax man. This tax year (2015/2016), you can fund your cash ISA, and your stock and shares ISA, for a total combined of £15,240. Remember that if you top it up and then withdraw money, you can’t put the money back again until the next tax year. So make sure you won’t need the money in the short term. ISA rates are pretty low at the moment, however, you can keep your ISA from one year to the other, and the tax free part makes it really competitive against a high street bank’s savings account.

 

Take a holiday

 

I am always partial to that one, because the majority of personal finance advisors tell you to use a lump sum wisely, however, times have been tough lately, and you could consider your PPI claim as a forced savings account that you weren’t able to use all that time, and could fund a nice holiday. £2,600, the average PPI claim amount, could allow you to have a really nice week long holiday. Two £300 tickets to Turkey, Morocco or some other sunny destination, a £80 a night hotel room (£80 buys a very nice hotel room in Morocco!) and you still have £1,440 to spend on food, sightseeing and souvenirs to make it a memorable week.

 

As a conclusion, how you decide to spend your PPI claim refund is up to you, but if you think you could qualify, it doesn’t hurt to give it a try, you could end up pleasantly surprised!