How to cut your car running costs

This week the RAC had more bad news for motorists when it warned that drivers of the future might be charged for each mile they travel to avoid traffic gridlock.

Driving a car is already an increasing financial burden. With fuel duty going up one pence a litre in October 2009 - and rising by a further 0.76 pence tax per litre of petrol on January 1, 2010 - these hikes, as well as the VAT rise to 20 per cent on 4 January 2010, will add £117.98 to the annual cost of fuel for a family with two petrol cars, according to the AA.

Car insurance will also cost more, as the Budget put up the insurance premium tax from five per cent to six per cent. The AA predicts that insurers will put up premium increases by up to a fifth sometime in 2010.

So how can you save money?

On petrol, the first thing to do is drive economically. Experts recommend a driving speed of 55mph offers the best fuel economy. Avoid using gas-guzzling air conditioning, but don’t open your windows too much either - that hits fuel efficiency too. To find the cheapest petrol price retailer, enter your postcode at petrolprices.com.

On insurance, the key is shopping around. There are a host of online price comparison sites, like moneysupermarket.com and confused.com - use a few as they don’t all cover the whole market. Two big insurers - Aviva and Direct Line - offer good deals without being part of these comparison sites, so check these out individually.

Avoid paying monthly if possible - it’s almost always cheaper to either pay the full amount up front or buy it on a cheap credit card. Lastly, remember to use a cashback website before you pay for the insurance - visit homesandproperty.co.uk/cashbacksites. These will give you up to £100 money back on a full car policy, which will go some way towards paying for that pricey petrol.