Get your finances back in shape: five things you can do to save £1,000s in 2018
Credit cards took an £8.5 billion bashing in Britain in the run-up to Christmas, reveals the uSwitch.com comparison website. Half of those who splurged will still be paying back what they owe next Christmas.
Use these tips to help tackle your debt and get in shape for the year ahead.
1. TACKLE THE FESTIVE BULGE
If you paid for your Christmas festivities on a credit or store card, take action today.
Switch your debt on to a 0 per cent balance transfer card. This could erase the interest payments on your existing balance for over three years, and give you a chance to tackle your actual debt.
There are two types of balance transfer cards — fee free and fee paying. Don’t automatically assume the cheapest card is best for you.
Do the maths. If you need more time to pay off your debt mountain, you may find the best strategy is to pay a small, upfront fee for a much longer interest-free holiday.
Once you’ve got your new card, work out a repayment plan and stick to it come what may.
Some top transfer card picks
- Fee free: Halifax offers an interest rate holiday on your initial balance for up to 29 months, plus 0 per cent on new purchases for three months.
- Low fee and a long interest-free period: MBNA offers up to 32 months of 0 per cent interest payments on your initial balance for a fee of 0.76 per cent.
- Longest 0 per cent period: Barclaycard offers 0 per cent on your initial balance for up to 38 months, plus 0 per cent on new purchases for six months for a fee of 1.4 per cent (after cashback).
2. BE SAVVY WITH YOUR OTHER DEBTS
Even after the Bank of England’s recent rate rise, the market is still awash with two-year remortgage deals where the interest rate — both fixed and variable — is less than 1.5 per cent.
If you need help choosing or have complicated circumstances, speak to a mortgage adviser. You can even do this online. Daniel Hegarty, chief executive and founder of Habito, says: “Homeowners can see how much they could save in a couple of minutes online and switch from home on a mobile phone, tablet or laptop.”
3. KEEP IN BETTER FINANCIAL SHAPE BY SHOPPING AROUND
It may be cold but don’t burn your money. Ofgem, the energy industry regulator, reports that around 60 per cent of households are doing exactly that, by languishing on their energy providers’ expensive Standard Variable Rate tariffs. Don’t be one of them.
Switch in four simple steps
- Grab your latest energy bill, as you’ll need some of its information.
- Use one of the many comparison sites to work out the cheapest tariff for you and select it.
- Take a meter reading on the day of the transfer to ensure you only get billed for the energy you’ve used.
- Pay your final bill or get a credit on your account. A few weeks later, cheaper energy will start flowing into your house.
Anyone who pays the bill directly to their energy supplier can switch. Pre-payment meter holders can also shop around for a better deal. But if you have a pre-payment meter and are not in debt to your provider, a much cheaper option is to ask for it to be changed to a normal meter.
Many suppliers do it for free. If yours won’t, consider switching to one that will.
4. PRICE UP LIFE’S OTHER ESSENTIALS
“Shopping around for the best deals on things like energy, broadband, insurance and mobile phone tariffs could save you over £1,000,” says Tashema Jackson, uSwitch.com money expert.
But life is also full of unexpected expenses. You need a savings buffer to cope.
The Post Office Online Saver account is a great option for those who want to retain access to their money. It offers the highest rate for an easy access account (1.3 per cent), allows unlimited penalty-free withdrawals and can be opened with £1.
Think about a regular saving account, too. First Direct, HSBC, M&S Bank, Nationwide and Santander all offer accounts paying five per cent Annual Equivalent Rate for their qualifying customers.
If you don’t want to switch accounts, Virgin’s regular e-saver offers a reasonable 2.25 per cent fixed AER. The amount you can deposit and ability to withdraw funds varies by account, so do check the small print.
5. ASK FOR FREE ADVICE
Latest figures from the Money Advice Service show 8.3 million adults in Britain live with a debt burden. This means one in six people, on average has financial worries. In parts of London the problem is worse, with almost one in four estimated to be over-indebted.
Free, confidential debt advice is available. Whether you want online, telephone or even face-to-face help, the Money Advice Service is a great place to start.
Check out the website or call the service’s advisers on 0800 138 7777 (available 8am-8pm Monday to Friday and 9am-1pm on Saturdays).