10 ways to revamp your personal finances
Consumer Watchdog? advises consumers on how they can save money by giving themselves a “money makeover” and fixing their finances.
A lot of people are feeling financial pressure right now because the surge in fuel, energy and food prices compress the household budget, writes Adam French, Which? Consumer rights expert. However, there are steps you can take to save money and reduce unnecessary expenses. Start by taking a look at your finances and giving yourself a “makeover” so you can save where you can.
Transferring debt to a balance transfer credit card can relieve you of expensive interest rates, as can finding a bank account with no-fee overdraft. Many people are unaware that they may be applying for benefits to cover day-to-day expenses, so it is worth checking what you may be entitled to.
Using budgeting apps to track your spending habits is a great way to cut down on unnecessary purchases, and finding a rewards program at retailers and restaurants can help you save money when you spend.
Below, which one? offers his top 10 money-saving tips.
1. Transfer Credit Card Debt
Those paying high interest on credit card debt can transfer it all to a 0% balance transfer credit card. This type of credit card does not charge interest on transferred debts for a fixed term so that users have some relief to repay any amount owed. However, interest tends to increase at the end of the promotional period, so be sure to pay off the balance in full before that happens and opt for a no-fee card. For example, a £2,000 debt on a card charging an 18.9% APR for which you pay £60 per month will take 46 months and cost you £2,755 to clear. By contrast, a £2,000 debt transferred to a 0% balance transfer card, with the same repayments of £60 per month, will take 34 months to clear and cost £2,000, saving you £755 .
2. Check the overdraft fees on your bank account
Being overdrawn can be costly, especially since some accounts charge up to 39.9% EAR (effective annual rate). If your bank account has a high EAR, it might be worth checking to see if you can switch to an account that offers a lower one if you use it regularly. Nationwide is currently offering free authorized overdraft on its FlexDirect account – but that only lasts for one year, so it won’t be good for long-term borrowing. It’s also worth keeping an eye out for the best current account switching offers. Many accounts offer switching bonuses – for example, First Direct offers £150 to new customers and Nationwide offers £125.
3. Check if you have unclaimed benefits
More than £15billion goes unclaimed from the Treasury each year, and more than seven million UK households could miss out on benefits such as council tax cuts. Low-income people can claim Universal Credit – replace benefits inherited from the past such as tax credits, housing allowance, income-based jobseeker’s allowance, income-related employment and support allowance and income support .
Those who are already claiming a child tax credit can also claim a working tax credit to help them with day-to-day expenses. The Child Tax Credit is available to low-income individuals who are responsible for at least one child or youth. Which? suggests checking out what might be available to claim by entering details about you and anyone else in your household into their entitlement calculator.
4. Reduce tax bills
Consumers can keep more of their income by claiming any tax breaks they may be entitled to. Relief such as marriage allowance and Room rental relief can all save significant amounts of money, but relatively few people are aware of them. For example, those renting a room, rather than an entire property, can take advantage of the Rent-a-Room program, which means they can earn up to £7,500 tax free.
5. Use price comparators
Insurance policies, credit cards and broadband plans usually have huge differences between the cheapest and the most expensive. Before subscribing to new financial products and policies, Which? suggests browsing the best deals available using price comparison websites to compare different products and ensure they are choosing the best one for their personal situation. When comparing the cost of a 12 month broadband plan, Which? found a difference of £15.04 between the cheapest and most expensive deals available.
6. Sign up for loyalty cards
Many retailers, restaurants and supermarkets offer loyalty programs to reward customers by allowing them to accumulate points each time they dine or make a purchase. Often the points earned can be converted into coupons or provide one-time discounts and offers. When shopping for sweets, it’s worth choosing a retailer that offers a decent reward system, like Tesco Club Card.
7. Earn rewards and cash back on your spending
Cashback credit cards can help shoppers earn money every time they spend. Some pay up to 5%. Some retailers also offer credit cards that offer rewards for purchases with them. John Lewis generally behaves very well in Which? satisfaction surveys, and offers a credit card reward system for customers that gives 1.25 points for every £1 spent at John Lewis or Waitrose, but you have to spend £4 at other retailers to earn a point. Shoppers using cash back or reward credit cards need to make sure they pay back what they spend each month to avoid paying interest.
8. Cancel unnecessary direct debits
It’s worth checking bank statements regularly to keep tabs on direct debit payments and cancel unnecessary payments that can quickly add up. Which? recommends consumers get into the habit of logging into their online banking account and checking statements to make sure they aren’t paying for services they no longer need or use .
9. Get a better mobile phone deal
Which? suggests reviewing phone bills to ensure that call, text, and mobile web usage isn’t consistently over or under your monthly allowance. If so, it might be worth looking for a cheaper deal that matches your current usage. Which? previously found that a low data contract such as 5GB of data from ID Mobile costs £6 per month, while 100GB of data from EE costs £34 per month – upgrading to this deal could save £336 £ per year. Consumers should also consider haggling to get the best deals. Which? research found customers who haggled saved an average of £35 a year on mobile contracts.
10. Use budgeting apps to keep tabs on your spending
Budgeting apps are a great way to get insight into account activity and spending habits. Many apps allow users to link multiple bank accounts to track their overall spending. By checking in regularly, consumers can keep tabs on unnecessary costs and budget more effectively. Which? has rounded up the best budgeting apps, to help savers choose the best one for them.