How to beat the budget cuts

Published:
22 June 2010
Topic:
News,Gas & Electricity,Insurance,Money,Car,Home,Credit Cards,Current Accounts

With the swingeing cuts outlined by the Chancellor George Osborne today, there has simply never been a better time to make efficiencies to your own household budget.

Most households will be hit by the measures announced in the emergency budget, but for many of us there are things we can do to minimise the impact.

Here are five simple steps to save well over £1,500 a year. You can also read more about the emergency measures in our article 'Emergency Budget at a glance' or check your tax allowances for 2010/11.

Bring down your energy bills now

Millions of UK homes waste hundreds of pounds a year by sitting on uncompetitive energy tariffs. Yet by switching to the cheapest online energy deal through our gas and electricity comparison tool, you could save an average of £174 a year.

In fact, if you're on an uncompetitive standard tariff, you could save an impressive £348 a year by swapping to the cheapest deal.

It's easy - all you need to do is use moneysupermarket.com's energy comparison tool to find the best deal for you (this will depend on where you live and the amount of gas and electricity to use). You can apply online and your new provider will arrange the switch for you. What could be simpler?

Minimise your motor insurance

When it comes to insurance, it's not about simply finding the cheapest cover, it's about finding the right cover at the best price possible. But as car insurance costs rocket, it can be hard to find that best price.

The average driver using our car insurance comparison tool to find the best deal saves an impressive £205. Given that the average quoted premiums for comprehensive motor insurance policy rose by 13.4% over the last 12 months, according to the AA, that's a decent saving.

Hammer your home insurance

Again, you don't want to cut the amount of buildings and contents cover you have, but you could still make savings on the amount you pay for this essential insurance.

The average saving made using our home insurance comparison tool is £132 a year.

Consider your credit cards

Many of us pay much, much more than we need to for our credit card debt. In fact, in our most recent money makeover, we saved a young couple almost £6,000 on their credit card debt alone.

If you're paying for an outstanding balance on a credit card, then switching to a 0% balance transfer deal could save you hundreds of pounds a year.

For example, the UK Cards Association says that the average credit card balance is £1,989, excluding all those people who repay their card in full each year. The average credit card interest rate is 18.52%. Yet there are a number of cards offering long interest-free periods on balance transfers. Among the leading deals is the Barclaycard Platinum, which gives 15 months interest free on balance transfers for a 2.9% fee and has a typical APR of 16.9%.

That means that, by switching to this deal, the average credit cardholder could save £262 just on their transferred balance.

 

Don't ignore incentives

How do you use your current account? There is such a broad range of deals available that most people could save money on their overdrafts or earn more on their balances.

But there are also some easy wins, with great incentives to switch. For example, the Halifax Reward Current Account pays customers a £5 'thank you' every month they pay in at least £1,000. Plus, if you apply through moneysupermarket.com, you also earn £50 cashback, meaning you could earn £110 in just one year.

Alternatively, the Alliance & Leicester Premier Current Account pays a £100 switching incentive, plus gives accountholders 12 months 0% overdraft and free annual European travel insurance.

Meanwhile, the First Direct 1st Account also pays a £100 switching incentive, but to qualify for that account you have to pay in at least £1,500 a month.

Cut costs with codes and vouchers

Treats and trips and family meals out can be some of the first things to get chopped from the household budget when spending gets tight, but it can be hard to give these pleasures up entirely.

But by using vouchers and discount codes, you can dramatically cut what you spend on family fun. In fact, the average voucher user and bargain hunter saves £57 a month (that's £684 a year!) by using vouchers. For example, on the moneysupermarket.com vouchers channel just now, we have 50% off orders over £20 at Pizza Hut, two-for-one entry to Alton Towers and 1/3 off Odeon Cinema tickets.

Secure your savings

So, total potential savings of £1,557. Once you've made these great savings, what do you plan on doing with them? Maybe your finances are being squeezed and this will simply help you stretch your budget further, or maybe you're anxious to put more money into a savings account for a rainy day fund.

If you're freeing up cash to make savings with, make sure you're earning the best returns possible. For example, if you want an easy access account, the market-leading rate is 2.81% from Alliance & Leicester's Online Saver Issue 7 account, which has a minimum investment of £1,000 and can only be managed online.

Next best at 2.80% are the AA Internet Extra Issue 3 and Egg Internet Savings Account Issue 2, both of which have a minimum investment of just £1 and, again, can only be managed online.

Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

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