They got in touch with moneysupermarket.com to see how much we could save them and, as a result, should be better off by an impressive £6,481. Most of that comes from making some savvy savings on Lorraine’s credit card debt.
Ian said: "I don't think we realised just how much the credit card debt was costing! Once the debt has mounted up, you don't tend to look at the big picture, you just pay what you can each month. Saving that much is great, it will make a big difference over the next few years."
Read on to find out how….
Lorraine currently holds two credit cards – one with Virgin Money and the other with Bank of Scotland. The Virgin card has a balance of £3,500, while the Bank of Scotland card has a debt of just over £5,250.
She pays £80 per month to each card but is being hit with APRs of 16.6% and 15.9% respectively. That means her repayments are mostly going on interest and just chipping away slowly at the actual debt.
In fact, Lorraine could continue paying this amount for the next five years and barely touch the debt, but during that time she’d have paid £7,685 in interest.
We often recommend using a 0% balance transfer deal to cut the cost of high credit card debt, but in the current economic climate no card provider is going to offer an £8,500 limit straight off the bat so unfortunately that’s not an option.
Instead, the most viable option could be a personal loan. Based on a loan amount of £8,750, Sainsbury’s Bank would be the market leader with interest of just 7.8% and monthly payments of £176.48.
Admittedly those monthly payments would be slightly higher than she pays at the moment, but over the next five years she’d pay just £1,789 in interest and she’d clear the debt. That’s a saving of £5,896!
Of course, to qualify for this market-leading loan, Lorraine will need a squeaky clean credit history, so she should check her credit file. She’ll also need a Nectar Card to qualify for the leading Sainsbury’s loan but these are free and can be picked up in a Sainsbury’s store or online.
Ian and Lorraine’s flat is mortgaged and not rented, so they need both buildings and contents insurance. They currently pay £432 to the Bank of Scotland to insure their two-bedroomed flat.
A search on our new look home insurance tool has shown that if they switch their policy to LV= they would pay just £132 per year, making them a massive saving of nearly £300.Current accounts – saving of £200
At the moment, Ian and Lorraine have current accounts with Barclays and Bank of Scotland, but neither of them earn any interest because they dip in and out of their overdrafts.
However, they could each open an Alliance & Leicester Premier Direct Current Account, which will give them a whole year’s interest-free overdraft and reward them for switching with £100 cashback each, so long as they use the official switching service.
On top of this, after the initial interest-free overdraft ends, they will still benefit from one of the clearest overdraft packages on the market. Alliance & Leicester charge just 50p per day up to a maximum of £5 per month for the privilege of dipping into the red.
Ian and Lorraine share use of their Hyundai vehicle but, because Edinburgh’s public transport is so excellent, they only clock up around 2,000 miles a year.
With two years no-claims, they currently pay RSA £400 a year for their car insurance policy. A search on our car insurance tool has shown that they could save themselves £86 over the year by changing their policy to one with Hastings Essential, priced at £313 per year.
Would you like the opportunity to see if we can make you any savings? If so, then email email@example.com