It’s time to knock your finances into shape

It’s the most wonderful time of the year… to give your money a makeover!

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How do you use those quiet days between Christmas Day and New Year’s Eve?

For those of us lucky to have some ‘downtime’, it’s an opportunity to re-charge the batteries, see friends and family, and indulge in some serious telly-watching.

But this time of year is also a great opportunity to give yourself a bit of a money makeover so that you can start 2019 with your finances in the best possible shape.

Here are some of the things you could do…

Switch current account

There are a host of different current accounts to choose from, each of which offers something a little different.

For example, some current accounts pay cashback on certain direct debits. That means, every time you pay your council tax or mobile phone bill, you earn a bit of money back. Who doesn’t want to get some free money just for paying their bills?

Alternatively, if you are the sort of person that tends to dip into their overdraft every now and again, then it’s a good idea to make sure you have an account with an interest- or fee-free overdraft facility. Otherwise, the cost of that overdraft can swiftly add up.

Check your direct debits

A study by Citizens Advice earlier this year cast light on just how much money many of us are handing over each month on subscriptions we neither need nor want.

It found that over a three-month period, consumers were paying an average of £160 on unwanted subscriptions, covering things like gym memberships and streaming services.

So set some time aside to go through your bank statements to work out precisely where your money is going each month. If there are direct debits for services you don’t need, cancel them as soon as you can.

Switch your credit card debt

It’s not unusual to have a bit of outstanding debt on your credit card.

According to research from the Money Charity, the average UK household owed more than £2,663 on credit cards in September 2018.

The trouble is, paying that debt off in stages will see a chunk of your monthly repayments going towards interest charges rather repaying the debt itself.

That is, unless you have a 0% balance transfer credit card.

These cards are a great tool for clearing debt - they have a set period where no interest is charged on your balance. In other words, every penny you pay will lower your debt.

What’s more the 0% periods on offer are significant, with terms available of over 30 months.

You will have to pay a transfer fee when moving your existing debt onto a 0% balance transfer card though, which is a small percentage of the debt you’re transferring.

Representative Example: If you spend £1,200 at a purchase interest rate of 20.9% p.a. (variable) your representative rate will be 20.9% APR (variable).

Get a 0% purchase card

If you have a few big purchases planned for the January sales then you might prefer to go for a 0% purchase credit card.

As the name suggests, these cards offer an interest-free period on the new spending you do on the card.

The 0% periods on offer from these cards are sizeable too. For example, right now you can get as much as 28 months in which to clear the balance before you start paying interest.

Representative Example: If you spend £1,200 at a purchase interest rate of 19.9% p.a. (variable) your representative rate will be 19.9% APR (variable).

Switch your energy tariff

It’s the time of year when you use the most energy, so it’s a great time to ensure you are on the best possible energy tariff.

If you haven’t switched tariffs for a few years, or if you’ve never switched, the chances are you will be on your supplier’s standard tariff.

These are the most expensive tariffs, and also the ones subject to the price rises suppliers announce around this time of year.

But switching to a new fixed tariff, where the price you pay for your energy is set for a year or two, can deliver serious savings. Our research in March found that households moving onto a fixed deal from their lender’s standard tariff could save a massive £250 a year*.

*Based on the average saving for customers that applied to switch via MoneySuperMarket, March 2018

Check you’re on the best mortgage

Despite the base rate rise in August, mortgage rates remain incredibly cheap on a historical basis. Yet plenty of borrowers have let their deals slip onto less competitive rates.

As with energy deals, when your initial fixed or variable mortgage period ends you move onto your lender’s standard variable rate. These are much higher than the current leading fixed rates.

Remember: Your home may be repossessed if you do not keep up repayments on your mortgage.

Maximise your savings?

Inflation is on the rise, and that’s not great news for savers. According to the Office for National Statistics, inflation now stands at 2.2%, so unless you enjoy a rate higher than that on your savings, you are essentially losing money.

It’s important to take a proactive attitude towards where you are keeping your savings. Check what rate you are currently getting and have a look around at the alternative options to see if you can find a better return. 

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