Seize the opportunity to send your finances ‘back to school’

Money worries starting to get you down? Now’s a good time to teach yourself a lesson in personal finance

Working out finances

Lockdown measures may be easing, but for many of us, our finances may still be in disarray following the financial fallout from Covid-19.

So, with kids about to head back to school, now could be the perfect time to get things back on track by teaching yourself a few simple lessons in money management.

Take advantage of balance transfer credit card deals

If your plastic has taken a battering thanks to lockdown – and the long summer break – and you’re unable to pay off your balance in full, now could be a good time to consider a balance transfer deal.

With a host of competitive interest-free balance-transfer cards to choose from, there’s no need to pay expensive interest on the debt.

Santander is currently offering 26 months interest free with a representative rate of 21.7% APR (variable)*, but comes with a £3 monthly fee. After the promotional period, you will be charged 3% (minimum £5) on transfers.

Similarly, Sainsbury’s Bank are offering 26 months interest free with a representative rate of 19.9% APR (variable)** but you must be a Nectar member to be eligible. A 3% balance transfer charge applies on transfers made at application. The charge will depend on your current offer thereafter.

To compare more deals, head here. Also remember the golden rule with any interest-free balance transfer card: you must do everything you can to repay your balance before the introductory deal ends, to avoid racking up interest.

Consolidate debts with a low-rate personal loan

Another good way to deal with balances you’ve run up during lockdown, is a personal loan.

With a loan, you can consolidate your debts into a single monthly repayment to a single lender.

To compare personal loan deals, head here.

Note, though, that you’ll need a squeaky clean credit record to get accepted for the very best rates (see below).

Equally, if you want to explore your loan options without your credit score being affected, make use of tools such as our ‘loans eligibility checker.’ That way, you can compare loans you’re more likely to get accepted for without your credit rating taking a hit.

Improve your credit score 

If you’re worried about your credit score not being up to scratch as lockdown eases, now could be the time to check your report – and get your rating back on track.

With a higher credit score, you should not only be able to qualify for credit when you need it – but also to qualify for the best deals.

A good starting point is our Credit Monitor tool where you can check your credit score in just a matter of minutes. You can also get personalised tips on how you can improve it.

Simple steps include:

  • Getting registered on the electoral roll, as this shows lenders you are reliable.
  • Ensuring your address is up-to-date on all accounts.
  • Making all payments on loans, credit cards and bills on time.
  • Closing down card accounts and other credit accounts you no longer use.
  • Avoiding making too many applications for credit in a short space of time.

Find a cheaper energy deal

While many of us have enjoyed low energy bills during lockdown, there are signs prices are heading up.

So, if you haven’t switched energy provider in the past 12 months – or if you’re on your supplier’s standard variable tariff (SVT) – it makes sense to switch to a cheaper fixed rate now.

The recent announcement of a change in the price cap by regulator Ofgem – which will see the cap fall by £84 to £1,042 a year from October – is positive news for consumers on an SVT.

However, standard tariffs are some of the most expensive on the market, meaning those who stay on these default tariffs are still likely to be paying way over the odds.

Rather than rely on the price cap to do the work for you, the best approach is to shop around to find the best-priced tariff.

You may be able to make significant savings by switching to a fixed deal, and the good news is, switching only takes a matter of minutes. Head here to compare deals.

Also note that you can make further savings by signing up to alerts from our Energy Monitor.

By registering and setting out how much you’d like to save, this tool will then automatically let you know when there is a deal available with the requested savings.

Switch your current account

Many of us have remained loyal to the same current account provider for as long as we can remember, despite getting very little in return.

But that makes little sense when there are some far better deals on offer, including accounts paying high rates of interest or offering attractive switching incentives or cashback. To compare current accounts, go here.

Deals you might want to look at right now include Virgin Money’s current account offering 2.02% interest on up to £1,000, and Santander’s Everyday Current Account offering up to 15% cashback with select high street retailers.

As most current account providers are signed up to the seven-day switching process, changing to a new bank should now be quick, easy and hassle-free.

Other personal finance lessons worth learning:

  • Get into the savings habit – with less opportunity to spend during lockdown, you may have started some new savings habits already, so try and continue with these. While savings rates are low at present, it’s always worth comparing what’s on offer to find the best deals you can. A good way to get into the habit of slotting money away is by setting up a direct debit to go into a savings account the day after you get paid. That way, you will barely notice the money leaving your current account
  • Remortgage to a cheaper home loan – with mortgage rates at rock bottom, now is a good time to think about locking into a cheap fixed deal
  • See if you can switch to a cheaper broadband deal. But be sure to check if there are any exit fees before making the move

* Representative example: If you spend £1,200 at a purchase rate of 15.9% (variable) p.a. with a £3 monthly fee your representative APR is 21.7% APR (variable)

**Representative example: If you spend £1,200 at a purchase rate of 19.95% (variable) p.a. your representative APR is 19.9% APR (variable)

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