6 ways to conquer your money in 2016

It’s a brand new year so why not make 2016 the year you whip your finances in to shape with our easy-to-follow tips?

The New Year has begun, so whether you’re reeling from the effects of spending too much over the festive period or you’re simply looking for ways to make your money work harder, you’ve come to the right place.

Our six easy-to-follow tips will help you to get your finances back on track in no time at all.

If you have debt to clear…

1. Stop paying interest on your credit card debt

First off, if you’ve racked up card debt and are paying interest on it, shift it over to a 0% balance transfer credit card.

Doing so will help you to avoid paying interest on your debt for up to three years – giving you plenty of breathing space and time to tackle your debt once and for all.

The Barclaycard Platinum credit card with extended balance transfer, for example, offers 0% on balance transfers for 37 months, so long as they are carried out within the first 60 days.

Just watch out for the transfer fee of 2.54% (again, so long as you carry out your transfer within 60 days, otherwise you’ll pay 3.5%).

Once the 0% period is up, you’ll pay a representative rate of 18.9% APR (variable)* so it’s best to clear your balance before then.

Keep in mind you’ll need a good credit score to be accepted for the top cards, so if you’re at all worried, use our Smart Search facility which will tell you how successful your application will be, without leaving a mark on your credit report.

2. Pay off more than the minimum each month

Minimum monthly repayments on credit cards are often set at very low levels, so paying off more than that each month is a simple way to clear your debt more quickly - providing you can afford to do so.

It’s a good idea to set up a monthly direct debit for the amount you want to pay, so you don’t have to worry about remembering to pay on time.

Missing a payment can not only harm your credit score, if your card has a 0% introductory period, your card provider can choose to withdraw it.

3. Switch to a better overdraft

Paying interest on your overdraft? It’s time to switch to a current account that won’t charge you for dipping into the red.

If you can cope with a relatively small overdraft, First Direct’s 1st Account offers a £250 interest-free overdraft. You’ll be charged 15.9% EAR (variable) on arranged overdrafts above this.

Paying interest on your overdraft? It’s time to switch to a current account that won’t charge you for dipping into the red.

You’ll also be given £100 for switching to the account, so long as you pay in at least £1,000 within three months of opening your account.

Paying in at least £1,000 a month or having another product with First Direct, such as a mortgage, also means you’ll avoid the account’s £10 monthly fee.

Alternatively, the Nationwide FlexDirect current account offers a fee-free overdraft for 12 months.

Try to use these 12 months to get rid of your overdraft once and for all as after the fee-free period is up, you’ll be charged 50p per day on arranged overdrafts over £10 (the first £10 of your overdraft is free).

If you want your savings to work harder…

4. Use up your ISA allowance

Cash ISAs allow you to earn interest tax free, so if you haven’t yet used up your £15,240 allowance for this tax year, you have until April 5 to do so.

The good news is, new rules coming into effect on April 6, 2016 mean that basic rate taxpayers will be able to earn £1,000 of savings interest in any savings account without the taxman taking a slice. Higher rate taxpayers will be able to earn £500.

5. Save in a current account

While savings rates have remained uncompetitive in recent years, interest rates on current accounts have improved dramatically.

So it’s worth thinking about using a current account to house some of your savings instead.

For example, TSB’s Classic Plus Current Account pays 5.00% AER (variable) gross on balances up to £2,000.

Plus, you’ll receive 5% cashback on your first £100 of contactless payments each month until the end of 2016.

To qualify, you must pay in £500 or more every month and register for internet banking, paperless statements and paperless correspondence.

Alternatively, Santander's 123 Current Account pays 3.00% AER (variable) gross on balances up to £20,000.

You’ll earn 1.00% AER (variable) gross on balances from £1,000, 2.00% AER (variable) gross on balances from £2,000 and 3.00% AER (variable) gross on balances of between £3,000 and £20,000.

To qualify, you’ll need to pay in £500 or more a month, have at least two active direct debits on the account and pay a £5 monthly fee.

6. Consider peer-to-peer

If you’re looking for a new way to get more from your savings, why not think about peer-to-peer lending?

Peer-to-peer lenders such as RateSetter and Wellesley & Co take money from savers and lend it directly to borrowers, cutting out the need for banks or building societies. And as a result, the returns are generally a lot higher.

With RateSetter, for example, you can earn 3.50% per annum (pa) with its monthly product, 4.10% pa with its one-year term account, 4.50% pa with its three-year term account and 6.10% pa with its five-year term account.

The peer-to-peer lending sector has been regulated by the Financial Conduct Authority (FCA) since April 2014, so all firms have to operate under certain rules.

But you will need to be comfortable with the fact that your money will not be protected by the Financial Services Compensation Scheme. This covers the first £75,000 (as of January) of your savings (per institution) in the event a bank or building society goes bust.

So there is a risk you may lose some or all of your initial investment.

However, many peer-to-peer lenders do offer compensation arrangements of their own, so it’s worth finding out more before you invest.

All overdrafts are subject to status and approval.

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*Representative Example: If you spend £1,200 at a purchase interest rate of 18.9% p.a. (variable) your representative rate will be 18.9% APR (variable).

All credit cards are subject to status and terms and conditions. Over 18s, UK residents only. Terms and conditions apply. See MoneySuperMarket.com for further information.

Peer-to-peer lending is regulated by the Financial Conduct Authority, but your money is NOT protected by the Financial Services Compensation Scheme. There is a risk you may lose some or all of your initial investment.

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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