Many of us will be looking to shed a few pounds from our waistlines after over-indulging this Christmas, but our wallets are usually the one place where we’re happy to feel the bulge.
Here, we look at six ways you can pile on the pounds (financially speaking) this New Year…
1. Review your mortgage
If you’re a homeowner, your mortgage is probably your biggest monthly cost. If you’re paying your lender’s standard variable rate (SVR), or you simply haven’t checked what rate you’re on for a while, the chances are you might be able to boost your bank balance substantially by remortgaging.
For example, if you’re currently paying the typical standard variable rate of 4.75% and have a £100,000 mortgage with 10 years left to run, monthly payments will currently set you back £1,048. If you remortgaged to a best buy two-year fixed rate at 1.17%, your monthly payments would fall to £883 a month, a saving of £165 a month or just under £2,000 over a year. Whilst this deal comes with a hefty fee of £1,195, even with this factored in, the savings are still substantial. Remember that there may be legal costs too, plus a valuation fee, although many remortgage deals now include these free of charge.
It’s not always easy to know which mortgage deal to choose, so your best bet is usually to use a fee free mortgage broker such as Fluent or London & Country Mortgages, where you can see lots of available options and get help narrowing them down so you can find the right mortgage for you.
2. Claim what you’re entitled to
Billions of pounds of means-tested benefits and tax credits goes unclaimed each year, so it makes sense to check whether you’re getting everything you’re entitled to.
For example, according to analysis from charity Turn2us, as many as one in four over 65s who are entitled to Pension Credit do not claim it, whilst carers across the country are missing out on £1.15 billion in unclaimed Carer’s Allowance. Turn2us can assess your eligibility for benefits through its Turn2us benefits calculator or by phone on 0808 802 2000. Alternatively, you can get help from Citizens Advice. You can search for your local Citizens Advice here.
3. Review your phone, TV and broadband package
When was the last time you changed your home phone, TV and broadband providers? Lots of us switch to new providers when we move home, and then stick with the same suppliers year after year even when our introductory deals have finished.
This can really cost you, so if you want to put some pounds back in your pocket in 2020, check how much you’re currently paying and see if you can save by moving to a different provider. Bundling your TV, phone and broadband together so you get them from a single supplier can help you save money and make it easy to keep on top of how much you’re spending. Always check to see what your current supplier can offer you first though – if you let them know you’re planning to move they might offer you a much better deal simply to stay.
On our broadband comparison tool, you compare deals with a wide range of providers and can customise the results to what you’re interested in, such as broadband speed, contract length, TV channels included and more. Several other comparison sites such as MoneySuperMarket.com also enable you to compare broadband, home phone and TV providers. According to uSwitch, the average ‘out of contract’ costs for the biggest providers including BT and Virgin Media are £492 per year compared to around £300 per year for the cheapest deals, a saving of nearly £200.
4. Earn more interest on your savings
There’s no escaping the fact that interest rates are low, which in turn makes it tricky to earn decent returns on your savings.
But it’s still worth hunting down the best rates, even if you don’t have a big savings pot.
The consumer association Which? has a really useful Savings Booster tool which lets you know how much extra interest you’d earn by switching provider. All you need to do is say what the current value of your savings is, and your current savings rate, and the tool comes up with the amount of interest you’d get if you transferred your savings to a higher interest-paying account.
For example, if you’re happy to tie your money up for a year, Ford Money currently pays a market-leading 1.65% on its one-year Fixed Rate Bond, which can be opened with £500. The top easy access account is from Shawbrook Bank and pays 1.41% on a minimum savings balance of £1,000. Remember that unless you’ve gone for a fixed rate account, savings rates can change over time, so you’ll need to keep a close eye on yours and switch your savings to a different account if your rate is no longer competitive. Bear in mind too that many savings rates include an introductory bonus which only applies for the first few months.
If you’re trying to build a savings pot for any emergency expenses, regular savings accounts can be a great place to start the savings habit, as they often pay the highest returns. The very best rates currently require you to have a current account with the same provider to qualify. If you’re willing to switch current account provider at the same time then you can have access to some of the best rates, and you may even be eligible for a current account switch bonus – see below. For example, if you have a First Direct current account, you can sign up for First Direct’s Regular Saver account, paying 2.75% AER fixed for one year. You need to pay in between £25 and £300 each month, and if you’re a new customer switching your current account to
you’ll also get a £100 bonus.
M&S also pays 2.75% AER fixed for 12 months on its Regular Saver account. You must switch to M&S Bank’s current account using its switching service to get the Regular Saver account.
Alternatively. if you’re keen on saving, but don’t want to have to switch current accounts, then Coventry Building Society offer a very respectable 2.5% rate of interest on their Regular Saver 2 account.
5. Reduce interest on your debts
If your plastic has taken a pummeling this Christmas, make sure you don’t pay more interest than you need to on what you’ve borrowed.
The best way to save money on high interest charges is to transfer your credit card balance to a new card with a lengthy interest-free period. Although there will typically be a balance transfer fee to pay, which is a percentage of the amount you’re transferring, the savings you’ll make in interest will usually far outweigh this cost.
For example, the average credit card debt in the UK is £2,663. According to comparison site GoCompare.com transferring this amount from a card which charges you a typical interest rate of 19.9% APR to a 0% balance transfer card with an interest-free period of 27 months and repaying £100 a month so the debt is repaid within the interest-free period, would save £880 in total.
Current best buy 0% balance transfer cards include Virgin Money’s 0% balance transfer card which offers 0% for 29 months, with a 3% balance transfer fee, and Barclaycard’s 0% balance transfer card which offers 0% for up to 28 months with a 1.75% balance transfer fee.
If you do take advantage of a lengthy interest-free period, always leave yourself a calendar reminder with plenty of time to spare, so you can switch again before the interest rates jump up.