To reveal the Hints & Tips tailored for you please select the product areas below.
SAVINGS
- Split up your savings into short term (e.g. day to day money, holidays, moving home), medium term (e.g. having children, travelling) and long term (e.g. your retirement). This will help you decide how much you need to save and find the most suitable savings accounts.
- Put at least 2-3 months of your income away so you have an emergency fund or 'cash cushion' for something unexpected.
- USwitch research has found that 22m savers are unaware of the rate they are being paid (uswitch.com - 8th April 2009). Keep an eye on the interest rate that is paid on your savings. As these can change rapidly you may no longer be getting the good rate you thought you were. Also consider any bonuses or withdrawal penalties that apply.
CURRENT ACCOUNT
- If you're planning to use your debit card abroad, make sure you contact your bank to understand what charges you are likely to incur. Some cards charge as much as £1.50 for every overseas purchase, as well as additional foreign exchange fees ranging from 2.75% to 3%. They may also charge fees of 2.5% or a minimum charge of £2.50 every time cash is withdrawn from an ATM. It is also a good idea to let your bank know you are going abroad so that they don't put a stop on your card due to unusual spending.
BORROWING
- Fraud costs the UK £14 billion pounds a year (crimestoppers-uk.org.uk - 19th March 2009), so it's worth checking your credit file with the major credit agencies (e.g. Experian/Equifax) to make sure everything is in order. Challenge anything that appears incorrect otherwise it will affect your credit rating. Under the Consumer Credit Act, credit agencies have to provide you with a one off copy of your credit report for £2, although most of the credit agencies offer free trial periods.
- Section 75 of the Consumer Credit Act means that there is a valuable benefit of paying by credit card, rather than debit card. If goods or services costing more than £100, and less than £30,000, are faulty, or not as they were described, or if the retailer goes bankrupt, you can recover the cost from your credit card provider or from the retailer.
- Earn rewards on your spending. Cashback credit cards give you back a percentage of every £1 you spend - typically between 0.5% and 1.5%, but sometimes as much as 5%. However, you need to make sure you pay off the balance each month, or the interest will outweigh the cashback. In a similar way, reward cards offer points or air miles, generally for every £1 you spend on your card. While the number or points or miles you get varies from card to card, you could earn money off your shopping with reward points, or miles, to put towards flights.
- £23 billion is spent on credit cards every year abroad so consider getting a credit card that doesn't charge commission on foreign currency, use it on holiday and pay it off as soon as you're back home. If you keep hold of it for your next trip, double-check that the benefits and charges on the card haven't changed in the meantime.
MORTGAGES
- Take advantage of any penalty-free repayment facilities on offer. Overpaying (even by a small amount each month) can take years off your mortgage and significantly reduce the amount of interest you'll pay. For example, if you borrow £100,000 at 6% over 25 years, you'll pay it back at £643 a month. The total interest charge will be £93,000. But if you can overpay by just £100 a month you'll clear the loan in less than 19 years, giving you six years of mortgage-free living and saving £25,000 in interest.
- Brits repaid a record £8bn of mortgage debt in the last three month of 2008 (http://news.sky.com - 3rd July 2009). If you are one of the millions of homebuyers who have seen their monthly mortgage interest bill fall in the past six months, then use this extra spending power wisely. Divert the spare cash to help pay off expensive credit card debts. Or, if your lender allows it, simply carry on paying the same each month to overpay the mortgage and reduce the outstanding capital. This will help you clear the mortgage debt more quickly, saving potentially thousands of pounds in interest costs.
- Look beyond the interest rate when choosing a mortgage. Always take into account the size of your mortgage, f your mortgage is relatively small it may make more sense to choose a mortgage with a lower reservation fee and incentives like free valuation even if it's a higher interest rate. If you have a large mortgage, it could make more sense to go for a lower interest rate and pay a slightly higher fee. The most expensive item you are ever likely to buy is your home, so it's worth spending some time to make sure your mortgage is the best possible deal for you.
PROTECT AND INVEST
- A staggering 72% of UK adults don't yet have a will (Co-Operative Legal - January 2009), and have no intention of getting one in the near future. Stay ahead of the crowd and make a will so your estate gets passed to those closest to you, and not the taxman. Remember to update your will if there are any changes in your life, e.g. marriage, births or divorce.
- Unbiased.co.uk research has found that the amount of inheritance tax Britons paid has increased by 16% year-on-year to £2.2bn. The company attributed the £314m increase to people failing to take out sufficient IHT provisions before their deaths (unbiased.co.uk - 11th May 2009).
- Consider paying insurance annually if you can afford to do so. Monthly instalments usually charge a premium of between 15% and 20% for the privilege (Life-assurance-bureau.co.uk - July 2009). So, if your home and car insurance bill for the year is £600, you're paying up to £120 a year in interest by paying monthly. If you can save up for next year's premiums in advance you can save money by paying the whole lot in one go.
- 47% of people feel that they are not sufficiently prepared for retirement (direct.gov.uk - May 2008). To avoid this ensure you get your full state pension, make sure that you and your partner have made the maximum national insurance payments over your working life. You can make 'catch-up' payments if you haven't.
- You never know what's around the corner. One in 30 people in the UK have been off work for over a year due to sickness or an accident (source: DSS Statistics 2008). Given the responsibility of having dependents, it makes sense to prepare for the unexpected and take steps to protect your family's standard of living.