How to save money in 2011
Monday, 27 December 2010 12:00
With 2011 imminent we present a guide to starting the New Year on the right footing financially. The holiday season tends to put a lot of pressure on our pockets and January 2nd is the day when many people add up and face up to the true extent of what impact the Christmas and New Year blow-out had on their finances.
So, with the help of Kevin Mountford, head of banking at moneysupermarket.com, let's take a look at ten financial tips that can set you off on the right financial footing in 2011.
Kevin said: "Many people will be setting resolutions for themselves as we head into 2011. At a time when we are all feeling the pinch on our wallets, especially with the increase in VAT from January 4, one resolution that should remain top of your list is to take some time out to review your finances.
Mortgages
Mortgages are the biggest single financial commitment that consumers make so homeowners should ensure they are getting the best deal possible - even a small difference in rate can greatly affect the overall monthly mortgage payment. Switching a £150,000 mortgage from the average standard variable rate (SVR) of 4.74 per cent to the market leading two year fixed rate from Santander at 2.65 per cent would save £2,040.00 annually.
Savings
Savers had a tough year in 2010 with low interest rates and high inflation giving little return on their money. Switching from an easy account paying the average rate of 0.74 per cent to Northern Rock's easy access account offering three per cent could generate an extra £226 of interest based on a savings pot of £10,000.
Use the myfinances.co.uk comparison site to find the best deal on savings accounts.
Personal Loans
The personal loan market has seen renewed competition over the past few months with average rates falling, so for consumers looking to borrow over £7,000 it pays to shop around. Swapping a £7,000 five year loan at an average rate of 11.68 per cent to the Alliance & Leicester loan at 8.7 per cent would generate an annual saving of £112.40 meaning an overall saving of £562.00.
Current Accounts
Switching your current account provider to one that pays a good rate of interest could earn you some additional cash. The Santander In Credit current account pays interest of five per cent on credit balances. Keeping a £1,500 balance in this account for 12 months would earn £65.25 in interest. However, if you use an overdraft every month, you could save £253.80 by switching from an account with an average overdraft rate of 16.92 per cent to the Santander Preferred Overdraft Account at 0 per cent for 12 months.
Credit cards
With many Brits carrying over debt from Christmas spending into the New Year they should ensure they get the best deal with a balance transfer card. By switching £2,000 worth of debt on a card with an average APR of 17.32 per cent to the market leading Virgin Credit Card, there would be no interest to pay in the first year. This would amount to an annual saving of £301.85 taking into account the balance transfer fee.
Car and home insurance
While insurance is necessary for financial security and peace of mind, it is essential people shop around for the best value cover that suits their needs. Insurance doesn't have to break the bank, and by following a few simple tips, you could shave pounds off your yearly outgoings.
For example, many people make the mistake of over-estimating the level of cover needed on their home and end up forking out extra as a result. Similarly, paying annually for your home insurance will be cheaper than paying monthly, and adding a partner or, if you are a younger motorist, adding an older driver to your car insurance policy can also help cut costs.
Use the myfinances.co.uk comparison site to find the best deal on insurance.
Utilities
For people looking to save money on their energy bills, scouring the market to ensure you are on the right tariff for your consumption level and region is crucial. The easiest way to make savings is to move to a dual fuel online direct debit deal. By switching to the best online tariff instead of staying on the average standard tariff, customers could save on average £258 over 12 months.
There are also simple measures you can take to cut down energy costs - turning down the thermostat by 1°C can cut your annual bill by ten per cent. Similarly, loft and cavity wall insulation can save up to 35 per cent of heat loss and the initial costs involved in the set-up process will soon pay for themselves in the savings you will see to your bills. Turning appliances off at the wall instead of leaving them on stand-by mode will also help to reduce costs.
TV, phone and internet
Bundling your TV, landline and broadband together into one package can result in big savings. For example, Sky provides a TV Variety Pack which includes broadband, line rental and a basic TV package, with unlimited evening and weekend calls. By bundling products, customers could save on average £219 over the year. It is also important to review your subscriptions annually and scour the market to ensure you're still getting the best deal.
Kevin concludes: "It is easy to make the mistake of sitting on average products which do not give a good rate of return or cost far more than they need to. Significant savings can be made by switching to a better deal and you may find that it could be the best resolution you have ever made. These savings don't even require a change of lifestyle, but simply requires a few minutes of research to check what deal you are currently being offered, comparing to other products and changing to a more competitive deal if necessary."
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