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Overhauling finances could save £2,260

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Written by:
11/12/2012
Switching mortgages, loans, credit card and other personal finances can save you thousands of pounds.

Changing to a new mortgage is the biggest win, potentially saving borrowers almost £800, according to new research by comparison site Moneysupermarket.com.

Kevin Mountford, head of banking at MoneySupermarket said:

“As we head into 2013, the impact of further austerity measures and rising bills will be leaving many households on the financial precipice. Now, more than ever, every penny counts. Different households face different challenges; our research shows the biggest financial worry for a quarter of people is increasing energy bills as we enter the cold winter months. Four in ten are more concerned about falling savings rates and a further one in ten stated their biggest financial worry is the uncertain job market.

“No matter what your main financial concern is in the current economic climate, it is vital you put your house in order in the New Year to ensure your finances are on the right track for 2013. There are still savings to be made for the average household as many Brits are languishing on products which provide a low return or cost far more than they need to. Apathy is rarely rewarded, so taking a few minutes to search the market, comparing the deals you are currently on with what is being offered and switching to a better deal could be the best resolution you make this New Year.”

Mortgages – Save £794

The area where often the biggest saving can be made is your mortgage, but remortgaging won’t be possible for everyone. However, there are still ways to free up a sizeable amount of money. 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 4.33% to the current market leading two year tracker rate from ING Direct at 2.49% would save £794 annually.

Savings – Save £104

Savers had a tough time in 2012 with interest rates falling and inflation remaining high resulting in savings pots being squeezed from all sides. Switching from an easy account paying the average rate of 0.27% to a Marks & Spencer Everyday Savings Account offering 2.35% could generate an extra £104 in interest based on a savings pot of £5,000. Don’t be put off by lower rates – it’s still worth moving your money into the highest paying accounts, especially if you have never shifted your savings.

Personal Loans – Save £205

Analysis from MoneySupermarket found the personal loan market saw average rates for loans between £7,500 and £15,000 hit their lowest level for over decade November, so for consumers looking to borrow over £7,500 it pays to shop around. Swapping a £7,500 five year loan at an average rate of 10.5% to the Derbyshire Building Society loan at 5.4% would generate an annual saving of £205.

Current Accounts – Save £90

Switching your current account provider to one that pays a good rate of interest could earn you some additional cash. The 1st Account from First Direct currently offers £100 to switch to the account. This would earn you £90 over the year compared to an account with an average rate of 0.65 per cent. However, if you use an overdraft every month, you could save £46 by switching from an account with an average overdraft rate of 19.65% again to First Direct’s 1st Account. Its overdraft charges an AER of 15.9% with the first £250 interest free.

Credit cards – Save £238

Recent research from MoneySupermarket revealed only nine per cent of credit card users plan to switch cards in the next six months. With many Brits planning to pay for Christmas on their credit or store card this year, it could prove costly if they are not on the best deal for their circumstances. For those 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% to the market leading Barclaycard Platinum credit card, there would be no interest to pay for 24 months. This would amount to an annual saving of £238 taking into account the balance transfer fee.

Car and home insurance – Save £525

Insurance is essential for financial security and a legal requirement for motorists, but people should look to find the best value cover to suit their needs. It doesn’t have to break the bank, and following a few simple tips could help save pounds on essential cover that ensures peace of mind. 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. Carefully think through the levels of cover you need. Similarly, paying annually for your home insurance will be cheaper than paying monthly if you can afford to do so, 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. There are great savings to be made by scouring the market to find the most competitive policies available to suit your needs. On average, consumers who use MoneySupermarket.com to switch their insurance provider can save £400 on car insurance and £125 on home insurance a combined saving of £525.

Utilities – Save £214

The winter nights have now set in and it will be an expensive Christmas for any household languishing on their provider’s standard tariff following recent energy price increases. Saving money on your energy bills can be easily achieved by searching the market and ensuring you are on the right tariff for your consumption level and region. The easiest way to make savings is to move to a dual fuel online direct debit deal. By switching to the best online dual fuel tariff instead of staying on the average standard QCC tariff, customers could save on average £214 over 12 months with First Utility iSave v13. There are also simple steps to take to reduce consumption and cut down energy bills, for example turning down the thermostat by 1°C can cut your annual bill by 10%.

Similarly, almost 25% of heat is lost via poorly insulated roofs, so it is worth investing in insulation as an insulated loft can knock £175 off your annual energy bill. Turning appliances off at the wall instead of leaving them on stand-by mode will also help to reduce costs.

TV, phone and internet – Save £91

Bundling your TV, phone and broadband together rather than taking out standalone products could save you £91 a year, and in addition to this you would also benefit from the ease of dealing with one provider rather than three. For example, Sky provides an Entertainment TV Pack which includes broadband, line rental and a TV, with unlimited evening and weekend calls.

Total Saving = £2,261

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