Save, make, understand money

Household Bills

How to save £2,500 a year on bills

Written By:

Brits may be overpaying their bills by £2,500, according to analysis by Experian. Here are three ways to make savings…

The consumer credit reporting agency has concluded that Brits could save more than £2,500 a year by taking control of their finances.

For example, Experian’s analysis showed that homeowners may find they are overpaying on their mortgage by £1,800 per year by failing to remortgage when their introductory offer ends and they slip onto their providers’ Standard Variable Rate (SVR).

Don’t put off remortgaging

Around 29% of a sample of 2,000 adults, surveyed by One Poll on behalf of Experian, viewed remortgaging as too much hassle or too complicated, Meanwhile 28% admitted they didn’t realise that moving onto an SVR deal could lead to higher repayments.

Another fifth said they were unable to remortgage as a result of stricter borrowing criteria. Overall, only 6% had switched their mortgage provider over the last year.

Shop around for a better energy deal

There was similar inaction when it came to switching energy provider, with close to two thirds of households admitting they hadn’t switched over the past 12 months. According to Experian, this could mean they are overpaying by as much as £255 a year on average.

The research showed those aged 25 to 34 were more likely to shop around for a better deal: 37% of this sub-group had switched during the past 12 months. This compares to 29% of the 55 plus age group.

Find a 0% balance transfer card deal

Consumers can also cut costs by transferring an existing credit card balance to a 0% balance transfer card. Cardholders who don’t switch will typically incur interest of £468 on their credit card balance, Experian has deduced from Bank of England figures.

The research showed that 19% of respondents incur interest on their current card, with only 10% transferring a balance in the past year to avoid paying interest.

When asked why they had not switched, 23% said it wasn’t possible because they had a low credit score, while 18% felt the process of switching was too complicated. In addition, 16% were unaware of the benefits.

Experian estimates that a typical UK household can make combined savings of £2,521 by introducing these changes, seeking a better deal for mortgages, energy providers and credit card deals.

In order to raise awareness of the potential savings that can be made across household bills, Experian has launched Money Matters Week, as well as a step-by-step plan to help people to achieve their financial goals.