Last week we all watched as George Osborne attempted to cut billions from the country’s outgoings without ruining the nation’s quality of life. Time will tell how he has done, but as the government tightens its belt, so should individuals – after all, if free services are to be cut we’ll need all the cash we can get to compensate. So how can we kick off our own Comprehensive Spending Reviews?
Start with what’s most likely to be your largest monthly payment: your mortgage. Can you get a better deal? At the moment many Alliance & Leicester borrowers are paying a standard variable rate of 4.99%. On a £150,000 mortgage over 25 years, that equates to a monthly interest cost of £624. But HSBC is currently offering a lifetime tracker fixed at 1.69 percentage points above the Bank of England base rate with a fee of £99. Right now that would make monthly interest-only payments only £274 on the same amount – more than 50% less.
Next, look in your wallet. How much interest are you being charged on your credit cards? If you have any debt built up on them that you can’t pay off then switch them to a 0% card, such as the Barclaycard Platinum, which is offering 0% on balance transfers for 16 months.
Now turn to your energy bills, where there could easily be a £400 saving to be had. If you are on British Gas’s four-year fixed-price tariff from September 2008, you are paying £1,428 a year on average. If you leave, you pay a £70 exit penalty, but if you move to Npower’s Sign Online 19 tariff you’ll pay around £890 a year. So even with the exit penalty, you’ll be much better off. Find out how much you could save at www.uswitch.com.
Next up, home and car insurance. Remember, insurance companies do not reward loyalty. Customers who renew get a poorer deal than new customers. So when your policy is due to run out, shop around. Don’t just renew.
Finally, shop around for a better mobile-phone deal. The monthly price of a mobile-phone contract has dropped dramatically in recent years, so if you are paying more than £30 a month you are probably paying over the odds. If you go for a sim-only deal – where you keep your current phone – you could pay as little as £10 a month for 300 talk minutes and unlimited texts. It has also become a lot simpler and quicker to take your mobile number with you if you switch, so there really is no excuse for having a bad deal.