FAMILIES face being worse off by an average of £2,417 this year – that’s £200 a month – when the cost of living soars from April.
We are all worried about paying bills and cutting back on essentials.
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But there are ways you can fight back and find extra cash.
Rachel Wait explains six simple ways to save thousands.
1. PAY FOR INSURANCE UP FRONT, NOT MONTHLY
IF you’re paying for your car insurance and home insurance on a monthly basis then it could cost you £55 and £13 extra a year, respectively, according to Gocompare.com and Moneysupermarket.com.
Paying monthly means you’re effectively taking out a loan from your provider and interest will be added to your bill.
Brean Horne, personal finance expert at comparison site Nerdwallet, said: “Home insurance premiums can cost 6 per cent or even more if you pay monthly.
Car insurance providers may add an average of almost 12 per cent to your premium, with some insurers charging as much as 30 per cent interest.”
If you can’t afford to pay for your insurance in one go, a 0 per cent purchase credit card could help you to spread the cost over a number of months, interest-free.
SAVING: £68 A YEAR
2. USE DEBIT CARD NOT CREDIT CARD FOR CASH
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IF you’re short of cash, resist the urge to whip out your credit card and withdraw money at the cash machine as this will cost you.
As well as a cash advance fee of around 3 per cent, you’ll be charged interest from the moment you get your cash.
Interest rates are typically higher compared with standard transactions, sitting around the 27.9 per cent APR mark.
That means an £80 cash withdrawal could cost you £5.98 in fees and interest.
If you took out the same amount each month that would cost you £71.76 a year. Use a debit card or prepaid card for withdrawals instead.
SAVING: £72 A YEAR
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3. BE READY TO SWITCH YOUR MORTGAGE DEAL
AS soon as your mortgage deal ends you’re automatically rolled onto your lender’s standard variable rate (SVR).
Earlier this week interest rates went up for the second time in two months to 0.5 per cent.
This will only cause further financial misery – so don’t make a common money mistake.
Much cheaper rates can be found by shopping around, so shift to a better deal as soon as possible.
Laura Suter, head of personal finance at AJ Bell, said: “Someone with £250,000 of borrowing on the average standard variable rate mortgage of 3.63 per cent could save £3,936 a year by switching to the current top two-year fix.”
SAVING: £3,936
4. PAY AS MUCH AS YOU CAN OFF CREDIT CARDS
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IF you make a minimum repayment on a credit card then it will take years longer to clear your debt and you’ll pay hundreds of pounds extra in interest.
Pay off as much as you can afford each month.
Jonathan Watts-Lay, director at Wealth at Work, said: “A debt of £3,000 with a rate of 18 per cent APR, could take ten years and ten months to pay off if paying £50 a month, with total interest paid of £3,495. If that monthly payment was increased to £100 a month, the debt would be paid off in three years and four months, and interest paid would be only £908.”
Consolidating credit card debts onto a 0 per cent balance transfer credit card means more money will go towards paying off the debt so you’ll clear it faster.
Compare cards using a comparison website like Uswitch.com or Moneysupermarket.com to find the best deal.
SAVING: £2,587
5. BUY SUPERMARKET OWN-BRAND ITEMS
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BUYING branded names at the supermarket can add hundreds of pounds to your food bill over the course of a year.
But switching to budget or supermarket own brands could help you save a third (around 33 per cent) on your food shop, according to Nerdwallet.
On a weekly food shop of £70, that could save you around £1,200 a year.
Lynn Beattie, founder of MrsMummyPenny.co.uk, says: “The price difference between branded and supermarket own products can be massive.
“You can save even more by opting for the supermarket’s basic range rather than its luxury products in fancy packaging.
“Test out the cheapest products and if you can’t tell the difference, stick with them.”
SAVING: £1,200 A YEAR
6. CANCEL UNWANTED SUBSCRIPTIONS
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TAKE a look at your bank statements and weed out unwanted magazine subscriptions, insurance policies and memberships. If it’s been a while, you could put £1,000 a year back into your pocket, according to money expert Martyn James.
He says: “I recently did this and it took me just an hour to save myself a massive £1,000 a year. You’ll be amazed at how much you could save too.
“I cut out some of the streaming channels I don’t use, dropped my gym membership, stopped repeat orders on Amazon and spotted billing errors which I reclaimed.”
SAVING: £1,000 A YEAR
