Reduce Your Household Bills By A Monster £2010
Money Saving Tips
If you own a house with a mortgage, then your home loan is likely to be your biggest expense, even after the steep rate cuts of the past year. Don’t stay loyal to one lender; instead, shop around to see if you can reduce your interest rate by remortgaging.
The size of the saving: knocking 1% off the interest rate on a £100,000 interest-only mortgage would save you a tidy £1,000 a year.
2. Get quality quotes for insurance
It seems to me that there is an insurance policy to cover almost anything these days. However, a lot of these plans provide poor value for money, especially extended warranties, mobile insurance, boiler cover, card protection plans, identity theft protection, and so on. Get rid of this rubbish!
Nevertheless, some insurance policies are well worth having, but only if you get the right cover at the right price. Therefore, instead of automatically renewing your policies at renewal time, shop around for quality quotes for car insurance, home insurance, travel insurance and life insurance.
The size of the saving: by pruning your premiums, you could easily reduce your spending on protection policies by £300 a year.
If you’ve not switched supplier in the past two years, then you’re probably paying well over the odds for your gas and electricity. For the record, the average saving made by lovemoney.com readers using our clever energy price-comparison tool is a tidy £215 a year. That adds up to more than two grand over ten years.
The size of the saving: £215 a year.
4. Cutback on communication costs
After shopping around for new energy tariffs, repeat this exercise for your broadband connection, your home telephone and your mobile. It makes no sense to stick with an expensive, outdated ‘legacy tariff’, leaving new customers to grab the great deals.
The size of the saving: £200 a year across all communication costs.
5. Blast your banking and borrowing bills
The average credit card charges yearly interest at over 18% APR, which is more than 36 times the Bank of England’s base rate of 0.5% a year. Why pay such rip-off rates when you can get up to 16 months of interest-free credit by shifting your debts to a 0% balance transfer card?
Likewise, why pay interest rates of 15% to 40% a year when you go overdrawn, when you can get an interest-free overdraft for a year, simply by switching current account?
The size of the saving: by reducing the interest rate on a debt of £2,000 by 10% a year, your yearly saving is £200.
6. Give your savings a shot in the arm
With the collapse in the base rate over the past year (it’s tumbled from 5% to 0.5%), savings interest rates have been shot to pieces. Today, there are thousands of savings accounts paying less than 0.5% a year and that’s before tax and inflation are taken off.
As I explained last month in Earn six times as much interest, switching to a superior savings account can provide a big boost. Indeed, by jumping ship, one reader raised his cash ISA rate from a feeble 0.4% a year to a much more respectable 2.65% a year. That’s 6.6 times as much interest for little effort, providing a tax-free income of £95.40 if you deposited the maximum Cash ISA allowance of £3,600.
The size of the saving: if you can make an extra £95 a year from your savings, then we’ve hit our target of £2,010 for 2010.