January is never a kind month on the bank balance, but don’t despair, says Vicky Shaw, make some New Year’s money resolutions instead...
This time of year, after too many Christmas indulgences and too much time before the next pay cheque, many people are desperate to get their finances back on track. It can seem overwhelming, but some simple changes can help you make sure 2014 is the year your money goes that little bit further.
Switch your current account
If you’re happy with your current account provider, that’s great. If not, give them the elbow and make a fresh start for 2014.
New rules have made it simpler than ever to ditch your old bank or building society. The length of time it takes to switch has been cut from up to 30 working days to just seven, and all outgoing and incoming payments are now automatically swapped over to your new bank account. A new switching guarantee also means you will be refunded any charges incurred as a result of mistakes in the process.
Before jumping to a new provider, think about how you use your current account to work out which deal will offer you the best value. If you often dip into your overdraft, you will want to keep charges to a minimum, but if you are often in credit, you may want to make the most of your money by choosing an account which pays in-credit interest.
Current account providers are also increasingly offering cashback deals and you may want to consider if this will work well with you.
A paid-for or “packaged” account may be worth thinking about. Such accounts offer a bundle of add-ons, like travel insurance, in return for a regular fee. You will need to consider whether you’ll actually use the perks these packaged accounts come with though, or whether it would work out cheaper to buy these add-ons separately elsewhere.
Transfer existing credit card debt to make your borrowing cheaper
Helen Saxon, money expert at MoneySavingExpert.com, explains: “If you have existing debts on credit cards, a balance transfer is where you get a new card that repays the debts on other cards for you - so you now owe the money at hopefully a cheaper rate. In turn, this means you’re debt-free quicker.
“How much you can transfer will depend on the credit limit you’re given. If it’s not high enough, move what you can - it’ll still cut some of your costs.
“Then if you need to, consider applying for another balance-transfer deal to shift the remaining expensive debt.
But beware, the more applications you make can, the greater the impact on your credit score.”
You will need to go through the hurdle of passing credit checks to get your hands on a new card, but a balance-transfer eligibility checker at www.moneysavingexpert.com/BTeligibility will tell you your odds of getting each card. This will not affect your credit score because, unlike applying for a card, this process leaves no credit search behind that lenders can see.
As well as reducing the risk of rejection, the tool also suggests some cards with less stringent acceptance criteria. Credit card providers have been battling it out in recent months to offer long-running zero interest rates, so now is a great time to see what’s on offer.
Switch to a cheaper energy deal
A string of major providers have announced hikes in recent months, so if you haven’t done so already, scour around to compare deals. It may well be worth considering locking into a cheap fixed tariff to protect against any future increases.
Have an early spring clean
According to research from AA Home Membership, nine out of 10 of us have gadgets lurking at home that we hardly use, with chocolate fountains and fondue sets among the worst offenders.
Now could be the time to put unwanted items up for sale, perhaps on a website such as eBay.
If you’re not the sentimental type and are prepared to risk the wrath of friends and relatives, you could also sell any unwanted Christmas gifts.
Building up additional funds with items you already own could help stretch your finances until next month’s pay cheque.
Take advantage of discount vouchers and cashback rewards
This is another great way to stretch out your January budget. A recent study for American Express by the Centre for Economics and Business Research looked into the impact of multi-buy and price discounts, store card reward points, vouchers, coupons and credit and charge card rewards such as cash back, and restaurant deals.
It found that each shopper saves around £742 a year.
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