Personal Finance News

Paying off debt is the biggest money saver

Savings rates have tumbled, but borrowing rates on credit cards, personal loans and overdrafts have actually increased over the last year, so the gap between the interest charged on debts compared to interest paid on savings has widened dramatically.

Therefore it is seriously worth considering reducing some of your debts as a more effective way of saving money.
Just to highlight this point, if you have an credit card balance with a rate of say 17.9% APR, paying off a £300 lump sum would save you £53.70 in interest charges over a year.

To earn the equivalent on your savings, you would need to invest seven times as much i.e. £2100 in the highest paying 1 year bond at 3.00% which would earn you just £50.40 net of basic rate tax.

Switch your car or home insurance and put some extra cash in your pocket

There are many people who continue to remain loyal to their insurance provider and think it’s not worth the bother switching. The reality is that it only takes a few minutes to compare quotes from almost 100 providers and with insurers desperate for new business; the savings can be much larger than you imagined. It’s quite common for our customers to save over £70 on a single policy.

Plus, at moneynet you can currently get an extra £20 cashback on motor insurance and an extra £10 rebate on home insurance – check it out for yourself today and see how much you can save.

Repaying a little extra each month can bring big rewards

If you haven’t got a lump sum that you can put towards paying off your credit card debt, you can still save a packet simply by paying just a little extra off your credit card statement each month. You’ll be amazed how much difference just an extra £20 per month will make.

Here’s the numbers to prove it. If you have a £1500 balance on your credit card at 17.9% APR, by paying an extra £20 each month on top of the 3% minimum repayment, you will pay your balance off in 4 years rather than over 15 years and you’ll save a staggering £845 in interest charges in the process.

Another more obvious way to save on credit card interest is to switch your balance to a 0% credit card deal from the likes of Egg Money where you can get interest free borrowing until August 2011.

Switch your bank account and get a £100 bonus

Transferring your current account to First Direct or Alliance and Leicester Premier is another way to earn some extra cash; both of these banks are currently offering new customers a one off payment of £100 to switch their cheque account.

It’s not often you get the chance to earn £100 without having to graft for it, it’s easy money, with your new bank looking after the transfer process on your behalf.

To put it into perspective, if you’re stuck with a savings account paying a mere 1% and you have a balance of £2000, it would take you more than six years to earn £100 in interest (net of basic rate tax). Whereas just by switching your current account you can bag the £100 ‘golden hello’ in no time at all.

In these uncertain economic times the message is simple, whether you’re saving or borrowing, don’t rest on your laurels and risk losing out financially. Keep an eye the best deals via moneynet.co.uk to make sure you don’t miss out.