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Spring clean your finances

Spring clean your finances

Category: Money

Updated: 29/03/2016
First Published: 29/03/2016

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

March is often the time when people start to spring clean their homes in preparation for the rest of the year, but with only eight days remaining until the new tax year, it may also be a good time to freshen up your finances.

"Regularly taking stock of your finances and highlighting any areas that need to be tackled is great for your financial health," said Charlotte Nelson, finance expert at Moneyfacts. "Fixing your finances sooner rather than later will lift a massive weight off your shoulders and make things far more manageable in the future."

So, with that in mind, we've outlined a few tips and areas you may want to focus on to give your finances the ultimate spring clean:

Opt for a balance transfer deal

Based on today's average APR of 21.8%, our calculations show that it would take a borrower making fixed repayments of £100 per month a full three and a half years to pay off a credit card debt of £3,000 – and it would also cost them £1,183 in interest.

However, if you have an outstanding balance on your credit card, there's no need to pay expensive interest on the debt. Why not consider getting a balance transfer credit card instead? "By opting for the best 0% interest balance transfer deal, borrowers could save a whopping £1,105.60 in repayments", said Charlotte. To really benefit, just make sure that the balance is repaid in full before the introductory deal ends, as that way you can prevent interest adding to the bill.

Switch your current account

Want to get a better deal from your current account? You can! "The seven-day switch guarantee means that customers no longer have to put up with poor service or expensive overdraft fees, and there are now many enticing offers out there to choose from", Charlotte explains. "For instance, some current accounts pay up to 5% in interest (albeit with some funding restrictions), a rate that easily beats the best savings accounts."

Don't let your savings languish in poor accounts

Constant talk about dire savings rates may put some people off searching for a better deal, but your cash can always work harder for you – particularly if you're sitting in one of the 131 accounts that currently pay 0.50% or less. Figures show that a saver who has £10,000 sitting in an account paying 0.50% would receive a disappointing £50.11 in interest after one year, but by moving that sum to the best one-year fixed rate bond, they'd be able earn £192.68 – a significant boost.

Saving for your first home? Opt for a Help to Buy ISA

If your big dream is to get on the housing ladder, a Help to Buy ISA is a great way to get you there. This kind of account is designed to increase the amount you're able to put towards your first home and provides extra incentive in the form of a top-up from the Government – essentially, you'll be given a 25% bonus on top of anything you're able to save, within the specified limits. Not only that, but with rates of up to 4.00% available, savers can benefit from the extra bonus as well as getting some of the best rates on the market.

Going on holiday?

"While many holidaymakers make an effort to get the best exchange rate on their currency before their trip, the same can't be said for emergency spending," said Charlotte. "When abroad it's easy to forget that spending on your regular debit card won't be free, which can be a costly mistake. To avoid unnecessary charges and fees, consumers would be wise to opt for a travel credit card that's designed for use abroad to cover any extra spending."

Get a fixed rate mortgage now

If you're currently sitting on your lender's standard variable rate (SVR) or are coming to the end of a fixed rate mortgage deal, now's the perfect time to look for a better offer. You can benefit from some of the lowest deals on record, and could potentially save a significant sum in the process: by opting for the average two-year fixed rate of 2.56% instead of staying on the average SVR of 4.81%, our calculations show that you would be £2,926.32 better off after just one year (based on a £200,000 mortgage over a 25-year term on a repayment only basis).

If you went one step further and used the extra money to overpay your mortgage, you could also significantly reduce the length of your mortgage term – it's a win win from every angle! So, step into the new season by taking a closer look at your outgoings, and see if you can spring into better financial health.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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