With Halloween fast approaching, many of us will have ghosts, ghouls and other creepy monsters on the mind, but have you thought of what's possibly the creepiest monster of all: your finances? Charlotte Nelson, finance expert at Moneyfacts.co.uk, has hunted down some of the most blood-curdling finance statistics to get you in the spooky mood, or at least get you thinking about what you can do to improve your financial situation.
Charlotte's first statistic (which is based on a borrowing amount of £200,000 over 25 years on a repayment-only basis) may well strike fear in the hearts of homeowners everywhere. "Homeowners who have failed to switch mortgages when their deal came to an end could be paying painfully more for no reason," she explained, with "[those sitting on] the average SVR of 4.90% a hair-raising £257.75 a month worse off compared to those opting for the average two-year fixed rate today (2.52%).
"The jump between an existing deal and a lender's SVR can be shockingly steep. So, any borrower sitting on their provider's SVR or coming to the end of their current term should look for a new deal straightaway. Borrowers who do so could put the extra cash saved to better use, for instance, by significantly reducing their mortgage term by overpaying each month."
According to the Office for National Statistics (ONS), the savings ratio currently stands at -0.6%, which means that on average, UK households are spending more than they earn, and have been for the last three quarters. "It may be partly down to confidence in the market that UK consumers are happy to borrow, yet even so, household borrowing still needs to be kept in check," said Charlotte.
"If this sounds familiar, budgeting is the best treat you can give yourself this Halloween. Getting back to the basics of working out all outgoings will help you see a clear picture of where you could make some potential savings."
"A shocking 30% of the savings market pays less than 0.75%," Charlotte warned, as savers face an ongoing nightmare despite two base rate rises. "The worst thing savers could do at the moment is sit in an account where the rate is falling behind.
"For example, a saver who has £10,000 sitting in an account paying 0.75% would receive a disappointing £75 in interest after 12 months; however, by moving to the best one-year fixed rate bond, savers could earn a thrilling £205 – certainly worth the switch."
This figure, which comes from Halifax's August 2018 report, marks a startling increase of 71% since 2008. "Faced with such a large sum, saving to get on the housing ladder can be a daunting prospect," commented Charlotte. "However, there are Government-backed schemes on offer that can help you on your way, such as the Help to Buy ISA and the Lifetime ISA, which both give you a bonus depending on how much you save."
Those looking to put some of their festive spending on a credit card will be ghoulishly disappointed by the deals on offer. "The average credit card APR now stands at 23.6% (up from 22.8% two years ago), which shows the importance of aiming to pay off any outstanding balance you may have," Charlotte found. "As a result, borrowers who have debt remaining on a credit card could be significantly better off opting for a balance transfer deal, with the intent to clear this balance.
"For example, with today's average APR of 23.6%, a borrower would have to make fixed repayments of £100 per month over three years to repay a credit card debt of £3,000. It would also cost them £1,330 in interest. However, by opting for the best balance transfer deal in the market, borrowers would pay just £59.20 in interest and it would take three months less (33 months) to repay the debt."
Once again, the ONS delivers some seriously scary statistics, this time from the Young People's series. Charlotte commented: "This is a terrifying statistic and unfortunately it is not limited to the younger population of today's society. Failure to have any money saved means that if anything were to happen, you would be less able to cope. Saving regularly is vital – setting up a standing order and treating saving almost like another bill is a great place to start."
Whatever your situation, remember that it's never a good idea to bury your head in the sand. "Fixing your finances sooner rather than later will lift a massive weight off your shoulders and make things far more manageable in the future," Charlotte concluded.
So, if you're just starting to think about saving, the easy access account Best Buys are a great place to start, or if you're looking to put away a little each month and get a high interest rate there are regular savings accounts, too. The latter could be perfect for next year's festive fund.
Those who are thinking of tackling their debts could consider a 0% balance transfer credit card, or indeed a personal loan if they'd like some repayment stability. If you're not sure where to start, our guide on getting out of debt could help.
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