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There are now just eight days remaining until the new tax year, and taking the time to freshen up your finances could mean you start 2017/18 with a clean slate. Taking stock of your bank balance and highlighting any areas that need to be tackled is great for your financial health; think of it as a spring clean for your finances!
"Most consumers know that shopping around and switching will save them money, but this is often put on the back burner," said Charlotte Nelson, finance expert at Moneyfacts.co.uk. "So, given that this is often the time of year in which many spring clean their homes, it could also be a great time to start getting organised financially."
There are just a few days left to sort out your ISA for 2016/17, so if you've yet to utilise your tax-free allowance for the year, it's now or never. "With the Personal Savings Allowance, many savers feel that ISAs have become redundant, yet ISA allowances work on the principle of use it or lose it, so once lost it will be gone forever – even when rates eventually do pick up," said Charlotte.
This means that you shouldn't neglect your allowance, particularly given that this year's ISA season has seen a boost to rates for the first time in a long time. For example, the average five-year fixed rate ISA has risen from 1.23% at the start of the year to 1.56% today, so now could be a great time to get on board and fix your finances for the future – and if you've already used up your ISA allowance for the year, get a head start on the next one by researching your cash ISA for 2017.
Based on today's average APR of 22.6%, our calculations show that it would take a borrower making fixed repayments of £150 per month a whopping four years and two months to pay off a credit card debt of £5,000 – and it would cost them £2,473 in interest in the process. That's where balance transfer credit cards come in.
As Charlotte pointed out, "if you've built up a balance on your credit card, there's no need to pay expensive interest on the debt. By opting for the best 0% interest balance transfer deal of 43 months, available from Halifax, the above borrower could save a whopping £2,324 in repayments (after the 2.98% fee is taken into account)".
Just make sure that you're organised enough to make this kind of option worthwhile – once a transfer is made, it's vital to ensure that the balance is repaid in full before the introductory deal ends, to prevent interest adding to the bill.
Current accounts are one of the few places where a saver can earn interest that currently beats the inflation rate of 2.3%, with some paying as much as 5%. However, it's worth pointing out that the interest is limited to smaller amounts, which may not make this option suitable for those with significant sums to invest.
Nonetheless, switching to a new account could still be worthwhile, even if you're not using it for savings purposes, with many accounts offering a fantastic package of perks that could make it worth the effort. "Along with enticing offers such as cashback and rewards, this is a great way by which customers can earn something just for everyday banking," said Charlotte.
"Don't be caught out by using your credit or debit card abroad," cautioned Charlotte. "It's easy to forget when on holiday that spending on your regular cards won't be free, but this can be a costly oversight." Instead, you'll want to be on the lookout for credit cards that are specifically designed to use abroad, such as Creation's Everyday Credit Card MasterCard or the Nationwide BS Select Credit Card Visa, neither of which come with any extra costs when spending overseas.
"With the average Standard Variable Rate (SVR) standing at 4.56% today, those who are just about to finish a two-year fixed rate deal may be in for quite a shock," said Charlotte. "With mortgage competition still high, now is the perfect time to look for a better offer."
Don't be tempted to revert to your lender's SVR – opting for the average two-year fixed rate of 2.33% instead could save £238.28 a month, or an impressive £2,859.36 a year (based on a £200,000 mortgage over a 25-year term on a repayment-only basis), which could make a significant difference to your monthly balance.
So what are you waiting for? Start the new tax year with a spring in your step, safe in the knowledge that your finances are as healthy as possible.
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