Tomorrow marks the first day of spring, a time of year that should instil a sense of new beginnings and brighter days. Alongside the warmer weather and the desire to spring clean their homes, one of the areas that consumers may wish to revitalise is their finances, and we're here to help: Rachel Springall, finance expert at Moneyfacts.co.uk, has put together some top tips for those who spend, save or who are looking to refinance, to help consumers give their wallet a thorough spring clean.
"One of the first steps to a brighter financial view is to dissect household income and outgoings," said Rachel. "If consumers can break down where they are overspending and what they could look to rein in on, it can make a world of difference. Starting a simple spreadsheet and keeping tabs on household bills and upcoming expenses, like holidays and birthdays, can help customers from being cut short."
This could not only give you more control over your finances, but it could also help you save more, as if you find areas where you're overspending and cut back as a result, you could have more disposable cash left over at the end of the month. Why not put that cash to good use in a top-paying savings account? An easy access deal could be perfect as it allows you to save small amounts whenever you can – check out the bonus and bonus-free Best Buys to get an idea of what's out there.
"There is an abundance of mobile apps that can be really beneficial for consumers to improve their financial health," said Rachel. "Free apps such as Money Dashboard can be useful to establish up to date balances on current accounts, credit cards and savings, from many different brands. Customers can assign their outgoings to categories and easily see where most of their cash is going each month."
"Consumers may be overwhelmed by the amount of loyalty cards that are available across the high street and might not have enough room in their wallet to carry them around every day – but this is where the Stocard app comes in," Rachel explains. "This app is completely free and enables customers to scan their loyalty cards to use on their phone. It's worth spending a few minutes to get them added, and consumers may find they start earning many more points than before with this handy hassle-free app."
Apps can be put to good use elsewhere, too, with the rise of online and mobile banking making it easier than ever to stay in control of your finances. Most bank accounts will now offer online banking of some kind and apps are becoming increasingly common – if your provider doesn't offer one, see what else is out there.
"As touched on above, just making a few changes to weekly spending habits can make consumers realise how much they could be putting away in a savings account," said Rachel. "A recent study by Barclays Bank revealed that millennials spend over £400 a year on daily treats, such as a cup of coffee. Saving this each year could go towards holidays and even the cost of Christmas. The top easy access account today for those who want to start saving from £1 without any withdrawal restrictions is from Marcus by Goldman Sachs® paying 1.49% gross, which includes a bonus of 0.15% for 12 months."
"Sometimes consumers may not feel they can find the time to make frequent deposits into a savings account – but thankfully there are ways to get this automated. This can be resolved using a simple free app like Chip, which connects to a current account and makes automatic deposits based on a user's spending. This means that the money put aside is affordable and may otherwise just get spent."
Another way to make sure you add to your pot on a regular basis is to simply transfer whatever's left over at the end of the month into a savings account – hopefully, if you've taken on board some of the previous tips, you may have a few pounds available to do just that.
"While savers will benefit from the Personal Savings Allowance, which allows basic rate taxpayers to take home up to £1,000 worth of savings interest tax-free each year (£500 for higher rate taxpayers), ISAs shouldn't be overlooked," said Rachel. "Some of the best easy access ISAs pay rates comparable to non-ISAs that require a small deposit, such as the Coventry Building Society deal paying 1.50%, which includes a bonus of 0.35% until 31 July 2020. Help to Buy ISAs are also worth taking advantage of if savers are looking to buy their first home – thanks to the generous 25% Government bonus – but these will close to new investors in November 2019."
Now could be a particularly good time to consider ISAs given that we're right in the middle of ISA season, and providers are responding by adding to their product ranges and even raising rates. Remember to make use of your 2018/19 ISA allowance before the tax year ends, because if you don't use it, you lose it!
"Moving credit card debts to a 0% balance transfer card is an essential way to avoid paying out on unnecessary interest and can help incentivise setting out a plan to get out of debt," said Rachel. "There are even balance transfer cards around that are completely fee-free, such as the 27-month 0% balance transfer offer on Santander's Everyday Mastercard. Customers could save £970* if they were to switch a £3,000 debt from a card charging 18.9%, and that's if they planned to make a £100 fixed payment each month."
Another way to make the most of credit cards could be to opt for one that offers cashback. Cashback credit cards can be ideal for regular card users as they give you something back with every purchase, but they rely on you always paying the balance off in full each month, otherwise the interest charged will outweigh any cashback benefit.
"Borrowers who are debating whether to refinance their mortgage would do well to consider some of the latest deals to hit the market, as they could shave hundreds of pounds off their monthly repayments," said Rachel. "Indeed, based on a £200,000 mortgage over a 25-year term on a repayment basis, the average monthly repayment on the average two-year fixed rate of 2.49% would cost £896.23. When compared to the current average standard variable rate (SVR) of 4.89%, this would see borrowers save £260.17 per month**."
It could seriously pay to remortgage rather than revert to your lender's SVR, so if you're coming to the end of your mortgage deal – or if you've already slipped onto an SVR – now's the time to see what's out there. Mortgage rates are still historically low, too, so make sure to check out the best remortgage deals and see how much you could save.
*Credit card repayment based on £3,000 purchase, based on an interest rate of 18.9% APR, minimum fixed repayment of £100 (thereafter a minimum of 1% plus monthly interest or £5, whichever is higher) and would take three years and four months to pay back, costing £970 in interest over this term.
**Based on a £200,000 mortgage over a 25-year term on a repayment mortgage basis. Monthly repayment on a rate of 2.49% would be £896.23, compared to £1,156.40 based on 4.89%.
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