Are you sure that your tax code is correct?If your tax code is 1250L, then you’re on the standard PAYE code that most people get. This code is based on the 2019/20 basic Personal Allowance of £12,500 and is applicable to low and middle earners with an annual income of less than £100,000. While this tax code is fine for most, if you’ve got any special circumstances or requirements it’s likely to be wrong. If your code is lower or higher than you expected you need to find out why, as it may have been adjusted by HMRC to accommodate unusual circumstances or to rectify underpayments of tax in previous years. If there are any errors and you pay the incorrect amount by the end of the year, you are usually liable to pay any unpaid tax, rather than your employer. Understanding how PAYE works and checking that you’re on the right code will help you avoid underpaying or overpaying tax.
How much do you pay per year on credit card interest?If you pay your credit card bill in full each month, you won’t pay interest on the amount you borrowed. However, interest is typically charged on a daily basis for cash withdrawals and can significantly add up over time, especially as the interest rate for cash withdrawals is usually higher than for one-off purchases. If you find that you’re spending more than £50 per year on credit card interest, one way you could cut this down is to shift to a 0% balance transfer card. A 0% balance transfer card can help you pay off your existing credit by moving the balance from one card where you may be paying interest, to a new one at a 0% interest rate for a fixed period. While the savings you can make with an interest-free card could help you keep in control of your finances, it’s important to remember that you must meet the monthly repayments, or you’ll lose the interest-free period.
Have you switched energy tariff in the last year?If you’ve not switched tariffs in the last year, you’re likely to be on your provider’s standard tariff. A standard tariff is a good option if you want flexibility and don’t want to be tied down to a contract, but the variable prices mean that you may be paying far more than you need to. According to regulator Ofgem, the cheapest energy tariff in summer 2018 was £788 per year, while those on a standard variable tariff paid on average £1,133. With a variable tariff, your provider can alter the unit rates for gas and electricity anytime during the duration of your contract. This means that your monthly bill can rise, even if you use the same amount of energy. Fixed rate tariffs usually represent the best value for money as they cap the unit price of gas and electricity for the length of your contract, which can be anything from one to three years.
Have you auto-renewed your car insurance?If you’ve auto-renewed your car insurance the last time it came around, it’s likely that you’re paying a higher interest rate than you need to. Auto-renewal means that you’re automatically signed up to a new insurance policy with your current provider when your existing contract comes to an end. This new contract will generally have a higher premium for loyal customers, as insurers tend to offer the best deals to new customers rather than rewarding existing ones. To save on your car insurance, you could:
- Change policy. Often if you find a cheaper deal and you’ve not claimed on your current policy in the past, you can cancel and get the rest of the year refunded. This means you won’t earn this year’s no-claims bonus, but it could be worth it to help you save and avoid future price rises.
- Check for a cheaper deal. To ensure you find the cheapest price possible, shop around and get quotes from multiple comparison sites. Once you’ve found the cheapest quote, see if you can get cashback.
Do you get cashback from your credit card?Paying off your credit card in full each month means you don’t pay interest, but when you use it to make a purchase, the retailer has to pay the card firm a transaction fee. With a cashback card you’ll earn a percentage of that spend back. The rate of cashback will vary depending on where you shop or how much you spend, and some purchases might not earn you back any cashback at all, but it can be a simple way to save money. These funds are paid monthly or annually as credit on your card balance, but the maximum amount you can receive is usually capped.
Is your mortgage rate over 4%?Although it’s very easy to take out a mortgage and not think about interest rates fluctuating, you should see whether you can switch contracts to save some money. Providers recommend that homeowners avoid paying more than 30% of their income on a mortgage in order to leave enough money for unexpected expenses. However, millions of homeowners end up stuck paying their lender’s standard variable rate, which averages 4.9% in the UK. Standard variable rate mortgages tend to be higher than the rates of other types of contract. The rate you pay on an SVR mortgage will be determined by your lender, who may increase or decrease it at any time independent of the Bank of England Base Rate. While not everyone can switch mortgage easily, it’s worth regularly checking for better deals and reviewing your mortgage when interest rates rise.
Do you have a spare bedroom?If there are the same amount or more bedrooms in your home as people, it’s likely you could save money by switching to a free water meter. You have a right to be charged for the water you use, rather than what providers think you should. Water bills are calculated based on your property’s ‘rateable value’, which roughly equates to what it’s worth. Instead, water meters measure usage, which should correlate roughly to the number of people in your home. This means if you’ve got a big house with very few occupants, meters are cheaper. Water meters can usually be installed free of charge.
Could you opt for a cheaper phone contract?If you’re paying more than £20 per month for your mobile, not including the handset, you could probably reduce the amount you spend. Traditional mobile contracts that bundle in the cost of calls and data in with the handset is the default way many people pay for their phone. While this can help to spread the cost over time, you may be better off buying the phone outright and pairing it with a Sim-only or PAYG deal and just paying for the monthly allowance. Most networks have a base PAYG tariff that sets out a standard cost of making calls, using data or sending texts. You may be subject to additional charges for calling premium numbers, SMS services or using your phone abroad. Bundles typically range from £5 to £20 and the more you spend, the more calls, data and texts you’ll get. When it comes to choosing the best plan for you, if you spend the majority of your time connected to a Wi-Fi network, 1GB of data would suffice for a month. While it’s important to buy enough data, there’s no point spending money on a huge allowance that you won’t use, especially as most networks won’t allow you roll any unused data over to the next month.
In summary…If you’ve adopted some money-saving tips and are still struggling to save the funds to meet a temporary financial shortfall, you may have considered taking out a loan as a short-term solution. Before taking out a short-term loan, it’s essential to understand the financial and emotional implications of not being able to meet the monthly repayments alongside other essential expenses. To check your options, apply today with the experienced team at Moneyboat today.
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