Your personal finances are no different to your home, garden or garage – they need a big clean from time to time.
The words ‘cleaning’ and ‘finances’ don’t exactly scream fun, but checking on your finances is quicker and easier than you might think, and switching to some new deals could save you hundreds, even thousands a year.
Six steps to clean your finances at a glance:
- Transfer expensive card balances to 0% balance transfer cards
- Get a cheaper (or more rewarding) credit card for spending
- Find a bank account that offers you something in return
- Update the information that affects your credit score
- Make sure to use the cheapest loan for any big renovation projects
- If you’re moving or your mortgage’s introductory rate is coming to an end shop around for a new deal (as long as exit/booking fees make it worthwhile)
Got a credit card with an outstanding balance? Credit cards are so varied it can sometimes be difficult to tell if you’re getting the best deal, which is why we’ve put together this repayment calculator to see how much your current card is costing you:
If you think you’re paying too much but have a stubborn balance you can’t clear, there is no need to continue paying interest.
Transferring the balance to a specialist balance transfer card with an 0% introductory offer that will let you put off paying interest for as long as three years.
Make sure to work out whether it’s worth your time though, as the transfer fee may cost you more than you could save by avoiding interest charges.
Also don’t miss the minimum monthly repayments, or you may lose the 0% offer and be charged interest.
Finally remember the golden rule of balance transfer cards – you can only transfer your debt from a different provider, so from Barclaycard to Santander for example.
What you need – Your current credit card provider and balance you want to transfer. It’s also worth finding your APR on a statement to make sure you will be saving money.
Balance transfer cards are great, but they’re not usually great for spending – spend on a transfer card and you’re adding to the debt you moved in the first place.
Alternatively, if you can pay off your balance at the end of each month, take a look at reward or cashback cards, that could see you benefit from your card spending with loyalty points, special offers or hard cold cash.
Not everyone has a credit card, but bank accounts are ubiquitous, which is why it’s always a good time to ask yourself if you’re being ripped off, or not getting enough from your bank.
Quite often the grass actually is greener on the other side. By switching to a different bank account you could get:
- Cashback on your spending as high as 3%
- A cash welcome bonus up to £150
- Paid interest rates of up to 5%
- Interest-free overdrafts
Personal banking has been getting more competitive ever since the introduction of the switch guarantee, which makes it quick and easy to change to a new bank, automatically moving all your ingoing and outgoing payments to your new bank within seven days.
This means it’s never been simpler to move between banks and banks need to do more to keep their customers and attract new ones. There are also new entrants into the personal banking market, like supermarkets who are challenging the big banks.
What you need – The details of your existing current account. Once you apply to a new account you’ll have to provide those details to your new bank who then handle the switch for you.
Your credit score will determine what rate you’re offered on a credit card, loan or mortgage, and even your car limit or overdraft limit on a current account.
If you think your credit score is less than perfect there are a few quick things you can do to clean it up.
- Make sure you’re on the electoral roll or include proof of residency on your reports if you can’t vote
- Get your name on household bills and utilities
- Cancel your old unused credit cards
- Don’t apply for too much credit too quickly (especially if you’ve just been refused)
- Use a credit builder card responsibly, by spending a little on it, and paying back the balance in full each month
What you need – Your national insurance number, the latest utilities bills, and details of any credit cards you own.
If you have big project you want to do, but don’t have the cash upfront, then using a personal loan to pay for home improvements or to buy a car is the cheapest way to borrow a large sum of money over the medium to long term.
Loans can also be used to consolidate debts, giving lower monthly repayments spread over a longer period of time, but doing this will end up costing more and leave you in debt for longer.
When comparing loans you should look at the total cost of the loan over its lifetime (which is represented by the APR), the monthly repayments and any upfront fees you have to pay. If you’d like to know more, you can read our guide on how to compare loans.
Before getting a loan make sure to plan carefully, as you have to meet the monthly repayments until the loan is repaid, if you regularly miss repayments it will hurt your credit score and make it more difficult to borrow in the future.
We’ve produced a loans calculator to help you work out your repayments and find a cheap loan.
What you need – A budget of what you can afford for monthly repayments.
If your introductory rate is coming to an end, or if you’re on a fixed rate that looks much higher than current variable rates, it could be time to remortgage.
And if you’re moving home, whether you port your mortgage or go to a new lender, you’re going to need to get a new deal.
The good news is mortgage rates have fallen to all time lows and are expected to stay there until the Bank of England announces a rise in the base rate of interest.
This means that there are currently some historically cheap deals available for anyone planning to remortgage so it’s worth shopping around to see what you can get.
However, if you think you could get a cheaper deal, make sure to take exit fees from your current mortgage, and booking fees for the new mortgage, into account.
What you need – Your current mortgage rate and details, like the term or exit fees.
- Managing debt with 0% balance transfer cards – What balance transfer cards do and how they work
- How to improve your credit rating – Our ten tips to improve your credit score
- How to improve your credit score if you’ve never been in debt – It’s possible to be financially well-off but have a poor credit score, but you can quickly improve your score with some tactical borrowing