Top 10 money tips
Last updated: 2003-12-30
Keep control of your money
As the festive season is coming to an end, now is the time to start looking a bit closer to home and your wallet. With a little bit of planning, it's possible to get your finances under control and in tip top condition for 2004.
The following 10 top tips from Royal Bank of Scotland can help you on your way.
1. Save now for less pain later
Set up a direct debit to pay a regular sum into a savings account each month. A savings account that is guaranteed to track any changes in interest rates might be a good one to choose as economists are predicting interest rates look likely to rise during 2004. Saving via direct debit means you are less likely to spend your money before you get a chance to put aside something for savings.
Your mortgage is one of the bills which has the biggest effect on the domestic budget. Look at the deals on offer for people who want to re-mortgage, with fixed, flexible and discounted products available. For example, a customer with a typical £75,000 25-year capital repayment mortgage could expect to save up to £70 per month against the standard variable rate if they switch to a discounted product.
3. Consider an 'all-in-one' account
'All-in-one' accounts, where your current account, mortgage and even your savings and loans are combined into one, can give you real savings. For example with a current account mortgage, in addition to paying in your monthly income, if you left £100 more in your account each month than agreed in your repayment plan, you could pay off all your borrowing 6 years and 11 months earlier and save £36,363 in interest.
4. Consider a packaged account
The process of switching current accounts is now much simpler, so don't be afraid to try the move. The competitiveness of the market has also increased considerably over the last 12 months. Be wary though of shopping just on price; the amount of choice in how you can bank (branch, telephone and internet) should be a consideration, as should reputation on the quality of service you're going to get. If you travel more than twice a year, eat out a lot, buy lots of CDs or videos or are thinking about buying a new car, look into packaged accounts.
5. Make your savings work harder for you
Consider opening an on-line savings account. The low cost to banks of maintaining these accounts means that they generally offer higher interest than those available in branches. They also offer the added flexibility and convenience of allowing you to operate your account 24-hours a day. In some cases, transfers between accounts at the same institution are done instantly, in effect giving you instant access to your cash, otherwise it can take up to three days for funds to be transferred.
6. Use your ISA allowance
If you have £3,000 in an old savings account you could be earning as little as 1% interest and be taxed on it. If you put this into an instant access ISA offered by many banks, you could receive up to 4% and this will not be taxed.
Cut your insurance costs. By staying with your current insurance provider for another year, you could be paying too much for your cover. Shop around for a competitive home insurance quotation with additional discounts available if you have an alarm or if you have certain types of current account, usually called 'packaged' accounts. Look at insurers who offer flexible payment methods, including interest free monthly instalments and money to cover the cost of any transfer fee charged by your current insurer. At this time of year it is important to ensure that you are sufficiently covered for both buildings and contents as the unpredictable weather causes more problems with flooding and storm damage each year. And don't get caught out. Some people do not increase the level of their insurance cover for home contents even though they are adding to them all the time. It makes sense then to make an inventory of your contents to make sure you will be adequately covered if the worst happens.
8. Ask your bank for a customer service review
If your bank hasn't offered to sit down and discuss your finances with you at least once in the last two years, now is the time to ask for one. Your bank should be working hard to make your money work harder for you. If you'd like to discuss your finances and how you may be able to save yourself money, you can pop into any branch of The Royal Bank of Scotland and a customer service adviser will be happy to help.
9. Switch to a lower rate credit card
Look at the very low introductory rates on the market, but check how long the rate applies for and whether this low rate applies to balance transfers, new purchases or both. For example, the new MINT card from Royal Bank of Scotland offers a rate of 0% on balance transfers and purchases until October 2004 and one of the lowest APRs around at just 10.9% after that.
10. And finally... if in doubt, ask for help!
Take advice from people whose job it is to provide guidance and advice on financial products. Whether independent or from the increasing number of high street banks that provide this service free for existing customers, it's well worth while investing a little of your time to save you money. And if you are in debt look at the host of free advice offered by your bank, Citizens Advice Bureau and specialists like the Money Advice Trust.