Budget and bring down debt

By JO THORNHILL
Updated:

 

MOST of us could save money on household bills simply by shopping around for better deals and service providers. If you want to get your home finances in shape for 2002 here are a few pointers on how to start.

Step one: Organise your bills
Make sure you are paying all your utility bills by direct debit. It's much easier to manage as you won't have to worry about sending cheques on time and it is also cheaper. This is probably the easiest way to cut your bills. You can do it today simply by calling your bank with the details of your energy suppliers. Or, alternatively most energy bills enclose a form to fill in to set up a direct debit.

Switch your utility suppliers to get the cheapest deal. Websites such as buy.co.uk and uSwitch.com show how much you can save by swapping companies. However, it is advisable to switch your energy and phone suppliers before you set up direct debits or you will end up having to change them again.

Step two: Switch your credit card
Shop around and you'll probably be able to find a credit card provider offering a better rate than you're paying now - particularly for transferred balances. Be wary, however, of special offer rates which will rise considerably in six-months' time. It's best to go for a low rate that looks stable rather than 0% for a limited period, unless you're happy to switch again in six-months.

To compare the best credit cards click here

Step three: cut up store cards
Store cards charge by far the highest rates for credit, so if you're finding it hard to manage these debts throw away your cards now to avoid temptation.

Linda Eaton, analyst at independent financial adviser Bates Investments, says: 'You'll pay well over the odds for most store cards, you're better to pay cash if you can rather than land yourself with more debts. For those items you can't pay cash for, shop around for the best deals - the market is competitive, so there are some excellent interest free credit offers around. It is also worth taking a look on the internet as many products are offered there more cheaply.'

Step four: Sort out your bank account
If you're a customer of one of the big four - Barclays, HSBC, Lloyds and NatWest - then you're probably not getting the best deal on your overdraft or interest rates. With the launch of new internet banks in recent years the banking war is well and truly on, so it makes sense to switch and take advantage of better offers - such as fee free banking and lower overdraft rates. You could save yourself a lot of money just by switching to a new current account.

Also, if you have savings shop around for an account with the best rate or take a look at our mini cash Isa tables. See the Isa centre.

Step five: Switch your mortgage
The mortgage is probably your biggest expense each month, so it's important to ensure you have the best possible deal. Speak to an independent financial adviser or a broker about your remortgaging options and if it looks like you could save money make the switch.

Remember to take into account any transfer charges from your current provider and any legal fees for switching. Weigh up the all-in cost of remortgaging before you decide if it's worthwhile, you may still find that the savings you'll make with a new mortgage will more than cover any transfer expenses.

Step six: Review your protection policies
Finally, save money by switching your insurance company. You can often get cheaper car cover or mortgage protection, for example, by phoning around or looking through an online broker. It is also worth checking that you're not doubling up with some of your cover - for example, some home contents insurance policies cover your belongings while you are on holiday, so you wouldn't need this in your travel insurance.

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