Resolve to gain pounds in 2007

Instead of pledging to lose weight in the New Year, resolve to gain pounds of the financial variety.

Figures from moneysupermarket.com show Brits could save up to £5,200 over the next 12 months if one of their New Year resolutions is to make the move to more competitive financial products.

Stuart Glendinning, managing director of moneysupermarket.com, said: “People should always review their finances on a regular basis. However, New Year may be just the trigger many need actually to do it. And for those suffering a financial hangover from the festive period, recovery could be all the quicker if they follow some simple switching tips.

“Savings can be significant – a family with a typical financial portfolio could save anywhere up to £5,168.93 over the coming year simply by reviewing their existing finances. By searching for more competitive deals on financial products such as their mortgage, credit card, personal loan, savings, home and motor insurance they can make significant savings.”

Examples of the savings that can be made:

Mortgage

With a good range low fixed rate mortgages on the market, homeowners can reduce their monthly payments considerably by remortgaging to a better deal. For example, if they switch from a Bank of Scotland standard variable rate (SVR) rate at 7.25 per cent, paying £1,084.21 a month, to a more competitive lender such as Derbyshire Building Society offering 4.69 per cent on a two-year fixed rate, they would pay £854.82 a month. A saving of £2,667.68 can be made in 12 months.

Personal loan

Despite the recent rise in the BoE base rate, APRs (annual percentage rates) on personal loans are still low as lenders maintain sub six per cent headline rates to top the best buy tables. With four personal loans now on the market at six per cent APR or less, a typical family could save £122.85 in interest payments in just one year, if they switch their £7,000 personal loan with M&S with a typical APR of 9.9 per cent to a Northern Rock loan with a typical APR of just 5.8 per cent.Over the five-year term nearly £850 would be saved, even after any redemption charge from M&S.

Credit card

Despite having been hit with restrictions earlier this year over the level of penalty charges they can charge – thus seeing a potential dip in profit – credit card providers have continued to offer a great number of 0 per cent deals on both balance transfers and purchases. Those who make the effort to choose the best deal to suit their needs will be rewarded. If a £2,000 balance on a Natwest Classic Card at 16.9 per cent APR is switched to one of the 48 credit cards offering introductory period of 0 per cent interest on balance transfers, such as the GE Money Transformation Card with 0 per cent for 12 months, they could make an annual saving of £305.36 after the balance transfer fee has been deducted.

Store card

Additionally, many shoppers will have been tempted by store cards over the Christmas period. At the point of sale the discounts, free gifts and points systems may have seemed appealing, but on closer inspection people will be paying well over-the-odds for these so-called ‘freebies’. If £600 is spent on a Burton Account Card with a massive 29.9 per cent APR it would cost £144.35 in interest a year if just the minimum payment is made. However if the same £600 were spent on the GE Money Transformation Card, with 0 per cent on purchases for 12 months, they would save £144.35 a year.

Utilities

Utility prices are currently a hot issue, and people wanting to take the sting out of their gas and electricity payments could save a bundle. If an average consumer were to switch from British Gas’ Standard tariff, paying quarterly by cash or cheque, to npower SOL7, paying monthly by direct debit, they would save £265.08 over 12 months.

Motor and home insurance

There are some great savings to be made if people ensure their insurance is up to scratch. By switching motor insurance provider on a Land Rover Freelander S 3Dr from Endsleigh, paying £402.22 a year, to Direct Line, paying £251.37 a year, they will save £150.85 over the 12 month period.

For a four bedroom detached house in St Albans over £157.35 can be saved over a year by switching home and contents insurance from a provider such as Lloyds TSB to Budget.

Savings

Savings that languish in poor paying accounts with the Big Four banks could be a costly waste. An individual with £10,000 in the Royal Bank of Scotland account paying 1.65 per cent AER would receive £165 in interest over a year. However, if they switched to the Alliance & Leicester Direct Saver account paying 5.64 per cent AER, they would earn £578.81 over a year – an additional earning of £413.81 over the year.

All these savings equate to a total saving of £5,168.93 over a year.

Stuart continued: “By making one of your New Year resolutions to review your financial products you could have an extra £5,200 in your pocket come the start of 2008. The fantastic thing about these savings is they can be made without changing your lifestyle or spending any less - all it costs is a little time to find the best deals for you and your family. And if you keep these resolutions up for a year the financial gains should be more than enough to persuade the most reluctant person to make the effort.”