Review your finances and offset the impact of the Budget
Yesterday's budget spelled the beginning of tough times for many of the UK's hard pressed consumers. With tax increases and cuts in public services spending, taking time out to review your finances could help reduce your own personal deficit. According to analysis by moneysupermarket.com, taking stock of your money could save you as much as £1,941 a year by moving to the best deals - and the Government won't take a penny!
Kevin Mountford, head of banking at moneysupermarket.com, said: "The emergency budget will have left many people worrying about the financial impact of tax increases and stringent cuts in public spending. Although there is very little you can do to avoid some changes, spending half a day reviewing all of your personal finances, could lead to an instant pay rise which the Chancellor cannot get his hands on. Moving from an average product to the best deals could save an impressive £1,941 a year, which more than offsets any impact of the budget."
Mortgages
The number of mortgage products available has been increasing steadily during 2010. Bank standard variable rates (SVRs) have been creeping up while fixed rate mortgages are at an all time low. Switching a £150,000 mortgage from the average standard variable rate of 4.73 per cent to the market leading two year fixed from HSBC at 2.69 per cent would save £538.36 once the application fee is taken into account.
Personal Loans
Although competition in the personal loan market is slowly returning, rates are still extremely high but if you are borrowing over £7,500 there are some competitive deals available.
If a £7,500 five year loan at an average rate of 12.39 per cent APR is swapped to the new Nationwide Building Society loan at 7.7 per cent APR, then an annual saving of £219 could be made.
Credit Cards
Credit card rates have been steadily creeping up since the credit crunch. Switching from the market average 18.52 per cent APR to Barclaycard offering 0 per cent for 15 months would save £265.71 in interest.
Current Accounts
Moving to the Premium Direct current account from Alliance & Leicester which pays a market leading 5 per cent on credit balances would earn you an additional £58.50 in interest compared to a current account paying an average 1.10 per cent.
Savings
2010 has been a tough year for beleaguered savers with low interest rates and high inflation hampering returns. With inflation forecast to remain high for the remainder of this year, it is even more important to get the best return on your money. The current average rate for easy access accounts is 0.68 per cent but moving to the Alliance & Leicester Online Saver Issue 7 would save £203 based on a £10,000 savings pot.
Car and home insurance
While insurance is essential for financial security and peace of mind, it is important people only opt for the best value cover relevant to their needs. Many people make the mistake of over-estimating the level of cover needed on their home and car insurance for example, and following a few simple tips can help you save money. Paying annually for cover instead of monthly can cut the cost of a premium. For car insurance adding a partner or, if you are a younger driver, adding an older driver to your policy can also help cut the cost.
There are some great savings to be made if people ensure their insurance is the most competitive available. On average, consumers who use moneysupermarket.com to switch their providers can save £205 on motor insurance and £132 on home insurance.
Utilities
For those looking to save money on their energy bills shopping around to ensure you are on the correct tariff for your usage and region is crucial. Moving online to a ‘dual fuel' direct debit deal is the easiest way to make savings; by switching to the best online tariff currently sign online 18 from npower as opposed to the average standard QCC tariff, customers could save on average £293 over 12 months.
Maximise your income
As well and trying to save money you can also boost your income and reduce your tax burden by making some changes. For example, if you have a spare room at home you can take advantage of the ‘Rent a room' scheme which allows you to take in a lodger and receive up to £4,250 a year tax free. If you are a UK taxpayer and your partner is not, you may want to consider putting your savings in your partners name to reduce the amount of tax paid on savings.
If you are on lower income, you should make sure you are claiming all of the benefits and allowances you are entitled to.
Kevin Mountford added: "It is easy to sit back and accept some of the drastic measures being implemented by the coalition government, but you needn't feel the pain if you are prepared to work a little to save money. Shopping around for the best deals can really help your finances and by being your own Chancellor for the day you can really cut your own budget deficit.
"As well as making savings by switching, you can also make some changes which can bring in extra cash. Renting out a spare room to a lodger could provide an alternative option, and the government allows you to earn some income from this tax free. You should always try and minimise the amount of tax you pay and can do this by switching your savings pot over to your partner if they are a non taxpayer or they pay less tax than you. Although Child Tax credits are being withdrawn for many people, it is still worth making sure you are receiving all of the state benefits and allowances you are entitled to, especially if you are on a lower income or have lost your job."