It is the week of reckoning for millions of Britons. The credit-card bills from the Christmas spending splurge will thud on to the doormats of homes across the country, and, potentially worse still, the final-quarter heating bills will arrive. After the worst cold snap in generations, most bills are going to be huge. But if you follow the simple money-saving and money-making steps in our guide, you can beat the financial doom and gloom and save £2,000 – in as little as an hour.
Savings and current accounts
When kicking your finances into shape, one of the most important steps is to ensure your money is working hard for you, and not languishing in an account paying a miserly rate.
"Our research shows that if you haven't switched in the last two years there's an extremely high probability you're earning interest of half a per cent or less," says James Daley, the editor of Which? Money.
If you want instant access to your money you can switch to a best buy such as the Post Office online saver, which pays a much healthier 2.9 per cent and could boost the annual gross interest on a £10,000 savings pot from £50 to £290.
For other non tax-free savings, one of the best offers around is 10 per cent interest on HSBC's regular saver. This isn't as extraordinary as it sounds – there are strict limits on the amount you can save which are set between £25 and £250 per month. You are also unable make any withdrawals throughout the year, and, finally, it is only available to HSBC's paid-for-current account customers. These snags aside, if you invested the full £250 each month, ending up with a balance of £3,000, you would earn more than £160 gross interest, so if you already hold one of the eligible HSBC accounts, it could well be worthwhile.
If you're looking to boost your ISA savings, a £100 incentive is up for grabs if you switch your existing ISA savings into a stocks-and-shares ISA with online stockbroker and fund supermarket Interactive Investor, before the end of January. The incentive is based on 0.5 per cent of the transfer value, so if you shift £10,000 you get £50, or move £20,000 across and you'll receive the full £100.
Cash savers with a tax allowance to use up before the end of the tax year should look to the Halifax easy-access cash ISA at 3 per cent, working out to £153 gross interest if you invested the full £5,100 annual allowance. Against an ISA paying only 1 per cent, this equates to an extra £102 for the year.
The only drawback is that this rate is exclusive to Halifax current account customers, but if you were to open the Halifax Reward account, this brings its own benefits – namely a £5 reward each month as long as you deposit as least £1,000 every month. With an extra £60 pocketed over the year, switching to both these products would bring in a handy £213.
"These Halifax accounts together offer great value but it's worth remembering that Halifax performs appallingly in customer-service satisfaction polls," says Mr Daley.
Other current-account incentives include £100 cashback at First Direct and Santander (which also pays 5 per cent in-credit interest), or £75 cashback with HSBC.
If you need to shift old debt cheaply, the Barclaycard Platinum card is the top pick for balance transfers, offering 17 months interest-free, with a rate of 16.9 per cent thereafter. And, until the end of the month, you can knock £20 off the 2.9 per cent transfer if you move at least £3,000 across.
Figures from Moneysupermarket show that if you shifted £2,000 debt on a card with an average APR of 17.32 per cent to the market leading Barclaycard Platinum, you would save £239.03 in the first year, even with the balance transfer fee.
"Consumers can save themselves a lot of money by comparing credit-card prices online. Don't be swayed by the APR alone, look at other possible charges such as balance transfer fees," says Raffick Marday from Compareprepaid.co.uk.
Home and car insurance
January is also the time to check insurance renewal dates for 2011 and pop them in the diary. Remember, never automatically renew your old policy before you've scanned around for a better deal. Using a comparison site such as Moneysupermarket saves an average of £286 on car insurance and £132 on home insurance, but many special offers will only be available directly from insurers, so it pays to dig a little deeper.
Right now, Tesco, Churchill and Barclays are all offering half-price home insurance and you can save up to 45 per cent online at Direct Line. Churchill is also offering free Green Flag breakdown cover with its car insurance until 31 March, and Halifax is giving customers taking out combined contents and buildings insurance a £50 reward now, and £50 for each year they renew.
Energy bills and TV/broadband
After we've been cranking up the heating over the past few months and with energy companies increasing prices by up to 9 per cent, many homes will be facing a huge bill in the coming weeks. If you're on a standard tariff, this should be all the incentive you need to switch, and if you move on to the cheapest online deal you could save could upwards of £300 a year.
And if you already fork out for digital TV, broadband and your home phone from three different providers, a triple-play bundle could also save you hundreds of pounds a year.
"By switching from separate TV, broadband, and phone services, consumers could save up to £261," says Michael Phillips, a product director at Consumer Choices.
Virgin offers a package with six months at half-price (£9.50 for six months, £19.25 thereafter), for example, or if you don't mind ditching the premium TV package you can save even more money with a package such as Primus Saver which offers broadband and free landline evening/weekend calls and costs only £15.99 a month, including line rental, when you buy it through Consumer Choices.
Mobile-phone users are also feeling the sting of price hikes this year, but if you're happy with your phone get a SIM-only deal which doesn't include a premium to cover the handset like most other contracts.
O2 Simplicity tariffs cost from £15.32 per month for a 12-month plan with 600 minutes and unlimited texts. The equivalent O2 contract with a phone would cost £35.74, more than £245 extra over the year.
"Always make a note of when your contract is coming to an end," says Mr Phillips. "Even if you don't switch, knowing what is available will help you haggle with your existing provider."
Michael Phillips, Consumer Choices
"Consumers can save a huge amount of money just by switching their mobile phone, broadband, digital TV and home phone services. I would advise anyone looking to switch to take advantage of offers available through online comparison websites and remember to avoid paying for services they will not actually use – a wasted service is wasted money."
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