AS THE days get longer and the smears on the windows begin to show up in the sunlight, many people’s thoughts turn to spring cleaning — a full blitz of the house that refreshes every room after the stuffiness of winter. But what about giving your finances a spruce up, too? Giving your bills and investments a once over could save or even make money. Here’s a five-step programme for making sure your finances are spick and span…
There’s no better place to start than with what is going in — and out — of your current account.
Current account clean-up
A financial spring clean should start with your day-to-day ins and outs, which means taking a long, hard look at your current account — whether three months of paper statements or online. Your first step should be to streamline your standing orders. Gym memberships you never use, magazine subscriptions you forgot to cancel and insurance for old mobile phones are particular money suckers.
Fortunately, they are easy to cancel, so study the payments that go out each month, work out what they are (Google is your friend here) and then cancel them through your banking app or by ringing up your bank giving the name of the organisation you are paying and the customer reference, if you know it. The bank should be able to cancel direct debits for you, but check next month that your request has been actioned, just in case.
According to comparison website gocompare.com, a current account detox could save you £340 a year.
Find a better banking deal
Now your current account is sparkling clean, it’s time to check it is still fit for purpose. Many people very rarely switch their current accounts — in fact you’re more likely to get divorced — but if you’re paying overdraft fees that eat into your income, or not receiving interest when you’re usually in credit, it is likely there is a better bank out there for you.
Some current accounts offer up to five per cent interest for the first year, others will pay you to switch, while some will have lower overdraft rates. You can compare what’s on offer at sites such as moneysupermarket.com or comparethemarket.com.
The Current Account Switch Service comes with a guarantee, so it should take only seven working days to switch and you’ll be compensated for any problems with moving over direct debits and so forth. Once you’ve switched, payments to your old account will be automatically forwarded to the new one for three years, too.
2. Your day-to-day expenses
Once you’ve tackled your bank account, the next step is to look at your regular spending. Unless you frequently switch your suppliers for various bills you’re likely to be spending too much, so now is a good time to check each one and see whether you could get a better deal.
Your energy bills
Switching your energy tariff is easier than you might think, and could also save you more cash than you imagined. According to Georgie Frost, consumer advocate at comparison site GoCompare, more than half of customers who aren’t protected by special guarantees on energy prices (and that’s most of us), are on their supplier’s standard variable rate.
She says: ‘51 per cent of GoCompare customers save up to £209 by switching, and one in ten save up to £305.’
Switching energy provider is a fairly simple process nowadays. Use any of the comparison sites, such as MoneySuperMarket, uSwitch or Compare The Market. They will ask you to input your usage (available on your latest energy bill) as well as your postcode before finding the cheapest deal for you.
If even that sounds too complicated, just phone your current supplier and ask them to put you on their cheapest rate. It may not be the very best on the market, but it is likely to be significantly better than your current rate if you’ve never switched.
Broadband and phone deals
Mobile phone, landline telephone and broadband deals definitely have a shelf life, so if your contract has expired you should be considering whether to be out with the old and in with the new. Many of us continue paying an inflated price for our mobile phones long after we come to the end of our contracts, even though it would be far cheaper to switch to a SIM-only deal and keep the existing handset if we don’t need a new one.
A variety of SIM-only deals are available from the Carphone Warehouse, for example, where offers include a £5-a-month deal from iD Mobile (complete with 1GB of data, 500 minutes and 5,000 texts a month) and a £10-a-month Virgin offer, which gives you 4GB of data allowance each month.
Try broadbandchoices.co.uk to see if you could get a better deal on your broadband. It is currently offering a £21-a-month deal with Vodafone for 18 months, including line rental, or £15 a month for fibre broadband with NOW Broadband.
3. Savings and investments
Putting money away for a rainy day is important, but an annual check-up will ensure your nest egg isn’t losing value even as you add to it.
Instant access savings
Most financial experts suggest you put three months of outgoings into an instant access account, so that you can get to it in emergencies. But the rate on these accounts can be pitiful, and often drops after a year. Head to moneyfacts.co.uk where you may be able to pick a better deal.
If you’re pretty sure you won’t need to make many withdrawals, try switching your savings to Virgin’s Double Take E-Saver, which pays 1.2 per cent and allows two withdrawals a year. Alternatively, ICICI offers a rate of 1.35 per cent, although this includes a bonus that will drop off after a year — making it really important that you ‘spring clean’ your savings again next April.
Longer-term nest eggs
Once you’ve got a cushion of savings for emergencies, you can work out how to allocate any extra. The new tax year begins on Friday, meaning a new tax-free Isa allowance of £20,000 for the 12 months ahead. Use this tax-free wrapper to shelter your cash from capital gains or income tax.
4. Turn your spring clean into spring cash
Spring cleaning may be falling out of fashion, but how about a financial incentive to motivate you to clear out your clutter ready for the warmer weather ahead?
Books, DVDs and CDs
Selling unwanted items on eBay can be a great source of cash, but if that sounds too difficult, alternative options include Ziffit.com and musicMagpie.co.uk, both of which will take unwanted CDs, DVDs and books for cash. They don’t accept everything, but their apps allow you to scan barcodes quickly to work out what they will take, and they’ll even send a courier to pick up your stuff.
Old mobile phones
Old currency and round pounds
According to the Post Office, more than a quarter of us still have old currency, including the round pound, hanging around our homes. Old tenners stopped being legal tender on March 1, and the old pound has not been accepted since last year.
The Post Office still takes old fivers, tenners and pounds, and will deposit them into your own current account.
Post Office spokesman Martin Kearsley says: ‘Thanks to an agreement with all UK high street banks, everyone can deposit cash and cheques, including any old notes, into their usual high street bank account at their local Post Office branch.’
5. Credit cards
Take an inventory of your credit cards and check whether you are getting anything back from them — whether good rates or rewards. If not, consider a change.
If you always pay the balance off at the end of the month, you should be getting rewarded for your spending. Cards offer air miles, cashback or loyalty points. You can compare the deals available at moneysupermarket.com.
Balance transfer cards
If you’ve got debt on your credit card, balance transfer cards give you time to clear it without interest building up. You’ll usually pay a fee to transfer the debt, but then could have years to pay it off, usually at zero per cent.
Cards for spending abroad
If you travel a lot, or even a little, having a card that’s good for spending abroad is really helpful. Many credit cards charge huge fees on foreign transactions but some, like Halifax’s Clarity or the new Tandem credit card, are great value abroad.
Once you’ve applied for and received cards that are fit for purpose, make sure you cancel the others — otherwise they continue to show up on your credit file.
Now that you’ve completed your financial spring clean, put a note in your diary to do the same next year.
Meanwhile, now might be a good time to download a few apps to help you to keep on top of your money until you need to clean it up again.