With lockdown still in place, now is a good time to take stock of your household finances and see where savings can be made.
Reviewing your spending this spring – and switching to better deals – will help ensure your finances are as robust as possible.
CANCEL ANY UNWANTED SUBSCRIPTIONS
Going through your bank statements with a fine-tooth comb is a worthwhile exercise and may throw up some surprises. According to online bank Marcus, almost a third of consumers spend an average of £120 a year on unwanted insurance policies, magazine subscriptions and memberships.
Many also fall victim to signing up to free trials and forgetting to cancel them before the trial period ends. Be ruthless although keep in mind that while no live sport is currently being shown on TV, Virgin Media and Sky are both allowing customers to ‘pause’ their sports subscriptions. Many gyms have also frozen membership fees.
SWITCH TO THE BEST ENERGY DEAL
Around 11 million households are paying over the odds for their energy bills as a result of sitting on their provider’s expensive standard variable tariff.
Yet switching gas and electricity supplier could save households hundreds of pounds each year – and now is the ideal time to look for a better deal.
Anders Nilsson, of comparison website GoCompare, says: ‘Energy prices have been dropping for a while. All of the top ten cheapest energy deals currently available would save consumers a minimum of £364 a year, which could be very significant for a lot of households at the moment.’
Switching to a fixed rate tariff will provide shelter from energy price rises for the length of the deal – often a year. But it is important to take note of when the tariff ends and get ready to switch again as that date approaches.
Using an auto-switching company such as WeFlip or Look After My Bills can take the effort out of switching as you will be moved to a more competitive tariff automatically.
REVIEW BROADBAND AND TV PACKAGE
Now is a good time to check whether your current broadband deal still represents value for money. Is the data allowance bigger than you really need or is the connection faster than you require?
If so, think about scaling down your package. Consider, too, how much you could save by switching from a paid-for TV subscription to a lowcost option such as Freesat and Freeview.
Anthony Morrow, chief executive of financial advice service OpenMoney, says: ‘It is not uncommon to get overly comfortable with certain broadband and TV subscription brands, sticking with them year after year even when the prices go up. However, checking to see if you’re still on the best deal could make a big difference.’
If you find a better deal, it is worth haggling with your existing provider to see whether it can up its game. If you have no luck and are out of contract, get switching.
Negotiating with an existing broadband provider or moving to a new one could save on average as much as £120 a year, according to consumer group Which?
LOOK FOR A BETTER INSURANCE DEAL
Research by GoCompare shows that 4.7 million drivers have been stung by car insurance policies that automatically renew – while only half of motorists are aware they can get a cheaper deal as a new customer.
Insurers rarely offer their best prices to existing customers while companies such as Saga and Rias that specialise in cover for the over-50s do not always offer the cheapest deals.
It therefore pays to check when your insurance is due to renew and use a comparison website to search for the best deal ahead of the renewal date. A typical motorist aged 50 or over could save around £151 as a result.
Switching home insurance provider can also save households around £100 while further discounts could be obtained by those who have added security measures to their property.
Krystian Zajac, of insurance challenger brand Hiro, says: ‘If you own products such as a video doorbell, a leak detector or smart light bulbs, these all help to make your home safer and it’s worth checking whether your insurance provider will reward you with a cheaper premium.’
DON’T FORGET TO SWITCH YOUR SAVINGS
Banks have been quick off the mark to slash savings rates following the Bank of England base rate cut to 0.1 per cent.
But low rates should not deter savers from moving their money to a better paying account, particularly those who are willing to lock away funds in a fixed rate savings bond. Laura Suter, of wealth manager AJ Bell, says: ‘Cash savers have suffered death by a thousand cuts this year. If you haven’t moved accounts in the past 12 months it’s likely you’re getting a paltry rate on your savings – so move it and you could bolster your income.’
Moving £25,000 from an account paying 0.1 per cent to the RCI Bank four-year fixed rate bond paying 1.8 per cent would result in extra annual interest of £428 (before tax).
REDUCE YOUR MOBILE PHONE BILL
Now is a good time to ask yourself whether you are getting value for money from your mobile phone contract.
OpenMoney’s Anthony Morrow says: ‘Reducing features such as your data allowance while you’re at home could substantially reduce your bill.’
For those out of contract, switching to a SIM-only deal can also help to bring down costs, particularly if you can put up with your existing phone. Virgin Media, for example, has a £9-a-month SIM-only contract with 8GB of data if you sign up for 12 months.
The Competition and Markets Authority estimates seven out of ten people could save £222 a year by switching to a better mobile phone tariff.
PROTECT YOUR PENSION FUND
Anyone concerned about their pension fund as a result of recent stock market volatility may want to consider increasing their contributions. It can also be worth hunting down old company pension schemes to see if it is worth consolidating them – but watch out for exit fees.
Samantha Seaton, of money management app Moneyhub, says: ‘It’s not uncommon for savers to have multiple pension pots by the time they reach retirement. But this often means they are incurring charges to administer each one which is not cost-effective. Combining pensions could result in lower overall charges and more money left to be invested and accumulate wealth.’
Aberdeen Standard Life’s Laura Laidlaw adds: ‘If you are nearing retirement, seek out specific advice about your pension to understand how to reduce the impact of any coronavirus-related market slumps on your hard-earned retirement savings.’
Moving a £50,000 pension fund with an annual charge of 1 per cent into one with an ongoing charge of 0.5 per cent would save £250 a year in pension costs – assuming no transfer fees.
With thanks to RACHEL WAIT, FINANCIAL MAIL ON SUNDAY