Prices are rising from the petrol pump to the supermarket checkout, but the cost of living is even worse if you’re already in debt.
Higher interest rates mean that you run the risk of spending huge sums of money on repayments without denting your outstanding balance.
Rosie Murray-West unveils Smart Switch to clear loans faster and potentially save thousands. , ,
lighten your debt
If you had taken out a loan a few years back, you would have been paying more than the odds.
It sometimes makes sense to use the new loan at a lower rate to pay off the old loan.
M&S Bank is offering loans with an APR of less than four per cent as compared to an average of 7.4 per cent in June 2020.
This means a savings of over £340 per year on a loan of £10,000.
But if you repay your loan early, you need to keep in mind the settlement fee that most lenders charge.
This could be up to two months of interest – which in the example above would be £122.
Not everyone gets the rates advertised by lenders, as these are reserved for people with good credit ratings.
Use an eligibility tool to check which loans you are most likely to get without hurting your score by using an eligibility tool like moneysavingexpert.com,
exercise equity release
Older homeowners who borrowed against the value of their home with an equity release plan can sometimes save massively by switching if they did their deal more than three years ago.
Interest rates on equity release schemes have dropped dramatically in recent years.
The average switcher saved around £52,000 last year, according to equity release advisor Edge Partnership.
Plans often come with an early repayment fee, but switching can still be worth it if the savings are high.
Always speak to an independent equity release advisor who is registered with the Financial Conduct Authority.
reduce your mortgage rate
Allowing your mortgage to roll over at your lender’s standard variable rate (SVR) at the end of a fixed or tracker deal can cost you thousands each year.
According to MoneyFacts, the average SVR is now 4.91 per cent, while the average fixed rate for two years is 3.25 per cent and that on five-year fixed is 3.37 per cent.
For a mortgage of £250,000, you can save £2,760 per year by re-mortgaging for an average two-year fix from a typical SVR – and some of the deals available can save you even more.
Your current lender will also offer you new rates when your deal ends, so check these out.
If in doubt, consult an independent broker.
blitz credit card balance
Don’t let credit card debt stop you. If you’re only making the minimum payment each month, it could take decades to make ends meet.
Paying an average 2.5 percent minimum monthly payment on just a £5,000 balance means it will take you about 38 years to pay back and in total it will cost you around £15,000 at a simple interest rate of 22 percent.
Switch to a balance transfer credit card to get a window of up to 34 months without any interest.
Divide the total debt into monthly payments and set up a direct debit to erase the balance in that time. If that’s impossible, try switching to the new card again.
But not everyone can get the top balance transfer deals, as they require an excellent credit score.
Rachel Springall, from the comparison website moneyfacts.co.ukThat said, even if you can’t get a 0 percent deal, you can still save thousands by taking a loan on a low-interest card.
Find out which cards you’re most likely to get with an eligibility check at Money SavingsExpert.com.
When you move your loan to one of these cards you’ll normally pay a one-time fee of two to three percent of the balance, so £100-£150 if you transfer £5,000.
Eliminate Overdraft Fees
Dipping into your overdraft can be one of the most priciest ways to borrow, with some banks charging 40 percent interest — nearly double the average credit card rate.
Go to a bank with a free overdraft. Nationwide’s FlexDirect pays you up to £125 to switch and has an interest-free overdraft for the first year. The amount you can borrow depends on your circumstances.
First Direct’s First account pays £125 to switchers and offers a free overdraft of £250. Both providers have online eligibility checklists so you can see if you’re likely to be eligible – important if you’ve already overdrawn.
To pay off large overdraft loans, a money transfer credit card can give you interest-free relief, but beware of fees.
‘interest free credit card let me borrow to grow my business’
HYPNOTHERAPIST Emma Gosling borrowed £5,000 on a credit card in 2019 to pay for a mentor to help grow her business.
But an interest rate of 19 per cent could have increased the cost.
The 47-year-old of St. Albans, Hearts, transferred that debt to two new credit cards, a move that gave her an interest-free period of 27 months.
He has now repaid the loan without paying a single penny in interest.
“I’m glad I used the card,” said Emma.
“I couldn’t pay upfront for mentoring, so it was a great solution.”
Tenants’ Energy Assistance Risks
Citizens Advice warns that more than half a million renters could miss out on government help on energy bills.
The charity estimates that one in eight tenants of private landlords – about 585,000 people – may be affected.
Renters can’t claim the £150 warm home discount if their landlord manages their bills, and they could also be denied a £400 energy grant from the government this October.
You can only get cash assistance if you pay directly to your energy supplier.
You can try talking to your landlord or managing agent about an exemption to see if they are willing to pass on some or all of it, but there is no legal requirement for them to do so. .
The charity has seen cases where vulnerable renters have been denied the long-running warm home discount.
A person with mental health problems who had less than £10 left on the pre-pay meter cannot claim payment because he was not a designated billpayer.
Citizen Advice chief executive Dame Claire Moriarty said: “We are concerned that many tenants are falling through the cracks, putting them at risk of losing money to help with rising bills.”
Tenants who pay their energy bills directly have the right to choose their supplier and install a smart meter, but they must tell their landlord or rental agent.
If your energy bills are included in your rent, this should be stated in your tenancy agreement, but there may be a “fair use” clause that limits how much you can use.
If your landlord pays for your energy and then sells it to you, they may only charge you for the units of energy you have used and your share of the permanent fee, as well as VAT.
A former minister has warned that thousands of women could be deprived of huge sums of money after more pension irregularities in the state.
Sun Money has already called on the government to accelerate efforts to repay some 134,000 retirees, mainly women, who missed out on nearly £1 billion due to past errors.
The Department for Work and Pensions is trying to identify those who were underpaid and plug the gap, but 40,000 pensioners are believed to have died, which they were owed.
The latest mistakes, exposed by ex-pension minister Sir Steve Webb, now a partner in consultancy LCP, affected women on the new state pension, who used National Insurance’s low rate previously known as the “married woman’s ticket”. had paid.
She is entitled to claim some of her state pension based on her husband’s contribution.
But some have been wrongly told they have no rights when they are actually owed more than £4,000 a year.
If you have paid Stamp of Married Woman then you can check your eligibility by calling Pension Service on 0800 731 0469.