Five places where you can still save money this year
Sometimes it feels like the cost of absolutely everything is going up, and the current inflation rate, running at over ten per cent, seems to bear this out.
However, there are still some parts of your household budget where you can bring down your costs, helping you to cope with inflation elsewhere. Here are some of the most useful.
Your mobile phone contract
Mobile phone providers tend to hike prices at above inflation rates, even mid contract, so if you haven’t switched for a while, you are probably paying over the odds.
The prices of some data-heavy mobile phone contracts are now more competitive, especially if you are willing to use a newer provider and get a SIM-only deal.
Smaller providers such as Talk Mobile and Lebara are offering monthly deals at under £10.
Even better, many of them are short-term contracts so you can switch again if you find something you like even more.
Switching phone providers and keeping your mobile is now a simple automated process, so this is not an admin heavy task either. You need to text your provider to ask for a PAC code, which can then be used to switch.
There are more details on how to do this on the Ofcom website here.
Your broadband contract
Most broadband providers have introductory offers, which means that if you have finished the contract with one provider- or are coming to the end of it – you could save money.
Websites like Broadband Choices and Compare the Market can help you find what deals are available. Make sure you are aware that providers can hike prices mid-contract, at a pre-agreed rate above inflation, so even if you get a good deal, it could still go up. Make a note of when your offer ends, as prices tend to go up significantly after the end of a deal.
OK, this is saving money rather than making it, but the flip side of interest rates on mortgages rising is that savings rates have risen too.
It’s now possible for those willing to put away their money for a year to get savings rates as high as 4.3 per cent, while easy-access savings are available for nearly 2.5 per cent.
These are huge increases on what has been available recently but tend to be from banks that you do not see on the High Street. Do not worry, however, since these banks are all regulated by the Financial Conduct Authority (FCA) and you will be compensated if they go bust up to £85,000 per institution, per person.
A word of warning, though. With rates rising, you are more likely to end up paying tax on your savings interest. Most people have a Personal Savings Allowance, which is an amount of interest they can earn without paying tax. For basic rate taxpayers, it’s £1000, but for higher rate taxpayers it is only £500, while additional rate taxpayers do not have one at all.
At these higher rates, it is now easier to hit the cap on this allowance and start paying tax. The solution is to use your ISA allowance (now £20,000 a year) to shelter the bulk of your savings. ISA rates are not quite as high as other savings accounts, but the benefit of having your savings in an ISA can add up over time, so check these tax-free accounts on the Moneyfacts page too.
Once you have money in these accounts, they can be transferred between providers, and between cash ISAs and stocks and shares ISAs without the money losing its tax-free status, as long as you follow the proper process.
Your current account
Most of us are reluctant to switch our current accounts, but there are perks available to help you to switch and you might end up with longer term benefits too.
Nationwide and First Direct are offering cash incentives to those who switch accounts. For First Direct it is £175, while Nationwide it is £200.
An alternative is to apply for the Chase Direct account that gives one per cent cashback on debit card spending for the first year.
These accounts will only save you money if they are the right ones for you, so check the suitability of things like overdraft charges and in-credit interest so that it matches your circumstances.
Your water bill
If you don’t yet have a water meter, the annual water bill is somewhere you may be able to cut down on spending.
Those who do not have a meter are charged on an average basis for the size of the property, so if you’re a small family in a large home, you are particularly likely to be able to save.
Try this calculator https://www.ccwater.org.uk/watermetercalculator/, at the Consumer Council for Water website to see whether fitting a meter could slash your bills.
14th November 2022