| | | Here's his masterclass on how to do it...
The Bank of England has over the last week warned the huge increase in personal borrowing - 10% in just a year - could lead to many defaulting. It's concerned this is starting to look similar to the bubble that caused the credit crunch a decade ago.
It's mooted it wants lending criteria tightened to make it more difficult for those who shouldn't borrow to get credit. I suspect that'd mean tougher credit scoring and affordability criteria. This is sensible, but those who just want to cut existing debt costs may fall foul of this too.
While nothing's certain, with rates across the board at or near all-time lows (part of the problem), if you've existing debt it's a sensible precaution to check now if you're on the cheapest possible deal. Here's my masterclass... | 1. | Cut credit or store card costs to 29mth 0% (or 42mth 0% for 3.29% fee). This is easy as there's fierce competition. It's all about balance transfer deals, where you get a new card to repay debts on old cards for you, so you owe it instead but at a cheaper rate. That'll mean most of your repayments clear the actual debt, rather than just servicing the interest.
Yet don't just apply, that marks your credit file. Use our Balance transfer eligibility calc to find which top deals are most likely to accept you. As Kelly told us: "Legend. Used the eligibility calc, got 35mths 0% and shifted £11,000 from 29.9%. Shocked by the savings." That's a saving of £4,900 if it's cleared within the 35mths. Here are the top deals...
Three tips to pick the right card...
1. Use the eligibility calculator to create a personal best-buy table.
2. Pick the card with the lowest fee in the time you're sure you can repay. If unsure go longer for safety.
3. If the eligibility calc suggests you've good odds of a non 'up to' card, unlike the 'up-tos' you know exactly what you'll get, so for safety it can be best.
Then follow the Balance Transfer Golden Rules...
a) Aim to clear the card or balance-transfer again before the 0% ends.
b) Never miss the min monthly repayment or you can lose the 0% deal.
c) Don't spend/withdraw cash. It usually isn't at the cheap rate.
d) You must usually do the balance transfer within 60/90 days. | | 2. | Do you pay over 2% interest on your mortgage? The cheapest new mortgage deals are at near-historic lows, 2yr fixes at around 1%, 5yr at less than 2%. So I think it's worth anyone who's paying more checking if savings are possible by remortgaging (getting a new deal that pays off the old one). Even a one percentage point cut on a £100,000 mortgage saves c. £80/mth.
This is especially important if you are on your lender's standard variable rate (SVR) - the default rate you move to when your fix ends. Then savings can really be large, like those made by Suzie: "Went on to a new 5-year fix and we are saving £195 per month. Same term, same balance etc." That's £2,340/yr saved.
Full help and answers to questions like 'fix or variable?' in my free 66 page MSE Remortgaging printed booklet, but here's a very short summary:
1) Compare: Use our quick comparison to benchmark available deals.
2) Do the maths: Use a mortgage calculator to see the savings possible.
3) Check your credit score: It has a huge impact on mortgage acceptance. Check yours with tips to improve it in the free MSE Credit Club.
4) Go frugal before applications: Even if you're remortgaging to a cheaper rate, bizarrely lenders must stress test to see if you could afford the mortgage if rates rose by 3%. Reel in your spending months before applying, as lenders want evidence of income, big bills, expenses & even eating out.
5) Check for early redemption fees: If you are currently on a fix or discount deal, you may have penalty fees to clear it, and that usually kiboshes any savings. Double-check with our ditch your fix calculator.
6) Factor in new deal fees too: Don't just look at the rate; remortgaging fees can be huge. Factor them in over the fix/discount period. Our comparison tool does this for you in its Total Cost Assessment.
7) Mortgage brokers can make getting a deal easier. They have info about credit scoring and affordability criteria not available to the public. See the How to find a mortgage broker guide. | | 3. | Often in your overdraft? Shift it to 0%. If you're overdrawn, debit cards are DEBT cards too, and often they're worse than credit cards. A constant £200 overdraft could cost you £365/yr; bust the limit and it can be worse....
1) Overdraft under £350, get paid £100 to grab a 0% overdraft. Switch to First Direct* and you get a £250 0% overdraft and a free £100. Use the free cash to reduce your overdraft and you've got time to pay the rest down. You must pay in £1,000/mth (or there's a £10/mth fee).
2) A (potentially) larger 0% overdraft for 12 mths. Switch to Nationwide's FlexDirect and get a year's 0% overdraft (50p/day after). The limit depends on your credit score, but it can be large, as Matt tweeted me a while back: "@MartinSLewis Matched my old one - £1,200. Implied I could have asked for more but the point was I wanted to p ay [it] off." Its Refer a friend scheme could net you free cash too.
3) Shift it to a special 0% money transfer card. This pays money into your bank to clear the overdraft, so you owe the card instead. Up to 41mths 0% is available for a fee. Use our Money transfer eligibility calculator to see if you'll get one, and for step-by-step help read the full Money transfers guide.
With all three of these methods, you'll need to pass a credit check. For more info, help and other options see 10 overdraft cost cutting tips. | | 4. | Already got a loan? You may be able to make it cheaper.Unlike credit cards, clear a personal loan and you could be charged an early repayment penalty of up to two months' interest. Yet loan rates have plummeted, so it can be worth getting a new one to pay off the existing one incl penalties.
Becki tried it: "Big thanks. Took a loan at a terrible rate - £7,500 interest on £15,000. Applied for a cheaper loan & I'm now saving £6,500." Here’s how...
Step 1: Call your current lender and ask it...
a) How many repayments you have left and how much they are. Multiply the two together to work out what you'll pay if you stick with your current loan.
b) What your 'settlement amount' is, ie, how much it costs to clear it today.
Step 2: See how much you can borrow the 'settlement amount' for. Use our Loans eligibility calculator to see your chances of getting a cheap deal. Our pick of headline best buys is below (bigger borrowing means lower rates). All are 1-5yrs unless stated.
- £1k-£4,999: Zopa* 5% - 9.9% rep APR, Hitachi* 7.3% - 7.9% rep APR (2-5yrs).
- £5k-£7,499: TSB* 3.3% rep APR, Hitachi* 3.4% rep APR (2-5yrs).
- £7.5k-£15k: Sainsbury's Bank* 2.7% rep APR (1-3yrs), M&S Bank* 2.8% rep APR (1-7yrs).
- For loans under £3,000 a 0% money transfer card that pays a lump sum into your bank account to clear the loan, is likely to be a winner.
Yet sadly like all loans, the loans above are ‘rep APR’ which means only 51% of accepted customers get the advertised rate - the rest can be charged more.
Step 3: Work out which is cheaper. Use our Cut Existing Loan Costs Calc to compare sticking with your current loan to getting a new one to pay it off.
Always ensure you pay on time or you may get a charge & a credit black-mark. Remember - never borrow more to get out of a debt problem. Full info, more options, and best buys in Cheap Loans. |
Debt FAQs Q. What about student loans? In many cases here you're better to save than clear it. See my Should I pay off my student loan? guide. (I'm in the midst of writing a new one for those who started in and after 2012).
Q. Can I shift loans onto my mortgage? While rates may be lower, as you're spreading repayments over a much longer period it'll likely cost more. If you're going to do it, at least increase your mortgage repayments by what you were paying on the loan. See Shift debts to your mortgage?
Q. I've multiple debts. Which should I focus on? The one with the highest APR, as it can grow most quickly. Focus all spare cash to clear it. Full pros and cons in Which card to repay first.
Q. I'm not getting great deals - how do I improve my credit rating? First check your credit file for free with MSE Credit Club which'll also show your hit rate, credit and affordability scores for free. Also see 37 credit score tips. Q. I've got savings - should I use them to repay my debts? In general, yes. See Repay Debts or Save? guide for full help. Q. I can't sleep at night due to my debts. Help... Do these apply to you?
- You can't even meet just minimum monthly payments.
- You have non-mortgage debts bigger than a year's salary.
- You have sleepless nights or depression/anxiety over debt.
... If so, then forget the solutions above and get free, one-on-one debt counseling help from Citizens Advice, CAP, StepChange or National Debtline. Read some inspiring stories in our Debt-Free Wannabe forum and also see our Mental Health & Debt guide. Full info: Debt Crisis Help. |
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| | | | | | | | | | | | | | | | Nationwide's hiking its packaged bank account fees, but it's still a big saving IF you'll use all its perks
Packaged bank accounts are where you pay a monthly fee for extra perks. In truth you're far better thinking of them as insurance packages. Work out whether you'd be buying those insurance policies anyway and, if you would, add up whether it's worth doing it this way instead. Our top pick for years has been Nationwide, yet it's hiking its fee from mid Sep and changing some benefits. So here's how it stacks up after the rise. Full info in Top Packaged Accounts, but in brief... Best for families: Up to £600/yr of insurance for £156/yr. The Nationwide FlexPlus* account will charge £13/mth from 21 Sep (£10/mth now). Here's what you'll ge t:
- Mobile cover for all the family's smartphones: For one iPhone the cheapest cover elsewhere costs £70/yr. Plus with Nationwide you can make up to 4 claims/yr from Sep (up from 2 now).
- World family travel insurance: Incl business, winter sports & golf cover (incl fees) up to age 74. Plus, from Sep, it also covers children travelling independently. The cheapest comparable policies we found elsewhere are from £60 (solo) to £242 (family with at least one over-65-year-old).
- European breakdown cover: Covers all account holders in any car.
- 3% AER variable interest on up to £2,500. So you could earn £74/yr interest. If you've already got the account it'll be £3/mth more, you'll lose the extended warranty on new-ish electrical goods and the not-very-valuable ID theft insurance. For many it still wins, but it's a good opportunity to check. Best for couples: Up to £530/yr of insurance for £144/yr PLUS £125 if you switch. The Halifax Ultimate Reward account costs £12/mth as long as you pay in £750/mth, pay out 2+ direct debits and remain in credit. Plus switchers get £125, making it effectively £19 in year one. It offers:
- Mobile cover: For the account holder(s) only.
- World family travel insurance: Incl business, winter sports & golf cover (incl fees) but only up to age 70.
- UK breakdown cover: So not Europe.
- Home emergency cover: Incl restoring gas, elec and water if they fail. Couples can open a joint account (even if only one uses it), so both get breakdown cover and phone insurance, meaning it can win for couples under 71, particularly if you won't drive in Europe. But it does not give the same breadth of coverage for other family members like Nationwide does. Full info and more top picks, see Top Packaged Accounts. Not happy with your existing account? You could reclaim £1,000s if it was mis-sold. If you were sold a packaged bank account check if it's worth it; if it is - great. If not, cancel, and check our Packaged Bank Account Reclaim Guide to see if you were mis-sold. |
| | | | | | | | | | | | | | If you're jetting off this summer and plan to park at the airport, don't wing it
Public transport is often the cheapest way to the airport, but for large families/groups, driving can win - and sometimes it's unavoidable. If so, book EARLY as prices often take off closer to departure. Forumite bigdaddy1210 says: "Brilliant deal using your links - got it for just over £40 instead of £115 by booking ahead." Full info in Cheap Airport Parking, but in brief... Tip 1: Use comparison sites, then get up to 31% more off with our links. Specialist comparisons hunt for the cheapest prices and often beat going direct - plus we've blagged extra discounts on them via our links below. Try a few as prices change constantly so there's no one cheapest site. And don't judge it on the discount, the final price quoted is more important. Try Holiday Extras* (10-30% off its standard price and searches most car parks), Looking4Parking (20-31% off), SkyParkSecure* (13-30% off), FHR* (12-30% off), Trusted Travel (16% off), Airparks* (12-25% off) & APH* (12-20% off). Tip 2: Try an airport hotel... for its parking. A hotel stay with parking can take the stress out of travelling on the day and sometimes won't cost you much more. Eg, a night at Gatwick with a week's parking via APH* is £89, compared to £76 for parking alone. We've even seen it work out cheaper than just for the parking. See Stay & Park Deals. Tip 3: You pay in 24hr slots - max the time or risk a fine. If you arrive at 10am for departure and land home at 9pm a few days later, book to pick your car up right up to 10am the day after the return - it costs the same and gives extra cover if your flight's delayed. If you stray over, some charge a full day rate. See MSE Guy's Airport parking warning blog for more. Tip 4: Use hidden local knowledge. Our forumites have a wealth of info about cheap or free airport parking, eg, cheap parking at train stations close by. See Heathrow, Gatwick, Luton, Stansted, E'burgh, Manc, Bristol, B'ham & other Airport Discussions. Tip 5: Rent a personal space near the airport. A few sites show driveways and private parking spaces rented out by their owners. Check Just Park*, Park Let* & Your Parking Space. |
| | | | | | | | They can get this email free every week |
| | | | | | | | New rules mean they only need to show deals that pay them. Our Cheap Energy Club shows you everything
Big news from energy regulator Ofgem this week. There's the much publicised 'safeguard' price cap for vulnerable customers but it also told price comparison sites they can hide tariffs that don't pay them, even if they're cheapest. Watch Martin's video of what this and the price cap really means, but for now we want to make something very plain to you....
Our Cheap Energy Club has always shown ALL tariffs and will continue to. It's expensive to run a comparison site, and when many of the cheapest deals don't pay to be featured, you can see why comparisons want to be allowed to hide tariffs.
However, we're committed to giving you a whole market comparison via the Cheap Energy Club (other than other firms' collectives which aren't open to all), so we do it a different way. If we get paid to switch you we give you roughly half of that back - £30 cashback per dual fuel switch. That way, the tariffs that pay us are cheaper for you, so you're more likely to switch to them. Our cashback comparison shows all tariffs, and adds the cashback to your saving, making comparisons even easier.
Our filters help you narrow down your options. The other reason Ofgem has changed its advice is when people compare and are faced with lots of unfamiliar small firms that they can't click and switch to, they just don't switch. Our way of dealing with that is to allow you to choose what you see with filters such as my current supplier, MSE top picks and big names only. Give them a try to see what you can save. |
| | | | Ten years after the credit crunch, what's the Bank of England done to make the system safer? It's made a video and the answer's an interesting watch. Safer systems?
£5 school uniform. Pre-order online from Thu, available in stores next week. Cheap School Uniform
SUCCESS OF THE WEEK: (Send us yours on this or any topic)
"Back from hols to find a £5k cheque waiting for us after querying our council tax band. So simple to follow your guide and not something I'd have known about otherwise. Thanks, MSE."
EXTRA 20-30% codes off 50% sales: Body Shop, Karen Millen, Nike. Summer sales + sizzlin' hot codes.
FREE £8 Malibu Piña Colada. At 650 bars this weekend (Eng & Wal). If you like Piña Coladas & pls be Drinkaware |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Thu 6 Jul - Good Morning Britain, ITV, Deals of the Week, 7.40am
Fri 7 Jul - This Morning, ITV, Martin's Quick Deals, time TBC. View previous
Mon 10 Jul - This Morning, ITV, time TBC. View previous
Mon 10 Jul - BBC Radio 5 Live, Lunch Money Martin, noon. Subscribe to podcast | | |
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| Wed 5 Jul - Facebook Live Q&A on graduates, 1pm
Wed 5 Jul - BBC Radio Cumbria, 'Money Talks', from 6pm
Thu 6 Jul - BBC Radio Tees, 10.35am
Fri 7 Jul - BBC South West stations, breakfast, travel money tips
Tue 11 Jul - BBC Radio Cambridgeshire, 2.20pm |
| | | | | | Q: I'm going on holiday with a good friend who doesn't live with me. Can we take out a couple's travel insurance policy and split the cost instead of taking two individual policies? Sheila, via email. MSE Tony's A: You almost certainly can't get a couple's policy as most insurers usually state you must both live at the same address and be in a relationship to get one. But don't let that put you off - travel insurance is vital and single-trip holiday insurance starts from £5/week or annual multi-trip policies from £9/year. Also, get cover arranged as soon as you've booked your holiday to ensure you're covered for cancellation. See our Cheap Travel Insurance guide which lists our best buys and which type is best for you. Please suggest a question of the week (we can't reply to individual emails). |
| | | | | | That's it for this week but before we go... we asked our users 'what's the oddest place you've had a parcel left?' on social media this week after seeing one box plonked on someone's flowerpot. And we got some corkers back such as parcels left under a neighbour's car, in the bin, or in a beehive (yes, a beehive). Do you have an even worse example? Read the list and let us know in our Twitter thread: 'Parcel delivery nightmares'. We hope you save some money,
The MSE team |
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