Rachel Springall, Finance Expert at Moneyfacts.co.uk, said:
“Parents may well have done everything in their power to prepare their children for the new school term, but amid the rising cost of living, their finances may have taken a hit. Working out how to pay back any new debts should be a priority so parents can get on top of their finances and, at the same time, consider some longer-term goals such as saving for the festive season or creating a budget.”
Move credit card debts to an interest-free card
“Credit cards are a convenient payment method and a useful safety net if someone has little disposable income. Those who do use these for making purchases would be wise to shift debts to an interest-free balance transfer card to avoid incurring interest charges. According to The Money Charity, the average credit card debt per household is £2,229 and if a borrower only paid £100 as the minimum repayment per month, it would take them over two years to pay it off.
“The longest 0% introductory balance transfer offer, with the lowest initial transfer fee, has a 34-month interest-free deal on balance transfers for a fee of 2.88% with Sainsbury’s Bank. Borrowers who can comfortably pay off their debts sooner may prefer to apply for a fee-free deal, such as the 22-month 0% balance transfer offer from NatWest.”
Consider a low-cost loan to consolidate debts
“An unsecured personal loan can be used to consolidate credit card debts into one place and may be more manageable for someone to repay. The lowest rate on offer on a £10,000 loan over five years is 2.8% from M&S Bank, costing approximately £718 in interest. Some borrowers may prefer to utilise a 0% interest credit card, but it can be tempting to reduce the minimum repayment and fail to pay off debts before interest applies. Borrowers are not guaranteed the lowest of rates and it’s worth noting that a minimum of 51% of successful applicants must be offered the advertised rate, and early repayment charges may apply if customers decide to switch their existing loan.”
Switch current accounts for some free cash
“Switching a current account can reward customers with a free cash incentive and there are a few providers offering some notable sweeteners to entice new business. One of the most generous free cash offers is from both first direct and Santander, offering £175 to customers who switch using the Current Account Switch Service (CASS). Santander’s 123 Current Account will also allow customers to earn cashback on their bills. Elsewhere, Virgin Money will pay 25% cashback, up to £160, on supermarket shopping and fuel for 60 days to those who switch.
“It is simple to switch current accounts using the CASS, and it can all be wrapped up within seven days without the worry of missing any direct debits. As tempting as free cash may be for switching, it’s crucial consumers weigh up all the features and charges to ensure it suits their spending habits. If consumers’ outgoings rise, it’s important they have a bank account that can support them and reward them for their loyalty.”
Review retirement plans
“During a cost of living crisis consumers may consider putting their retirement plans on hold or indeed reducing the amount of cash they are saving for their future retirement to concentrate on their current commitments. However, it’s important consumers carefully balance their savings, or they may hit a pension shortfall in the future. Saving little and often is key to building a retirement pot and working out some achievable goals is wise. Seeking advice to go through income and outgoings and being realistic on what can be saved each month is vital, especially in a high inflation environment. Concentrating on paying the bills and any debts is essential, so reducing pension payments temporarily could help, but it’s important not to forget about saving for later life.”
Remortgage and review monthly repayments
“Interest rates are rising and, for many, a mortgage will be the biggest financial commitment they have to cover each month. Consumers could stand to save a large sum on their repayments by remortgaging, so it’s always worth seeking advice to go over the sums, even if someone is currently locked into a fixed deal. Borrowers coming off a five-year fixed mortgage in the coming months and who fall onto a standard variable rate (SVR) could see their repayments shoot up, so it’s never too soon to investigate other options. Indeed, back in September 2017 the average five-year fixed rate was 2.77%, but today the average SVR is 5.40%. Fixing for longer may well be in the mindset for some borrowers as interest rates continue to rise, but it’s vital they seek independent financial advice to navigate their options as the average five-year and 10-year fixed rates continue to climb above 4%.”
Build a savings pot
"The key to building a decent nest egg is to save little and often, but it could be difficult for those with little to no disposable income. Taking advantage of any saving initiatives is wise for those who have little to fall back on, such as the Government’s Help to Save scheme which is designed to encourage working people on Tax Credits to save. The scheme’s 50p per £1 initiative means that it will pay a maximum bonus of £1,200 over four years, which could be a much-welcomed boost for those struggling amid the rising cost of living.
“Those savers who want flexibility with their savings will find a variety of easy access accounts out there to choose from, but it’s important they check all the terms and conditions as some limit withdrawals. Switching savings accounts is essential right now as interest rates continue to climb. The top rate today for savers who have just £1 to invest comes from Gatehouse Bank, which pays 2.00% as an expected profit rate on its Easy Access Account. Savers with a high street bank may not be seeing any benefit from the base rate rises. With some accounts paying as little as 0.01%, it’s clear to see why loyalty doesn’t always pay.”
Rachel Springall, Finance Expert at Moneyfacts.co.uk, said:
“Parents may well have done everything in their power to prepare their children for the new school term, but amid the rising cost of living, their finances may have taken a hit. Working out how to pay back any new debts should be a priority so parents can get on top of their finances and, at the same time, consider some longer-term goals such as saving for the festive season or creating a budget.”
Move credit card debts to an interest-free card
“Credit cards are a convenient payment method and a useful safety net if someone has little disposable income. Those who do use these for making purchases would be wise to shift debts to an interest-free balance transfer card to avoid incurring interest charges. According to The Money Charity, the average credit card debt per household is £2,229 and if a borrower only paid £100 as the minimum repayment per month, it would take them over two years to pay it off.
“The longest 0% introductory balance transfer offer, with the lowest initial transfer fee, has a 34-month interest-free deal on balance transfers for a fee of 2.88% with Sainsbury’s Bank. Borrowers who can comfortably pay off their debts sooner may prefer to apply for a fee-free deal, such as the 22-month 0% balance transfer offer from NatWest.”
Consider a low-cost loan to consolidate debts
“An unsecured personal loan can be used to consolidate credit card debts into one place and may be more manageable for someone to repay. The lowest rate on offer on a £10,000 loan over five years is 2.8% from M&S Bank, costing approximately £718 in interest. Some borrowers may prefer to utilise a 0% interest credit card, but it can be tempting to reduce the minimum repayment and fail to pay off debts before interest applies. Borrowers are not guaranteed the lowest of rates and it’s worth noting that a minimum of 51% of successful applicants must be offered the advertised rate, and early repayment charges may apply if customers decide to switch their existing loan.”
Switch current accounts for some free cash
“Switching a current account can reward customers with a free cash incentive and there are a few providers offering some notable sweeteners to entice new business. One of the most generous free cash offers is from both first direct and Santander, offering £175 to customers who switch using the Current Account Switch Service (CASS). Santander’s 123 Current Account will also allow customers to earn cashback on their bills. Elsewhere, Virgin Money will pay 25% cashback, up to £160, on supermarket shopping and fuel for 60 days to those who switch.
“It is simple to switch current accounts using the CASS, and it can all be wrapped up within seven days without the worry of missing any direct debits. As tempting as free cash may be for switching, it’s crucial consumers weigh up all the features and charges to ensure it suits their spending habits. If consumers’ outgoings rise, it’s important they have a bank account that can support them and reward them for their loyalty.”
Review retirement plans
“During a cost of living crisis consumers may consider putting their retirement plans on hold or indeed reducing the amount of cash they are saving for their future retirement to concentrate on their current commitments. However, it’s important consumers carefully balance their savings, or they may hit a pension shortfall in the future. Saving little and often is key to building a retirement pot and working out some achievable goals is wise. Seeking advice to go through income and outgoings and being realistic on what can be saved each month is vital, especially in a high inflation environment. Concentrating on paying the bills and any debts is essential, so reducing pension payments temporarily could help, but it’s important not to forget about saving for later life.”
Remortgage and review monthly repayments
“Interest rates are rising and, for many, a mortgage will be the biggest financial commitment they have to cover each month. Consumers could stand to save a large sum on their repayments by remortgaging, so it’s always worth seeking advice to go over the sums, even if someone is currently locked into a fixed deal. Borrowers coming off a five-year fixed mortgage in the coming months and who fall onto a standard variable rate (SVR) could see their repayments shoot up, so it’s never too soon to investigate other options. Indeed, back in September 2017 the average five-year fixed rate was 2.77%, but today the average SVR is 5.40%. Fixing for longer may well be in the mindset for some borrowers as interest rates continue to rise, but it’s vital they seek independent financial advice to navigate their options as the average five-year and 10-year fixed rates continue to climb above 4%.”
Build a savings pot
"The key to building a decent nest egg is to save little and often, but it could be difficult for those with little to no disposable income. Taking advantage of any saving initiatives is wise for those who have little to fall back on, such as the Government’s Help to Save scheme which is designed to encourage working people on Tax Credits to save. The scheme’s 50p per £1 initiative means that it will pay a maximum bonus of £1,200 over four years, which could be a much-welcomed boost for those struggling amid the rising cost of living.
“Those savers who want flexibility with their savings will find a variety of easy access accounts out there to choose from, but it’s important they check all the terms and conditions as some limit withdrawals. Switching savings accounts is essential right now as interest rates continue to climb. The top rate today for savers who have just £1 to invest comes from Gatehouse Bank, which pays 2.00% as an expected profit rate on its Easy Access Account. Savers with a high street bank may not be seeing any benefit from the base rate rises. With some accounts paying as little as 0.01%, it’s clear to see why loyalty doesn’t always pay.”
