Financial Savings
Is it time to review your Life Insurance?
Over the last few years there has been a serious realignment in the pensions and life insurance industry with the revelation that government actuaries appear to have miscalculated the average lifespan of the UK population. While on the surface this may seem good news in the longer term it has impacted on the cost of pensions but more importantly as we now expect to live longer the cost life insurance has reduced. So have you reviewed your life insurance recently?
While there are many of us in the UK who took out life insurance over the last decade or more as part of a mortgage agreement, on the understanding they were the best deals available at the time, does that still ring true?
When taking out a mortgage it can often be convenient to plump for the easiest option and take out the life insurance being offered in conjunction with your mortgage. The regulations have changed of late and customers are now able to shop around and with the marked reduction in premiums over the last few years there may be substantial savings to be made. The online market has also encouraged further pricing pressure in the life insurance industry and now is the time to take professional advice and see if your life insurance package is still as competitive as it was when you took it out.
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Do you have your general insurance plans with the same provider?
Even though many of us have been taught to shop around for insurance and personal finance needs there is a growing trend towards taking out various insurance policies with the same provider. While placing all of your eggs in one basket can in some instances be risky, there are some major insurance companies in the UK which are very well financed and unlikely to fold. Many of these companies offer substantial discounts if you take out your home, car and for example travel insurance with them. So are you making the best use of the offers available?
As the insurance market, and financial markets in general, move online we have seen some major cost reductions when compared to off-line equivalents. Many people would be surprised to learn the sums of money which can be saved not only with individual insurances but by taking out a number of different insurance plans with one provider. It is now also possible to eliminate certain elements of insurance policies which are perhaps irrelevant or indeed add new elements which may have more relevance to your way of life and family.
It is vital that you take advantage of the cost reductions and greater flexibility in the insurance market and check to see whether your current policies are competitive or better terms are available elsewhere.
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Do you have the best utility plans for your situation?
The cost of gas, electric and water is something which continues to dominate the headlines and is likely do so for some time to come. During 2008 there was a massive increase in the cost of utility services across the UK and while there has been a reduction in some areas of late they are still well ahead of the corresponding figures last year. But are you really using the best utility services available to you?
Only a few years ago there was much promotion about utility switching services which have in many situations saved literally hundreds and hundreds of pounds a year. Surprisingly, even though we have seen many people move online there still appears to be a reluctance to even consider moving utility provider and possibly taking all services from one provider. The UK market has changed dramatically over the last decade and where historically for example British Gas may have been the most competitive in the gas market, this is not always the case nowadays. It is now vital, with budgets in the UK becoming more and more stretched, to review your utility needs and utilities charges with professional advisers who can point you in the right direction. Can you really afford to give up literally hundreds of pounds of savings a year?
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Are you making the most of the credit card offers available online?
While the UK banking sector has come in for severe criticism of late, the credit card industry has escaped fairly unscathed even though base rates have fallen and credit card interest rates have remained stable and even risen in some cases. A quick glimpse at the popular press would suggest than 0% transfer deals are a thing of the past when in reality it is not necessarily the case. So are you really making full use of the credit card offers available today?
There are literally thousands of people in the UK who have overspent on their credit cards and are stuck in an ever-growing debt situation where interest is piling up and the underlying capital has remained constant. For those looking to pay off their credit cards, and possibly unable to transfer into a loan, it is vital to investigate the number of 0% transfer deals on offer because even six months interest-free payments can make a substantial difference to your level of debt.
Imagine the situation where you are currently paying off your interest and the underlying credit card debt remains the same, putting you under more and more pressure. How good would it be to eliminate interest payments for six months, or possibly longer, allowing you to pay off the underlying credit card debt after transferring to a new credit card provider. It is vital that you make use of any relevant offer or promotion which will help you to reduce your credit card debt.
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What are you paying for your Broadband Service?
The UK broadband sector is amongst the most competitive in the world and one which is set to grow well into the future. We are seeing the introduction of ‘superfast’ broadband networks, fibre-optic networks and a whole post of mobile broadband service providers but are you really getting value for money or are you paying over the odds for your current broadband service?
There are a significant number of very cheap broadband offers on the market today which to many people may look too good to be true. However, many of these promotional offers are being presented by some of the leading broadband companies in the UK as they look to secure an expanding client base moving forward. While many people may pay upwards of a month for their broadband connection it is potentially possible to reduce that to around month and still retain a reliable and fast service. So why are broadband providers keen to tempt you into cheap offers?
Broadband providers are now looking to the future with the next couple of years set to herald a significant change in the landscape of the sector. To many broadband providers in the UK these cheap offers are in effect investments in the future and will offer the chance to market and promote additional services, cross selling across different divisions, and increasing income and profit per customer. It is also worthwhile looking at amalgamating your telephone and Internet services because there are some very interesting bundle deals available.
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Learn the tricks of getting the best loan deals available
Whether we like it or not the vast majority of the UK population will at some time or another be forced to take out personal loans. Unfortunately, the vast majority of people often approach their current bank and sign up to their loan agreements without necessarily thinking about how they could reduce the interest rate charged and additional costs often associated with a loan. There are ways and means of reducing your interest rate and associated charges which you should certainly consider.
The best way to reduce the potential interest charge on a loan is to ask your current bank to match or better any other offer on the market because nine times out of ten they will want to retain your custom and often improve their rates. Let's not forget that your bank has probably spent a significant amount of money in the past attracting you as a customer and the last thing they want to do is lose you for the sake of a few hundred pounds.
Sometimes more is less in the loan market with larger rates often attached to smaller loan deals so in some circumstances it could be worthwhile taking out a few hundred pounds extra to move you to the next level and reduce the interest rate charged. You can always repay the excess which is not required as soon as the agreement is signed and still lock yourself into the lower rate. It is also worthwhile asking your loan provider to reduce or withdraw any potential charges attached to the agreement, as again they will not want to lose your business for the sake of just a few hundred pounds.
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Consolidate your debts with an IVA
As the recession continues to embrace more and more of the UK population we are seeing more instances of financial distress than ever before. While many people continue to struggle paying off debts they cannot afford for fear of considering bankruptcy or IVAs, is there really no other option?
It would be wrong to suggest that IVAs are a simple alternative, for many people in financial trouble they are available for a reason and they are perfectly legal. In effect if you are struggling to repay your debts and can see no out of your predicament, and if you are successful with an IVA application, you could see your creditors write off up to 75% of your debt and put in place a payment schedule for the remaining amount.
Otherwise known as an independent voluntary arrangement this is, as it suggests, an arrangement between yourself and your creditors which is arranged by a professional solvency practitioner who will be able to put a plan in place for you. While your creditors will not write off your debts without good reason they also recognise that if you're unable to pay your outstanding debts then there's no point hounding you for money which you have not got.
For those who have serious financial problems and can see no way out in the short to medium term, IVAs could be a serious viable alternative.
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Are you claiming all of the benefits that you are entitled to?
Since Labour came into power there has been significant increase in the number of benefits available for a variety of situations and a variety of groups of the population. However, despite heavy promotion and publicity given to an array of benefit arrangements now in place literally hundreds of millions of pounds in benefits go unclaimed each and every year. This is money which many people in the UK are entitled to and are either too embarrassed to claim or do not know about their entitlement.
This money has been put aside on an annual basis to cover the expected benefit applications across the country and in many cases you may be able to claim backdated benefits which could amount to a substantial payment. It is worthwhile taking professional advice with regards to the benefits you may be entitled to and the benefits you may have missed out on in the past. One example where benefits are going unclaimed is in the retirement sector where many older people are either unaware of what they're entitled to, unable to physically apply for the benefits or in some cases too proud.
Let us not forget that the benefit system is funded by taxpayer’s money to which we have all paid in over the years and to which we are all entitled as and when required, if we fulfil the criteria set out by the government.
This money has been put aside on an annual basis to cover the expected benefit applications across the country and in many cases you may be able to claim backdated benefits which could amount to a substantial payment. It is worthwhile taking professional advice with regards to the benefits you may be entitled to and the benefits you may have missed out on in the past. One example where benefits are going unclaimed is in the retirement sector where many older people are either unaware of what they're entitled to, unable to physically apply for the benefits or in some cases too proud.
Let us not forget that the benefit system is funded by taxpayer’s money to which we have all paid in over the years and to which we are all entitled as and when required, if we fulfil the criteria set out by the government.
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Have you considered remortgaging your home?
For the vast majority of the UK population the acquisition of a home will be the largest transaction ever in their lifetime but surprisingly it is one in which many people are less active than they could be. How many people across the UK have taken out a mortgage and left it until it is paid off without even considering remortgaging their home at a low rate or possibly changing the length of their mortgage agreement to suit their financial situation?
As UK base rates head toward 0% we have seen a substantial reduction in UK mortgage rates over the last 12 months. As a consequence there is now a variety of fixed interest mortgage deals available as well as variable rate agreements which may be substantially below the level of your current mortgage. Competition in the sector may not be as intense as it has been but a crackdown on excessive setup charges and various fees has proven very beneficial for UK mortgage customers.
While professional advice should always be taken, there is the opportunity at this moment in time to remortgage your home and significantly reduce rates which should take away growing financial pressure on the UK population. It is also worthwhile reviewing your mortgage arrangements on a regular basis as situations and rates can change.
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Is debt consolidation really an option?
As the debt built up by the UK population continues to increase, even in these difficult times, more people are struggling to pay off various loans and credit cards while trying to make ends meet and cover the bills at home. Even though a growing number of the UK population have considered and have taken out debt consolidation arrangements this is an option which on the whole has gone unnoticed by many. So what exactly are the benefits?
For those who have a variety of debt arrangements such as credit cards, bank loans and overdrafts there may be great benefit in consolidating these debts together and replacing them with one arrangement over a much more amenable timescale. Not only will a longer payback period result in lower ongoing payments but very often there may be a significantly better interest rate available when consolidating large debts into one. Obviously the rate at which any financial institution would charge will take into account your financial circumstances they are unlikely to be anywhere in the region of the double-digit figures afforded to credit cards of today.
It is essential that you take regular professional advice regarding your financial circumstances as there may be alternative arrangements which could both release pressure and reduce payments in the short to medium term. Those who suffer in silence without considering the options are the ones who may have serious problems further down the line.
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Do you really need a monthly contract mobile phone?
Over recent years the mobile phone has become more of a fashion accessory for many people than a real requirement. However, while there is no doubt that mobile phones are useful, the significant increase in monthly contract mobile phone arrangements has seen many people take up services which they neither use or ultimately have any real interest in. Do you really use the Internet on your mobile phone? How many texts do you send a month? Do you always use up your free minutes?
More and more people in the UK are now looking at returning to pay as you go mobile phones where competition has grown of late and charges are vastly reduced from just a few years ago. Pay as you go mobile phone arrangements offer you the chance to pay for services which you use and not services which you may use. When you consider that many mobile phone bills on monthly contracts may easily be in excess of per month there may, for many people, be substantial savings to be made.
Many people do not realise that monthly contracts are effectively a long-term repayment program for the "free mobile" which you received and very often the services which are on offer, they would not have signed up to on a pay-as-you-go basis. While there are obviously many people who do require monthly contracts and make use of the services available in full, there are a significant number in the UK that are effectively throwing money away each month on the off chance they may use their full entitlement.
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Book early to save money in many areas of the economy
While the vast majority of us will probably know what we are doing this time next week, possibly the week after and in some cases for the rest of the month, how many of us actually plan ahead with regards to travel arrangements and accommodation? The vast majority of the UK population seem happy to arrange accommodation and travel on the day or a couple of days before, when in many cases they will need to pay full price for the services they require.
Planning your travel arrangements even just a short time ahead can result in significant savings on both train and air plane travel packages and very often booking ahead for hotel accommodation may well afford you the benefit of a discount. For those providing the service, whether this be travel or accommodation for example, the ability to know in advance how many people will be using their services will allow them to charge higher prices nearer time.
By attracting a large number of customers significantly before travel dates and accommodation dates they can effectively cover their costs knowing their real profits will come nearer the time by charging those leaving it late the "going rate".
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Stop smoking and save £££'s a year
While there are many "no-brainers" in the area of saving money few are as obvious as stopping smoking. It is estimated that the average UK smoker spends upwards of £2000 a year on a product which is widely known to be detrimental to their health. Aside from health issues for smokers themselves there are also wider issues for passive smokers, children in the house and the smell of smoke which often hits you when you walk into a smoker's home.
Even though there are hundreds if not thousands of websites available to help you stop smoking it would be wrong to suggest it is easy but as with any addiction there are ways and means of weaning yourself off the substance. But the fact you could save £2000 a year, improve your health, the health of your family and have enough money to treat yourself to something special must surely be an incentive worth pursuing?
There is also the fact that the UK government has been constantly increasing tax on cigarettes for many years in the hope of reducing the number of young smokers in the country as well as increasing the government's tax take. In the midst of the ongoing economic downturn is now the time for you to look at your smoking habit and the potential savings you could make?
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Could a financial review save you money?
While historically the financial services industry may not have had the best reputation in the world there have been significant changes over recent times which many people may not be aware of. There have been a number of improvements in the regulatory environment, increased protection for customers and increased transparency so that everybody involved is aware of exactly what payments are being made and what advice can be given. However, there are still literally hundreds of thousands of people who simply ignore the opportunity to carry out a simple financial review with a financial adviser which in many cases is to their detriment.
It may be hard to understand but a simple annual review of your financial situation could not only flag a number of opportunities but it could literally save you thousands and thousands of pounds in the long run. A simple tweak of your pension arrangements, a better return on your savings and making plans for your retirement many years in advance could be more beneficial than many people may believe. Financial planning is about planning ahead and being proactive rather than reactive because once you retire you should already have your pension arrangements in place to suit your financial situation and if you don't this could make life very difficult for you.
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Do you really need to use your ISA allowance?
Even though Individual Savings Accounts (ISAs) have been with us for some time many people have simply ignored them with many holding a general opinion they are for the more wealthy of society. However, ISAs have a use for each and every person in the UK with a cash ISA allowing you to invest £3,600 in the 2008/9 tax year and a stocks and shares ISA allowing you to invest £7,200 in the same period (less any amount you have invested in a cash ISA). While you need to take professional advice from your financial advisor, not all ISAs are high-risk investments and they were created to allow people to protect their investments from the taxman and increase their returns.
It's also worth reminding ourselves that you do not need to use your full allowance each and every year but if you put away as much as you can on an annual basis and invest sensibly whether this is in cash instruments or stocks and shares you could build up a substantial tax-free investment fund for the future. Those who invest in stocks and shares on a regular basis and do not make use of their ISA allowances are effectively missing out on an ongoing basis and increasing their own tax charge into the future. Is it time that you approached your professional adviser about considering your ISA allowance?
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Have you considered reducing your tax bill?
While this may seem like a rather strange question to many people, how many of us actually sit down and study our tax returns with the intention of reducing the amount of tax we pay each year? If we are honest the vast majority of us in the UK hand over our taxes without even considering how they could be reduced, deferred or even reclaimed.
Even though the vast majority of tax reduction (not tax evasion) schemes and opportunities may well benefit the higher rate taxpayers in the UK more than most, there are still opportunities for each and every taxpayer to reduce their annual outlay. It is worth considering a visit to your local wealth manager to see exactly what they can do for you both now and in the future and how you can rearrange your investments and personal assets in the most tax efficient manner.
We are not talking about illegal tax evasion, which can result in criminal prosecution, but about efficient management of your investments, income and assets to ensure that not only do you pay the correct amount of tax for your situation but you also ensure that your family do not suffer in the event of your death. While death is a subject which many people try to avoid it is one which is vital in the financial world and one which you ignore at your peril.
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Can I reclaim my payment protection premiums and bank charges?
The last two or three years has seen a major push from consumer groups with regards to excessive bank charges and payment protection schemes which in many situations have proved worthless. The regulators have also been fairly aggressive in their pursuit of those miss-selling payment protection schemes as well as banks charging excessive bank charges. The end result is that some customers have received compensation and others are awaiting the outcome of ongoing court cases between the office of fair trading and the banking industry.
While there have been a number of legal challenges from the banks regarding the validity of the challenge from the office of fair trading these have been rejected by the courts and we are awaiting the final verdict which could potentially open the floodgates for compensation payments across the UK. It would appear that many financial institutions have already "thrown in the towel" behind closed doors, readying themselves for substantial compensation claims but how exactly do you go about reclaiming historic charges and payment protection premiums?
There are various websites and various companies around the country who will take on your case but you need to be careful about who you are dealing with and the terms of their services. The best port of call initially would be your financial advisor who can point you in the right direction to what in many cases could be substantial compensation payments totalling thousands of pounds.
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Have you considered a prepaid credit card?
As much as many of us would like to bin our credit cards they do serve a purpose when looking to acquire goods over the phone, online or services in emergency situations. However, with your plastic to hand it can be easy to overspend and overstretch your budget which many people in the UK have experienced over the last few years and will experience for many years to come. There is also a problem for those with sub-prime credit ratings and the fact that they are likely to be rejected by traditional credit card companies. So what are the options?
When you have been rejected by a traditional credit card company and are looking to introduce more discipline into your credit card spending, it may be worthwhile looking at prepaid credit cards which you "fill up" with funds before you spend. This ensures that you only spend what is on the cards and never increase your debt via this method. There are however charges associated with depositing money on to your prepaid credit cards and it is worthwhile comparing these amongst the ever increasing array of prepaid credit cards now available.
While prepaid credit cards may not be appropriate for everybody there is most definitely a growing market for this more disciplined approach to spending and one which is set to grow in the future.
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How to improve your credit rating and make a difference
As a larger and larger proportion of the UK population stare headlong into the financial abyss we are seeing more and more people downgraded by various credit reference agencies making it more difficult to access credit in the future. However, even if you have been through the worst financial upheaval there are ways and means of improving your credit rating and starting to build again even from the very bottom.
Your first port of call when checking your credit rating should be to ensure that the data held by the likes of Experian and Equifax, the two leading UK credit reference agencies, are correct. More and more people are finding that their credit ratings and their credit worthiness are being impacted by inaccurate information which can be corrected fairly quickly. However, for those who have suffered financial problems in the past getting back on track is not as difficult as many would have you believe.
In order to build up your credit rating you need to show that you are able to pay off your debts on a regular basis, open bank accounts and where possible arrange for a family member or a trusted friend to call sign a small loan agreement to show that you are able to abide by the terms of such arrangements. It is basically just a way of showing the credit reference agencies that you are back on the ladder and you are now able to keep up with your payments and pay off your outstanding balances when due.
We are not advocating taking out credit arrangements and loans which would push you back into financial trouble but simply showing the credit reference agencies that your finances and your attitude to debt have changed.
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Improve your terms by threatening to leave
In many countries around the world bartering is a way of everyday life where everything has its price and services can be negotiated. However, in the UK many people seem wary or scared of trying to improve the terms of an agreement or the cost of an item or service. In basic terms if you do not ask you will never receive!
Let us take for example the financial industry, where competition is still intense and companies have literally spent millions of pounds attracting new customers. If for example your bank was to charge you an excessive overdraft fee, what would you do in their position if you threatened to leave.
At the risk of losing a customer many banks and insurance companies for example may waive any potentially "excessive fees" because they know competition is now so intense that customers can leave at the drop of a hat and how other services available almost immediately. It is the same with any type of business where loyalty is expected and often assumed because at the end of the day this is a two-way relationship and unless businesses are willing to be flexible on certain occasions there will be somebody else offering you a better rate and a better service.
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