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28 Mar 2022

11 ways to improve your finances with a money makeover

Our best tips for saving money from cutting bills and claiming discounts to checking prices and cancelling unnecessary payments
A couple checking their bills

As the cost of living soars, now is the time to check your finances to see where you can save any money.

Last month more than half of households (54%) had to make an adjustment to their finances such as cutting back on essentials or dipping into their savings to cover essential spending - according to the latest data from the Which? Consumer Insight tracker.

An estimated 2.1million households missed or defaulted on at least one mortgage, rent, loan, credit or bill in the last month.

Here, we share 11 of our best tips for saving money from cutting bills and claiming discounts to checking prices and cancelling unnecessary payments.

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1. Check for unclaimed benefits

More than £15bn is unclaimed from the Treasury each year, and more than seven million UK households could be missing out on benefits.

If you're on a low income you can claim Universal Credit and those already claiming child tax credit may be able to apply for working tax credit to help with day-to-day expenses.

Watch this video by Harry Kind to find out more.

2. Transfer your debt

If you have debt on a credit card with surging interest charges every month it's probably time to switch.

You can transfer the debt to a 0% balance transfer card which will give you a set amount of time to pay off the balance of the card interest free - although once this period ends the APR will jump up.

If you had £2,000 debt on a card charging 18.9% APR that you pay £60 a month towards, it will take 46 months to clear and cost £2,755.

With a 0% balance transfer card you could make the same repayments and it will only take 34 months to clear and cost £2,000 - a saving of £755.

The longest interest free period on the market right now is 34 months - however you will pay a fee to transfer the initial balance. The longest fee-free period is 26 months.

3. Save money on overdraft fees

If get charged for going into your arranged overdraft it may be worth looking for a free or low fee one.

Nationwide offers a free authorised overdraft for up to a year with a FlexDirect account but after the effective annual rate (EAR) you pay will be 39.89%.

First Direct also offers a free overdraft up to £250 - but if you borrow more you'll also pay 39.9%

Alternatively you could look for an overdraft with a cheaper EAR. Starling offers 15% EAR and Monzo offers 18% EAR - but you'll only be eligible for the best rates if you have a good credit rating.

Overdrafts are not suitable for long-term borrowing so you might be better with an unsecured personal loan.

4. Get a switching bonus

If you're in the market for a new current account then some providers are offering up to £150 if you switch. Here are some of the offers available right now.

  • First Direct New customers can get £150 if they switch to First Direct and you'll also get the free overdraft mentioned above as well.
  • Nationwide Existing customers who switch to Nationwide FlexDirect can get £125, new customers can get £100. You also get 2% fixed interest up to £1,500 for 12 months and many also get a 0% overdraft for this period as well.
  • Natwest New customers can get £150 for switching to one of its current accounts. Existing customers can get the bonus if they switch to a reward account.
  • Virgin Money New customers can get a £100 experience day voucher and up to 5.02% interest on up to £1,000 for a year if they switch.

Find out more:revealed - what banks are people switching to?

5. Cut tax bills

It's important to claim all the tax relief you are entitled to so you can keep a bigger chunk of your earnings.

For example, with council tax you could qualify for a reduction if you live on your own, with students, provide care, have a disability or live with someone who does, or receive the Guarantee Credit part of Pension Credit.

You could also challenge your council tax band if you think your property is in the wrong band. Not only could this cut your bill for 2022-23, but some councils will also backdate refunds.

Other less known tax rebates include marriage allowance and rent-a-room relief. Those renting out a room, rather than a whole property, can earn up to £7,500 tax free.

Marriage allowance gives one partner who earns less than the personal allowance of £12,570, to transfer £1,260 of their allowance to the other. The higher earner must be a basic-rate taxpayer.

6. Cancel unused direct debits

Are you paying for a service you no longer need, want or use?

Get in the habit of regularly checking your statement to make sure you are using everything you pay for.

And see if you can save money on existing bills - for example, could you cancel one of your streaming services or share a subscription with a housemate?

7. Use budgeting apps

If you have multiple bank accounts and different bills going out from each of them, you can lose track of your bills.

Money Dashboard and Snoop are two apps that can help you get an overview of all your accounts in one place.

Some banking apps also have features that make it easier to stay on top of bills.

For example, Starling Bank offers Bills Manager which allows you to set aside money each month just for your bills so you ensure you don't fall short.

Some also have roundup features which will round up every transaction and put the pennies in a saving pot for you.

8. Sign up to loyalty schemes

Loyalty schemes are no longer just about points - they can also unlock big discounts and other exclusive rewards.

Tesco now features deals on everyday items exclusive to Clubcard members and Lidl will allow you to unlock more vouchers the more you shop.

Most of these schemes are free to join and have an app which means you don't have to carry around lots of different cards.

9. Get a reward or cashback credit card

These cards will reward you for every penny spent with cashback and some pay as much as 5% on all purchases.

However the trick is to pay your card in full each month or any interest will wipe out potential savings.

Reward cards work similarly but you'll be given points such as air miles for every £1 spent.

Barclaycard recently launched two cards which give you Avios points - which can be exchanged for flights and British Airways have a similar offer.

The John Lewis Partnership card allows you to earn five points for every £4 spent (including Waitrose) and one point for every £4 spent elsewhere.

10. Use price comparison sites

If you've got a policy or contract coming up for renewal - don't let it auto renew.

Using a comparison website for insurance, credit cards and broadband have huge differences between the cheapest and most expensive.

When comparing the cost of a 12-month broadband package, we found a £15.04 difference between the cheapest and most expensive deals available.

11. Get a better mobile deal

You may be able to cut your monthly mobile deal just by looking at how much data you use - do you really need 200gb?

We previously found a low data contract such as 5GB of data from ID Mobile costs £6 a month, whereas 100GB of data from EE costs £34 a month - switching to this deal could save £336 per year.

You can also haggle to get the best deals. We found customers who haggle saved an average of £35 per year on mobile contracts.

Also check what bundles come with your mobile - if it offers a free Netflix or Spotify subscription that you already pay for, this could be an easy saving to make and will allow you to cancel your existing subscription.

Get help with the rising cost of living

We know households are struggling right now with the rising cost of living.

Which? is dedicated to offering tips and advice on how to cut the cost of your household bills, essentials and make the most of your money.