1. DON’T just pay the minimum monthly repayment on your credit card
While you should always pay at least the minimum monthly repayment (MMR) on your credit card each month, try not to leave it at that. Minimum payments are usually set at a ridiculously low level – in fact, they can be as low as 2% of your total card debt. This means it will take you a long time – typically more than 15 years on £1,000 of debt – to pay off your balance. And it also means your debt becomes much more expensive, as you will end up paying a lot of interest during that period.
2. DON’T ignore your savings
Becoming disciplined enough to start saving is one thing, but once you’ve successfully got into the savings habit, don’t then leave your savings to languish.
Interest rates on savings accounts change on a regular basis. And if you want to ensure you’re getting the best rate possible, it’s a really good idea to review your savings at least every six months. The average easy access account currently pays just 0.80% AER, while best buy easy access savings accounts pay just under 3%. If you discover the rate on your savings account is no longer competitive, switch to a better one! You can compare a whole range of savings accounts at our savings centre.
3. DON’T neglect your ISA
These days there aren’t many things that come tax-free, but a cash ISA is one of them. Each financial year, you can stash up to £5,100 in a cash ISA (although this will be increasing to £5,340 in April).
Of course, you don’t have to put all of this money into a cash ISA in one go, but if you can afford to, try to take advantage of this and top up your cash ISA as much as you can before the end of the tax year
4. DON’T automatically renew your insurance policies
If you have an insurance policy that’s about to run out, don’t simply renew it without checking to see what else is out there first. Insurers have a tendency to increase premiums for existing policyholders, so even if you think you’re still getting a good deal, you’re probably not.
5. DON’T bury your head in the sand about your debts
If you’ve spent a lot over the Christmas period, and now have a hefty amount of debt sitting on your credit card, don’t just put up with it, move it onto a 0% balance transfer credit card! That way you won’t have to pay any interest on your debt for a year or more – giving you plenty of breathing space and time to tackle that debt head on!
Just bear in mind you will have to pay a transfer fee of around 3% and you will need to pay off the balance in full before the interest-free period comes to an end, otherwise you’ll be hit with a high rate of interest. If you know you won’t be able to pay your balance off in full by then, transfer it to another 0% balance transfer credit card. And whatever you do, don’t spend on the card, or you’ll get even further into debt.
6. DON’T miss a payment on your 0% balance transfer card
Once you’ve successfully transferred a debt onto a 0% balance transfer credit card, make sure you always remember to make your monthly payment. If you fail to do so, or you are late, your card provider usually has the right to cancel your 0% deal immediately – and instead, you’ll be dealing with an interest rate of around 16%!
7. DON’T neglect your retirement
Starting a pension early is a wise move because your investments have many more years in which to grow than they would do if you were making contributions close to your retirement.
So if you’ve been putting off starting a pension, or you’ve not been paying into it quite as much as you should be, don’t neglect it any longer!
Even if you’re not planning to use a pension, and would prefer to rely on your ISAs or property instead, make sure you don’t leave it too late.
8. DON’T underinsure yourself
It can be very easy to underestimate how much home insurance you need, simply because trying to work out how much all of your possessions are worth is a tad tricky. But if you do underestimate the value of your items, you run the risk of being under-insured. And if this happens and your belongings are stolen or destroyed in a fire, your insurer won’t be obliged to pay out for your full claim.
So if you’re struggling to work out exactly how much all of your possessions are worth and how much insurance you need, take a look at this home contents calculator from NFU Mutual. This clever tool guides you through each room in your house, and all you need to do is add in the value of your belongings.
Similarly, make sure you don’t underestimate how much life cover you need.
Visit KPM Financial Services for further information and facts