Top Tips

Tips for your finances

We have put together some practical hints and tips about money management – a combination of answers to questions that we are frequently asked as well as practical steps that you can take to make the most of your money. We have included some guidance on how to keep your money safe and help you make the right choices.

Top Tips for Keeping your Money Safe

We all know that losing your cards, or having them stolen, is a huge inconvenience. By following some simple advice you can help protect yourself against fraud.

Only take cards out with you that you intend to use. Leave others in a secure place at home.
Make sure your bank has your up to date contact phone numbers, especially your mobile phone. If your bank spots unusual spending patterns it may try to contact you to check that the transactions are genuine. If unusual transactions are spotted your bank may even block these until you confirm that they are yours.
Make sure you have the 24-hour contact phone numbers for the cards you do take with you - in case you need to speak to your card company
To avoid pickpockets it is often advisable to wear a concealed money belt to hold your valuables when you are out and about. Do not leave purses in unzipped bags or wallets in your back pocket
Take extra care with cash machines; ensure that they have not been tampered with. Try to use machine in well lit areas or inside bank branches
Always shield your PIN with your free hand when typing your PIN into a keypad in a shop, business or at a cash machine
Guard your card and card details at all times. Safeguard your PIN and don’t keep a written copy. Don’t give details to anyone - even if they claim to be from the police or your bank. Never respond to emails purporting to come from your Bank asking you to confirm account and passwords – these are likely to be from someone trying to fraudulently gain access to your account. This is known as ‘pfishing’ and should be reported immediately to your bank
Check your statement carefully and regularly to identify any fraudulent activity. Online or telephone banking gives 24/7 access and can help you spot unfamiliar transactions quickly

Budgeting Top Tips

Keep an accurate note of how much you spend for one full month. That includes incidentals like magazines, lunches, cups of coffee and drinks in the pub. Only by doing this will you be able to calculate how much your day to day living is costing you. Use our budget planner to help you
Try to pay as many bills as you can by direct debit every month. Apart from the fact that you might get a discount for paying this way, if you arrange for bills to be dealt with as soon after your salary is paid as possible then you will know how much money you have left for the rest of the month.
Keep a spreadsheet or list showing your monthly income and expenditure. Spread as many bills as you can over the year so that you don't have lots to pay in some months when your expenses increase dramatically. Don't forget to add in the things that you only pay once a year like your TV license or your car insurance
If you need extra money to cope with extra expenditure at a particular time then an overdraft might be the answer but remember to ask your Bank first. Unauthorised overdraft rates are much higher than authorised ones and you also run the risk of having bills unpaid or direct debits returned, increasing the charges you are likely to have to pay
If you think you will need the money for longer than a few months then a personal loan might be a better option than an overdraft. It is sensible to shop around for a loan to suit your needs – look for a competitive interest rate but also check the terms and conditions. Sometimes a loan with more flexible terms may be more appropriate for you.
Don't rush into buying something just because you want it today. A store might offer you access to a personal loan or its own store card but you should go away and check out the price elsewhere, and whether there are better ways of paying for your purchase. This is especially true of more expensive items like furniture or cars.
If things get tight at anytime remember that you have to prioritise your debts. If you don't pay your mortgage you could lose your house, if your electricity remains unpaid it may be cut off. If you can't afford to pay everything at one time then you need to make a list of the most important debts
Make sure you speak to your creditors if you are not going to pay bills. Go to them and tell them you have a problem, why you have it, and make a proposal to pay what you can when you can. It's not easy but there should be no stigma to owing money and it is really important that you are up front and honest. If you are concerned about your level of debt look at the tools in For People Worried about Debt.
Here's the most important tip. A budget is not all about telling you to stop spending money. Just the opposite in fact. It's all about helping you to spend money more effectively and in areas that you want to spend it. Use it as a positive tool to help you control your money rather than allowing your money to control you!
Why not sign up for Internet banking and text alerts; having access to your transactions 24/7 can help you keep track of your money and manage your accounts more efficiently

Mortgages Top Tips

1. It makes sense to start looking for the right mortgage product before you start to look for the right house. Look at all the options, work out how much you can afford and find out how much you can borrow – most lenders will give you an Agreement in Principle. Remember that in addition to the purchase of the property, you are likely to need funds for solicitors fees, survey fees etc as well as furniture and decoration
You need to look beyond the headline rate. Your lender should provide a Key Facts Illustration (KFI) which is a personalised quote for the total cost of a mortgage. Depending on your circumstances, a slightly higher monthly interest rate with no arrangement fee might be a better deal than a lower rate with a large fee up front. Your Home may be repossessed if you do not keep up repayments on your mortgage.
The higher the loan to value of the property usually means a higher the interest rate. Sometimes the lender may apply a 'Higher Lending Charge'. This is a one off payment to the lender and protects them if you default on payments. It can be expensive and you might wish to try to find a lender that will give you the option of adding this charge to your mortgage but remember you will be paying interest on it for the length of the mortgage so it could end up costing you more in the long run
Some mortgages can be set up on an 'interest only' basis to start with, but if you do that you will always owe your lender the same amount of capital and your mortgage balance will stay the same throughout the mortgage term. Interest and a premium to an investment vehicle are paid monthly. At the end of the term, the proceeds from the investment vehicle are intended to repay the mortgage. The amount will depend on the performance of the investment vehicle. If you choose an interest only mortgage you will be responsible for ensuring that you have sufficient funds available to repay your mortgage at the end of the term. A capital repayment mortgage is a more common way of repaying your mortgage. The capital and interest elements of the loan are paid off with each monthly instalment so that the balance reduces over time. At the end of the mortgage term the balance will be nil.
Fixed rate mortgages are a good choice if you need to be sure of your monthly repayments, so you can budget from the start of the mortgage. Remember though that if interest rates drop you will not be able to benefit and will end up paying more.
When you get to the end of a short term deal, it is important to speak to your lender to see what deals they can offer you as an existing customer. If you don't, you are likely to move to your lender's standard variable rate (SVR) of interest which can increase your monthly payments considerably – this will depend on their SVR and the rate your short term deal is on. Also, take time to compare deals available from other lenders in the market.
If you are buying a house with a partner it is important to take legal advice to determine what happens in the event of a split. Not a happy subject, but one that is better addressed up front rather than at the point of a break up, when emotions are likely to get in the way.
Don't forget to look at all of the insurances that you are likely to need to protect both yourself and your home. Mortgage payment protection insurance covers you and/or your partner if you are unable to work due to accident, sickness or unemployment. Life Protection will pay off the mortgage should you die unexpectedly which means that your family will have the financial help available when you are no longer there to provide that security. Home buildings and contents insurance will provide protection for your property and possessions.
You will need to make sure that you insure the house you are buying, but you don't need to insure it with your lender. Shop around to find the best home buildings and contents insurance deal you can get, but make sure it provides the right cover for your needs.

Savings Top Tips

Saving is not difficult. It's all about planning and keeping some of the money you have today to use at some point in the future, whether it's next week, next month or in twenty years time.
Break down your savings into three areas - and this is the really easy bit. Short term, medium term and long term. Short term should cover day to day needs, medium term can help with things like a deposit for a new car or house and long term is essentially retirement planning.
Try to move some money every month from your everyday current account to a savings account. Apart from the fact that this will give you a bit of a cushion and some peace of mind that you have an emergency fund, you will also find that the rate of interest paid on a savings account may be higher than that paid on your current account.
Before you think about medium or longer term savings you should build up an emergency fund that is easily accessible in a high interest bank or building society account. This will help you to take care of any unexpected large purchases without having to borrow and will allow you to keep on top of any budgets you have set up for yourself.
Think about the tax position of any interest you make from your savings. Remember that interest on building society and bank accounts may be taxed at your highest rate, so if you have unused Individual Savings Account (ISA) tax allowances, it may be worth using them.
Pensions are very tax efficient for your longer term savings. You could be eligible for tax relief at your highest rate of tax, the fund itself is able to grow in a tax efficient environment, and under current legislation you are able to take up to 25% of the fund as a tax free lump sum at retirement.
You have to consider whether you need your savings to produce capital growth in the longer term or an income either immediately or in the near future. You may be able to combine both.
Not all savings are risk free. While money you put in the bank should be safe, the same might not be true for money invested in the Stock Market. Bear in mind that the value of such investments can fall as well as rise, and that you may not get back the full amount of your investment. You should think carefully about how much risk you are prepared to take with your money, and only invest in risky areas if you are prepared for a potential loss, especially in the short term.
Remember that some savings accounts offer better interest rates if you agree to tie your money up for a certain length of time. So you may get an extra interest, if for example, you don't touch your savings for a year, or if you agree only to make one withdrawal in the first six months. You should make sure that you can stick to these terms at the beginning since if you try to take your money early you may lose some or all of your interest.
You should try to put money aside regularly for summer holidays and Christmas rather than hoping you will be able to pay for these expensive times of the year out of normal income, or worse still have to borrow to pay for them.

Credit Cards Top Tips

If you use your credit card for any purchase over £100 and you have received unsatisfactory goods and services, or the supplier goes out of business, then you can also approach your credit card company for help, as they are jointly liable under the terms of the Consumer Credit Act.
Check out the interest free period between buying goods and interest starting to become due and try to clear your balance before that happens. Know the APR on all your cards and pay off the most expensive first.
Set up a direct debit to make your regular monthly payments to your credit card. That way you will not be liable for late payment charges. If you want to make extra payments then you can still do so at other times.
Store cards and credit cards are different. Store cards can only be used within the group that issues them while credit cards can be used much more widely. Store cards can be very expensive so only use them if you qualify for some special deal and if you can afford to pay off the balance before the interest starts to be applied.
Try to avoid using credit cards for cash as the interest rate is likely to be higher than if you use it to purchase goods. Interest is normally charged immediately you withdraw the cash and there is no interest-free period as there is when purchasing goods.
Don't build up a wallet or purse full of credit cards. Pick one that offers good value and stick with it. It's much easier to budget this way.
If your credit card company writes to you to tell you they have increased your credit limit you do not have to accept it if you feel you may be tempted to spend more.
Pay more than the minimum payment every month otherwise your balance will take a long time to go down. Just because your credit limit is £3000 doesn't mean that you have to maintain a balance at that level.