Do you have a mortgage and savings? If so, it’s almost certain this is the moment to change strategy. Saving rates are dire are getting worse. So I want to urge you to urgently check now if you’d be far better off simply overpaying your mortgage instead – the gains can be in the £10,000s.
It’s now been several months since the Bank of England cut UK base rates from 0.5% to 0.25%. Since then we’ve gradually seen savings account after savings account slash its interest – for example NatWest's cash ISA's has dropped to 0.01% and Santander’s halving the interest on its 123 current account.
Of course, cutting the rate is meant to benefit those with mortgages, yet millions are locked in on fixed rates, or paying over the odds, so for many there's little gain. That's why I’m calling on everyone with a mortgage and spare cash to check if overpaying it is their best form of saving.
Here are the six key need-to-knows:
Don’t hate me . . . I dislike tinsel and Jingle Bells before December as much as the next man, but many festive savings are only possible if you do them early.
I’m fed up of people telling me every January they’re skint, and when I ask why, they reply: “Christmas of course.” Well I can tell Shropshire Business readers exclusively here, Christmas will be on December 25 this year!
A typical family Christmas in Shropshire costs between £600 and £800 – that’s a huge amount from one month's salary alone. If you’re saying you can’t afford that, and haven’t been putting money aside earlier in the year to spread the cost, then I’m afraid you’ll need to go cold turkey.
Christmas is just one day; it’s not worth overspending and ruining your New Year. Here are some helpful festive finance tips:
Agree to not give unnecessary presents.
Gifts for kids, grandchildren or your spouse are fine. Yet it’s time to stop the ever growing list of people we buy for even when we’ve no idea what they want. I’ve been campaigning to end unnecessary gifts for six years, and more and more people are doing it. Yet it involves agreeing a pact not to buy each other. Even the joy of giving can be selfish if it obligates someone who can’t afford it to buy back. Julia tweeted me a couple of weeks ago: "@MartinSLewis, finally took your advice and told family I can't afford Xmas presents. What a weight off my mind. Thank you."
So contact friends and family now and make an agreement not to buy, to cap the cost, only give homemade gifts, or even to give to charity instead. See my full ‘why Christmas presents are bad’ explanation at www.mse.me/BanChristmas.
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Small savings make merry
If you buy a £2 coffee every work day, or other on-the-go refreshments, just give them up now, put the cash in a Christmas kitty instead and you’ll have some handy spending money by the big day. It’s about deciding priorities. If that’s cash you need for Christmas, are you willing to make the sacrifice?
Earn 5% cashback on your Christmas shopping.
If you’re going to be spending for Christmas, you might as well do it on a card that pays you every time you spend on it.
The no annual-fee www.americanexpress.com Platinum Everyday credit card pays you 5% cashback on your first three months' spending (maximum £100), so get it now and you get the big cashback during the high spend pre-Christmas period. It then follows with up to 1% after.
The cashback is paid after a year, so you’ll get it in time to help next Christmas, though there’s a minimum £3,000 spend to get it. That sounds a lot, but do all your normal spending on it as it pays you, and you’ll be fine. Of course, only do this if you’ve a direct debit to repay it IN FULL each month, or you’ll be charged 22.9% rep APR, which kills the gain.
Set up a Christmas cupboard.
Become a tactical shopper. Work out what necessary gifts you need to buy, and then if you spot a bargain, you can pounce on it when there’s a code, voucher or discount that makes it cheaper (I put the best in my weekly email at www.mse.me/tips).
Not used it since last Christmas? Flog it.
Walk around the house and examine everything; it’s time for your annual personal stock clearance. Many old items can be worth serious cash. And if you’ve not used things for a year, whether toys, prams, old coffee makers, mobile phones, gadgets, or even clothes, why not sell them?
This isn’t just about eBay or car boot sales, Facebook now has a lot of good local sales groups too that can be an easy way to do this. There are also lots of recycling sites that will pay you for old mobiles and gadgets – just make sure you do your research first to find the one that’ll give you the most.
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