Our Top Money-Saving Tips for 2020 Include Checking Your Mortgage Rate
As we get settled into 2020, it’s probably a good time to start planning for the year ahead. New Year’s Eve and the new year celebrations already feel like a lifetime away, and it’s this time of year that most of us settle down to some true long-term planning.
Not to be confused with new year’s resolutions which you give up on after a week, year-long planning sessions are a valuable tool to keep you on track for the year ahead. Popular plans include long-term health and fitness plans, decorating and DIY plans, and of course, the annual holiday planning is essential.
As you get down to making your plans for 2020, one of those major planning sessions should really be for your finances. It’s easy to get inefficient in money terms. Leaving your car, home, and personal insurance with the same providers year on year is obviously the most time-efficient solution for busy people. However, it’s probably about the least money efficient you could be.
6 Money-Saving Tips for 2020
Start with your bank accounts, and work outwards. Is your savings account the best one you could get? Are there higher interest rates available? Are you getting the best deal from your current account? Is there an ISA with a better rate / better deal for you?
- Compare your current account to others
- Compare your savings account
- Compare your ISA
It’s easy to switch banks, savings, and ISAs. Your new provider should be able to do all the work for you with just a couple of signatures and a few basic details from you. You may be surprised by what you could earn in extra interest payments or rewards for moving, and it’s well worth investing the time to find out. Keep in mind that your credit score does look favourably at having accounts open for a longer period of time, so don’t do too much switching at the detriment to your credit file.
Look at your credit cards, catalogue debts, and loans. Could they be arranged more efficiently if they were all in one repayment? Could you get better or even zero interest borrowing for your credit cards? Could you move any to a zero-interest credit card?
- Look for low / zero interest cards
- Consider whether loan consolidation is an option
- Consider paying off any small sums
- Look for good balance transfers deals
- Get the best possible monthly deal / repayment figure
Although it might take a little bit of shopping around, you’re probably going to find better deals than the ones you’re on.
Car, home, pet, life – we all have multiple insurance policies these days. Take some time to look at each policy and to search for better offers. You’ll likely find it easiest to use an online comparison site, although you could also save money by going through a broker or IFA if you prefer.
- Home insurance policy – can you better deal by switching?
- Car insurance – are there lower-priced providers out there?
- Pet insurance – look for lower-priced deals.
- Life insurance – compare policies, prices, and benefits of switching.
Take your time and look at whether you’ll get a better offer by moving all your insurances to one provider, or whether your best offer comes from taking each policy one at a time. If you’ve been with your current providers for a while, it’s definitely going to be possible to save money here.
This is probably the most popular annual switch for homeowners to make. In a highly competitive marketplace, it’s nearly always going to be possible to get a better deal than the one you’re on.
- Look for new Electric and Gas providers that offer you the chance to save money with a lower monthly payment by switching to them.
Find out who friends and family recommend in the world of energy providers, and then be ruthless. Hold out for that one place where you get the best deal imaginable from, and enjoy the savings!
Have you given any consideration lately as to whether the type of mortgage you’re on is one of the best mortgage deals out there, or not? It’s common practice for there to be a period of comparing mortgages when you’re first applying for a mortgage, especially for first time buyers, but once that initial fixed term deal has ended, what then? If you’ve been moved onto your bank’s standard rate repayment mortgage, you’re probably paying more than you need to for your mortgage.
- Look for a better mortgage deal – you may be able to get a lower monthly payment by switching to a better deal, and you may not have to switch providers.
Specialist mortgage brokers will be able to help you in your search without there being too much effort on your part. They’ll know whether your best deal is with your current provider, or your best changing. Leave it to the experts, they’re in the best place to help you!
Broadband, Phones and TV.
An increasingly popular one to switch over on a regular basis is your TV channel / broadband / mobile provider. There may be some great deals out there, and unless you check how will you know?
- There’s some good ‘all in one’ TV, Broadband and Mobile deals available – but don’t discount separate deals until you’ve checked them all out.
Don’t worry about losing your favourite TV channels if you switch provider – if you look carefully, the major TV channels are available now from most major providers, so you’re unlikely to miss out.
How much could you save by following all of the above steps? Well, let’s add it all up.
- According to Martin Lewis, you could earn up to £175.00 just by switching bank accounts
- According to Which?, you could earn hundreds of pounds a year in extra interest by switching savings and ISAs
- It’s possible to save hundreds of pounds a year in interest payments by consolidating your borrowing or moving to lower / zero percentage interest rate credit cards
- You could save hundreds on your old, outdated insurance policies by switching to new providers
- It’s estimated that UK households could save an average of £300 p.a. by switching energy providers
- You could save up to a few hundred pounds a year by switching to a better mortgage deal
- The average household can save £69 per annum on their broadband bills alone by switching at the end of their introduction deal
That’s an awful lot of ‘saving a few hundred pounds a year’ and, when added together, that could total an eye-wateringly large annual household saving. With that amount of money saved, you could move straight into your annual holiday planning session as the next part of your efficiency drive!
If it’s that easy to make changes that can lead to massive amounts of savings, why don’t more people do it? There are genuine psychological traits or behavioural quirks to consider as the answer to that question.
Familiarity bias – “I’ve always been with this provider”
If you’ve been with the same energy / insurance / credit card provider for years and they’ve never let you down, it’s easy to just stay with them.
We tend to stick with the things we know and trust, and unless they break that trust, why switch? Because, as we’ve seen above, you might save money with a different provider.
That’s why the first step to breaking this ‘familiarity bias’ is to check what other providers are offering.
Endowment effect – “I made a real effort, so it must be good”
We often overestimate the worth of something if we spent a lot of time on it, something known as the ‘endowment effect’.
Unfortunately, switching requires effort; although with the advent of comparison sites that’s been made an awful lot easier for us in the past few years. Still, it can seem like a daunting task to search for a good deal.
If you spent a lot of time researching Company A, you may believe by the sheer amount of effort you put into it that it’s better than Company B, who you haven’t spent as much time looking at.
By exploring one company and what it offers, you may end up with a skewed view of how valuable that deal actually is.
Status quo bias – “It’s good enough, so why should I change?”
Let’s say you spent hours comparing energy providers several years ago and managed to find the best deal possible at the time. And you feel it has paid off, you haven’t experienced any issues at all.
It’s still likely that prices will have changed by now, or other providers will have come up with better deals.
While your deal might be comfortably predictable and issues-free, there still might be opportunity to find a better price elsewhere, even if there’s a small change involved.
I wasn’t planning to switch
Energy, insurance, and borrowing providers and your savings accounts are not necessarily the first thing at the front of people’s minds. It’s just another bill to pay, after all.
Unless there are clear signals in your everyday life, the idea of changing providers, especially going through all of them, probably won’t rank high on your list of priorities.
So if you weren’t planning to switch, how can you prompt yourself to make the move? You could, for instance, give yourself a little nudge by setting up a yearly reminder in your calendar to look for a new provider. Timetable it in for around 60 days before your current deals end, as most providers will insist on a 30-day cancellation notice period.
Perception of hard work
We’re hard-wired to think changing providers is going to be hard work. We dread anything being put up as an obstacle that makes switching providers more difficult, such as superfluous paperwork, or phone calls from your current provider asking if you’re really sure you want to leave them.
Fortunately, switching providers of any kind is the ‘new normal’, whether it’s banks, mobile phone services or energy providers. Companies have been compelled to make it easier to do and now it’s usually as easy as you signing paperwork giving your new provider permission to manage the change on your behalf.
For many, though, our brains are still wired to expect a lot of extra work when it comes to switching providers, even if it might not be the case anymore.
While researching and comparing alternative providers can be a time-consuming and even daunting task, it will pay off financially in both the short and long term.
Small monthly savings will add up over time and make a big difference to you and your household. Don’t let your excuses stand in the way of having a lot of extra money to play with in the year, get settled in with a nice cup of tea and get cracking on those deals!