Finances

To get the best deals, you need to take active control of your finances and reassess your options every few months. It is as much about making the best of your money as it is about saving it. To make the concept less overwhelming, we have compiled some tips on Your situation, Your bank, Your savings and Your borrowing.

Your situation

• Start by checking your bank and card statements to see what you have got coming in and going out. Look out for direct debits you have forgotten to cancel or spending you can easily do without.
• Then check your credit report – also known as a credit history or credit file. It shows what you have borrowed, your repayment record and other details that lenders use when they decide whether to make you an offer, so it helps to build up a fuller picture of your financial position. Again, look for deals you can live without and cancel them. Several online services offer a free trial that allows you to see your credit report at no cost.
• Look at personal finance sites, newspaper supplements and magazines to get an overview of what is on offer when you are looking for a current or savings account, loan, credit card, mortgage or insurance.
• Think carefully before committing yourself to anything. If you do not understand any of the small print, ask for an explanation in plain English.

Your bank

• Make sure you are getting the most from your current account. There is a huge choice, so do your research and match the account to your circumstances. For example, some accounts can be opened with as little as a pound, while others pay generous interest if you pay in a set amount each month.
• Some accounts come with multiple benefits, such as travel insurance or a generous overdraft, which may be good value if you need the services – but expect to pay a monthly fee.
• Your bank can be a good source of financial advice and products. It may offer discounts if you take multiple products, such as buildings insurance and an ISA. Most current accounts will come with a free debit card.

Your savings

• Instant or near-instant access funds are good for dealing with emergencies. Check online and newspapers to see who is providing the best rates. – and look again every month or so in case the deals have changed.
• Do not pay tax if you do not have to. Options include ISAs and National Savings Certificates. If you are employed by a company offering employee shares and buy some, any increase in value, up to a government limit, is tax-free.
• Small can be beautiful. You can invest £270 a year as a lump sum, or £300 a year in instalments, in a Friendly Society, tax-free.
• Tax-free investments that no longer accept further funding are PEPs and Tessas. If you have these, any gains remain tax-free until you choose to withdraw your money but you are not allowed to add to them.
• Take expert advice if you want to make more complicated investments, from stocks and shares to fine art or property.
• A pension is also a form of saving. See Retirement.

Your borrowing

• Never borrow more than you can comfortably afford to repay.
• Price comparison sites are a good place to start when you are looking for a loan, credit card or mortgage. Go to several, as they all have different offers.
• Some companies do not deal with comparison engines and you will need to approach them directly.
• For mortgages, it is worth contacting an independent broker. They may have access to special deals that match your circumstances more accurately.
• For homeowners who are on top of their finances, an offset mortgage could save thousands over the years. Offset mortgages link your current account and mortgage, allowing you to reduce your mortgage with the value of your income each month and then dip into the mortgage for living expenses. You must repay a fixed minimum amount each year but you may well find that you repay rather more.

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