This article contains a list of money saving and investment tips. They are in no particular order and just appear as the author thinks of them
Credit cards can be a great money saving vehicle, as long as you pay them off on time. If you purchase an expensive item on the first of the month, then typically you will have 30-60days before you start paying interest on the purchase. This gives your hard earned cash a little bit more time to earn interest in a high interest savings account.
Most credit card companies offer some type of reward system, this is typically equivalent 0.5-1% cashback. It is best to choose cards that give you the rewards in real money, rather than in tokens or points for savings on some other goods and services. Otherwise instead of pocketing a couple of hundred pounds in cash you may up spending out on that all new lean mean grilling machine as you have earned 50% off through George Formans credit card company….
Credit Cards – Company Expenses
If you end up claiming a lot of company expenses then try to put all purchases on your credit card, and make sure you claim for the expenses as soon as possible. If your company is quick at refunding expenses you may find that you get the cash before you have to pay off the credit card. Yet more interest to be earned in that high interest savings account. Further more, if you have a credit card with a reward points scheme you will earn money on expenditure that isn’t even yours!
High Interest Savings Accounts
There are a number of accounts that have been recently advertised with headline interest rates. 7-10% interest is now becoming more common place. However these deals aren’t quite as good as they seem. You can usually only put a maximum of £”50 a month into the account, and at the end of the year it will typically be swept into a current account or equivalent. This means you have to keep on your toes and make sure you swap to another account once the initial interest rate period expires.
Now what about that maximum investment per month? Even if you invested £250 a month for a year into a 10% account you will only end up earning £135 pounds in compounded interest. If you are a tax payer this is reduced to £105, or a high taxpayer would earn a measly £81 pounds. Okay, so it is better than nothing, but it is hardly a massive pay out by the banks and building societies.
You will probably be better off in the long run by choosing a good, consistently high paying online savings account, such as that offered by Nationwide or Halifax. These pay out in the region of 4.5%-5%, but their annual investment limit is normally around £50,000 a year, rather than £3,000 a year. Also with a proven track record of high interest rates you wont have to chop and change your accounts every year. Saving you lots of time and hassle.
Invest in cash ISA’s! Especially if you are a higher rate taxpayer, but even if you are exempt from taxation you will find that they offer a good rate of interest, and will protect your interest earnings if you end up paying tax in the next few years. Also don’t forget that you can only save £3000 a year into a cash mini-ISA, so you need to make sure you make good use of your tax free savings each and every year to be able to build up a good tax free nest egg.
If you are on a variable rate mortgage see if you can tie yourself into a discounted mortgage. Banks and building societies are offering some eye-popping rates at the moment, but make sure you checkthe small print. A 2% interest rate in the first year may sound great, but check that it doesn’t increase to 7 or 10% interest in the 2nd to 5th year.
Some financial research has shown that statistically you are most likely to be best off with a 2 year fixed rate mortgage, and then remortgage every 2 years. This may seem like a lot of hassle but it could save you hundreds of pounds each year.