Ditch the financial duds that may just trash your cash

Save hundreds of euros a year with just a few simple changes

It’s time to freshen up your finances as well as the grimy recesses of your home. Is your money languishing in a dusty old bank account earning 0.00001% interest? Meanwhile, are you paying 25% interest on a credit card? Or you could even be paying over 50% interest to a moneylender.

That’s right. Many people are paying very high interest to a registered moneylender without realising it (read on to find out how).

But here are four ways to spruce up your finances this spring.

DUST OFF YOUR OLD BANK ACCOUNTS

Do you have money mouldering away in a forgotten savings account earning a pittance in interest?

Your money would be far better spent clearing any overhanging debts. There’s no point saving money at 0.001% interest while leaving a credit card bill unpaid costing you 25%.

If you’ve no debt to clear, look for a better savings rate for your money.

Check out your credit union, especially occupational unions, which can pay up to 2%.

The best savings rate otherwise is An Post’s five-year bond at 0.98%.

Also, watch out for old current accounts gathering dust – and charges.

Banks cajole us into opening new current accounts we may not need with special deals.

Now the interest on savings has fallen so low it’s probably outweighed by the bank charges.

It’s bad enough paying bank charges on your main bank account, let alone for extra ones you don’t even use. Shut ’em down!

CRUNCH YOUR PRICEY CREDIT

Take a good look at what you owe. There’s a strong chance you’re paying through the nose for a lot of your debt. Mortgages are a biggie. AIB reduced its interest rates as low as 2.75%. Bank of Ireland did nothing and kept it’s already-high standard variable rate at 4.5% (for 90% loans). If you’re with BoI, are you going to stand for that?

The difference may not sound like much. But it’s crucifying. It tots up to €67k over 23 years, one couple found to their astonishment.

It’s also time to look at fixed rates. Interest rates are set to go up from 2019. Yet fixed rates are actually lower than variable rates. And this is where BoI has a decent offering of 3%. The bank’s own borrowers on 4.5% can get it too. But they have to ask! The next biggest saving could be store credit. Retailers offer credit with cards and credit deals but they can charge dearly for the privilege.

Some stores charge so much interest that they have to register as moneylenders.

Oxendales, Simply Be, Jacamo and The Brilliant Gift Shop are licensed to charge up to 51.5%. Littlewoods Ireland is on the register and can charge up to 43.7%.

Next comes your credit card debt, which also can be expensive.

Switch to one with a low interest rate for transfers. But 0% isn’t necessarily the best rate – it all depends on how long it lasts.

You’d be better off with AIB Platinum’s 3.79% transfer deal over 12 months, for example, than 0% over six or seven months. (See Credit Card table above).

Another option is to get a credit union or bank loan to clear your credit card debt. (See Loans table above).

SCRAP SMALL INSURANCE POLICIES

Generally, you should only insure what you can’t afford to lose.

Minor insurance policies aren’t worth the bother of filling in forms and wading through terms and conditions.

The cost of administration, marketing, profits, commission etc gobbles up most of your premium and there is little left to provide any real value.

Mobile phone cover, for example, is expensive and notorious for exclusions and excesses.

Policies cost as much as €162 a year – nearly as much as a new phone if you shop around.

One reader contacted me to complain that his mobile phone wasn’t covered against theft from his car unless placed in secure area such as the glove compartment. It had been stolen from the back seat, so wasn’t covered.

Other exclusions may specify robbery with the threat of force – and you may not be able to claim if you simply lose your phone, which is the most common problem.

Instead of insuring minor items, you could look at adding ‘possessions away from home’ to your home contents insurance. Another dubious policy is to accept extended warranty cover if you’re buying appliances in the spring sales – for example, a fridge or TV.

This covers the cost of repairs but can be overpriced and full of exclusions. Accidental damage may not be covered. The cost of the policy is usually between a third and a quarter of the price of the product.

Yet most stores will cover you anyway for the first year of a product’s life if anything goes wrong – some will cover you for two. Consumer rights require that goods should be of satisfactory quality, fit for purpose and last a reasonable length of time.

Pet insurance can be another rip-off, rising to ridiculous levels as your dog gets older and more likely to claim.

SWITCH EVERYTHING, ALWAYS!

Most of us need to take a good firm yard brush to clean up our household bills.

Consumer inertia is the rip-off merchant’s best friend.

Most markets work like this: you get offered a discounted rate or cashback pressie that disguises the costly standard rate. When the discount period is up, and the cashback spent, you get hammered by the standard rate.

This same principal applies to our electricity, gas, phone, and broadband bills. Yet the vast majority never switch. The ones that do save thousands every single year. Make a note of when contracts come to an end in your online diary.

The rest is easy with the help of switcher.ie or bonkers.ie to compare rates.