SIX money mistakes

When it comes to financial matters, there are plenty of habits that could make us significantly worse off.

Here are six money mistakes you should avoid making:

1. Not checking your credit record

New research from Experian has revealed 55% of consumers have never checked their eligibility before applying for credit.

Of those, 43% thought checking their eligibility beforehand would negatively impact their credit score.

Checking your eligibility is known as a ‘soft search’ and won't impact your credit score. However, applying directly with a lender is a ‘hard search’ and being rejected could reduce your chances of being offered the best rates in the future.

2. Paying in pounds when you’re abroad

Never pay in pounds when you use a credit or debit card abroad. Always select the local currency when the card machine asks which you’d prefer. A study from FairFX shows you could pay an extra 8% by paying in pounds rather than the local currency1.

3. Sticking with your bank

Increasing numbers of current account holders are switching banks, with almost 1 million switches taking place in the last 12 months, according to the latest figures2. Yet these growing numbers still represent a tiny fraction of UK current account customers, leaving many who could still gain by switching bank accounts. There are lots of highly competitive current accounts on the market and the moving process is straightforward, with dedicated switching services to do most of the hard work. When checking out the different accounts on offer research charges as well as any perks that catch your eye.

4. Leaving money in savings accounts paying next to nothing

Many savings accounts pay less than 0.5% - some pay 0.05%. There is £724 billion currently held in easy access accounts earning an average rate of a miserly 0.47%3. Don’t assume your savings will earn more because interest rates have recently gone up. Banks often only hike rates on their newer products.

The City watchdog has proposed the introduction of a basic savings rate, which could help easy access customers languishing in low-paying accounts.

Until then, it’s crucial to fight for the highest interest on your savings. Use a comparison website to find the best one and move your money, pronto.

5. Letting your mortgage deal expire

Many borrowers fail to remortgage to a better deal meaning they pay a higher rate of interest. Some worry about the fees attached to a new mortgage deal. The good news is that 40% of the mortgage market is now offering products without arrangement fees to remain competitive.

6. Missing out on free cash

A study revealed that while more than 40% of people admitted that they needed financial support from friends and family to buy their first home, only 19% said they had used a government scheme like the Help to Buy ISA or equity loan4. The government is offering a 25% boost to savings placed in a Help to Buy ISA. For every £200 saved, the government will give you £50. Don’t miss out.

1http://blog.fairfx.com/smart-money/five-travel-money-dirty-tricks-avoid/amp/

2https://www.bacs.co.uk/NewsCentre/PressReleases/Pages/CurrentAccountSwitchServiceJuly2018.aspx

3https://savingschampion.co.uk/news/savings-news/savers-missing-out/?utm_source=Hootsuite&utm_medium=Timeline

4https://www.totallymoney.com/