11:15 14 January 2013
Money worries is topping the list of stresses for UK consumers, as 77% of adults say their finances will become 'more difficult' as 2013 rolls by, according to a recent MoneySupermarket poll. Here we pull out some specific financial worries and provide a suggested solution to each.
Problem: According to our poll, 22% of people expect Christmas to push them further into debt - or into the red for the first time.
Solution: Take a look at the MBNA rate for life card which pays an agreed sum into your current account with which you can then choose to pay off more expensive debt. This is because the card comes with a fixed low annual percentage rate (APR) of 5.9%. And, crucially, the related fee has just been reduced from 4% to just 1.5%.
If it's existing credit card debt you are saddled with, consider a balance transfer card. Currently Barclaycard offers the market leading Platinum Credit Card with Extended Balance Transfer. It comes with 0% interest for 24 months on balance transfers, 0% for three months on purchases plus on transfers of £2,000 or more the fee is just 2.1%. The only downsides are that you must have an annual income of more than £20,000 to apply and you can't transfer a balance from another Barclaycard product.
Problem: Our research also found that more than a third (34%) of adults feel stressed as a result of their day-to-day finances.
Solution: Consider what you can do to cut down on your daily outgoings. Planning meals for the week ahead and bringing your lunch into work rather than buying it, reduce your expenditure straight away.
Find out also if anyone at work lives near you. You could share lifts; even one day a week saves you two journeys worth of petrol. Better still, is it possible to walk or cycle into work?
You can also save more than £2,000 on your household bills every year just by shopping around for the best deals. This translates into more than £5 a day straight back in your pocket.
Problem: Nearly one in five people (17%) admit that their current financial situation stresses them out more than anything else, found our poll.
Solution: There are ways to get the most out of your current money without getting a pay rise. For example, are you really getting the most out of your current account?
More people get divorced every year than switch their banks, statistics show - but this could mean missing out on a lot of benefits. For example, you can earn 3.00% on balances of between £3,000 and £20,000 with Santander's 123 current account, pocket £100 to switch to First Direct's 1st account, and get a 12-month fee-free overdraft when you switch to any Halifax current account before March 3 - plus £100 paid into your new account for the privilege of your custom.
It's also worth looking at some packaged current accounts which offer various add-ons ranging from travel and gadget insurance to breakdown cover. You can search the current account market at our comparison channel.
Problem: Our research shows that 8% of people are worried about keeping up with their monthly payments in 2013.
Solution: Mortgage rates are falling so, if you are not tied into your existing deal, it's certainly worth looking to see how much you can save by remortgaging. Do this by searching our mortgage comparison channel to find the product that best suits you. Bear in mind though that the very cheapest rates will be reserved for those with the biggest deposits.
Problem: Our research showed that, for 6% of adults, cuts to benefits is going to be their primary financial concern throughout the year.
Solution: There's nothing you can do about cuts to Child Benefit cuts which take place from January 7, but Melanie Wright does have some suggestions on how to combat the problem.
Problem: For 17% of UK adults, financial stability for the future causes the most sleepless nights, says our research.
Solution: First off, have a look at your monthly outgoings and see where you can begin to make cutbacks. These savings can then be placed into an easy access savings account which, starting from a deposit of just £1, could be opened tomorrow!
The Marks & Spencer Everyday Savings account, for example only requires £1 and pays a best buy annual equivalent rate (AER) of 2.35%. However, this includes a 1.00% bonus which is only payable for the first year, so you may want to move your money once this disappears. The account can be operated online as well as by phone.
In the longer term, a very tax-efficient way of saving is to invest into a pension. Many companies offer a workplace pension scheme where they match your contribution up to a certain amount. You can also take out a private stakeholder pension, which offers the same tax advantages although your contributions will not be matched by anyone else.
Putting cash into cash Isas is also a great way to avoid the taxman. If you can only afford to contribute monthly sums (currently up to £5,640 a year in cash) then you're better off investing into a variable rate deal. Just make sure you keep an eye on the bonus period, usually these are around 12 months and afterwards the interest rate will drop off a cliff.
Currently the market leading easy access cash Isa is the Advantage Cash Isa offered by M&S Bank. It pays 2.75% on a minimum investment of £25 a month but savers need to be careful as there's a minimum investment of £100 and the interest rate will fall to 2.25% on March 6, 2013.
Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct. We're free, independent and compare all UK credit cards, as well as offering exclusive deals you can't get anywhere else.
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