The Financial Blog

Moneysupermarket.com say that an average British family could save over £4,000 a year if they compare products and make the switch to alternative banks, credit card and loan companies, energy suppliers, insurers, broadband and mobile phone providers.

Why not Spring clean your personal finances today? The Price Comparison Site Moneysupermarket.com explains how;

Head of debt at price comparison site moneysupermarket.com, Tim Moss said: “A family with a typical financial portfolio has the potential to save well over £4,000 in a year by moving away from uncompetitive products. There are many great deals out there, and not just for those with good credit ratings. While mortgages, credit cards and loan applications are helped by your credit score, getting the best home and car insurance, gas and electricity, current account and broadband prices and rates are very easy.”

Mortgages
Having a two-year £150,000 fixed-rate mortgage with First Direct at 4.95 per cent instead of with Northern Rock at 6.79 per cent will save you £2,010 a year in repayments, plus First Direct’s fee is £497 cheaper.

Loans
A typical three-year £10,000 loan with Tesco at 6.8 per cent will save you £157 per year compared to an Egg loan at 9.9 per cent.

Credit Cards
If you’re the usual type of credit card user, you will probably do a £2,000 balance transfer and then spend about £500 per month. But doing this on most credit cards, where the balance transfer and purchase offers are of different lengths, will potentially hit you with interest charges of over £300 over a year – as occurs with Egg. Halifax One, which offers 12 months on both balance transfers and purchases, will levy no interest.

Current Accounts
Reviewing your current account deal can prove an easy win, with Alliance and Leicester offering 8.5 per cent, as opposed to HSBC, NatWest and Barclays at 0.1 per cent. With a typical monthly balance of £2,500, you will earn an extra £210 with A& L.

Utilities
With the big six energy giants having shown their hands on price hikes, npower has proved to be the big winner. Its SOL10 tariff is significantly cheaper than every other provider. The 63 per cent of Brits still on a Standard tariff would be well advised to make the move. For example, a medium user of gas and electricity in Newcastle would save £363 by moving from Scottish Power Standard to npower SOL10.

Motor insurance and home insurance
The Association of British Insurers says the average person can save 35 per cent by comparing just five different policies for a single type of insurance. Therefore imagine how much you can save by comparing over 50 providers in a moment. For example, a good 35-year-old driver from Bromley with a 2005 Ford Focus would find a premium of £430 with Marks & Spencer, but £268 with LV=, a saving of £162.

For buildings and contents insurance for a three-bed semi in Milton Keynes, moving from Legal & General at £219 to 1st Quote at £87 will save £132.

Broadband
TalkTalk’s Talk 2 International has an 8Mb connection for £5.89 per month, with free evening and weekend phone calls. BT’s similar Option 3 product is £21.99 per month, so taking the TalkTalk option will save £193.

Mobile phones
Mix and Match 500 from 3 gets you 500 minutes or texts to use in any combination for £18 per month – £84 less than Vodafone at £25 per month for 25 fewer minutes.

Tim Moss added: “Traditionally, saving money has meant tightening the purse strings and cutting back on the things you enjoy. But this lucrative financial makeover can be made without changing your lifestyle – all it takes is some easy research to find the best deals. At over £4,100, this should be enough to persuade even the most reluctant saver to start their spring cleaning.”  

Product Annual saving

Mortgage £2,507
Loan £157
Credit Card  £301
Current Account £210
Utilities £363
Home Insurance £132
Car Insurance £162
Broadband £193
Mobile phone £84
Potential Total  Saving £4,109

From 1st April 2008, Marks and Spencer Money is offering 0 per cent interest for 6 months on shopping at Marks and Spencer and elsewhere and 0 per cent on balance transfers for 6 months - there is a 2 per cent handling fee.

You will earn Marks and Spencer points every time you use your card and also collect extra points and regular bonus point offers. On a quarterly basis points are converted into Marks and Spencer reward vouchers to spend at Marks and Spencer stores.

 The Marks and Spencer credit card

• Typical 18.9% APR variable
• M&S points on every purchase - 1 point for £1 spent at M& S, 1  point for every £2 spent elsewhere, 100 points = £1 Reward Voucher
• M&S Money voted best credit card provider in the Which? Awards 2007
• M&S points on all shopping, at M&S and elsewhere
• Exclusive bonus point offers from M&S
• Convenient and safe online account management
• Extra security with Spend Safe fraud protection
• Free copies of Your M& S magazine and Home Catalogue
• Up to 10% savings on holidays with the exclusive Travel Club

From tomorrow, click here to apply online for the Marks and Spencer credit card.

Marks and Spencer Moneyis offering an amazing 25 per cent cashback reward to personal loan customers.

You must take out a loan between the 1st April and 3rd June 2008 and you must take out a loan over 36 months or more. You get 25 per cent of the interest you pay back, once the final loan repayment has been made. www.marksandspencer.com/loans

This is the first time I’ve heard of Cashback on personal loans and it’s definitely good news for the personal finance market and consumers looking to apply for a loan in the next couple of months. www.marksandspencer.com/loans

If you take into account the Cashback, the typical rate of 8.9 per cent APR for loans of £7,500 to £20,000 is equivalent to just 6.9 per cent P.A.

Cashback examples;

£7,500 loan over 36 months = £288.09 Cashback, over 60 months = £469.24 Cashback

£12,500 loan over 36 months = £480.15 Cashback, over 60 months = £782.07 Cashback

£15,000 loan over 36 months = £576.18 Cashback, over 60 months = £938.48 Cashback

Get to www.marksandspencer.com/loans from tomorrow and apply online!

Nearly 1 in 6 adults plans to cut their spending according to Moneyexpert.com research.

That equates to 26.3 million people cutting back this year, a sure sign that the credit crunch is really affecting people’s personal finances in the UK.

57 per cent of us plan to cut back over the next 12 months, 23 per cent of people on things like food shopping, 31 per cent of people on clothes shopping and 32 per cent will reduce the amount they spend on going out and general entertainment. A further 12 per cent of people won’t buy the car they planned to and 6 per cent will not be moving house.

Urging people not to panic, Sean Gardner of www.Moneyexpert.com said: “The credit crunch is moving on from being something that just affects bankers to having real effects on real people in the real economy.

“There is however a risk that we could talk ourselves into a recession by panicking unnecessarily. Certainly anyone who is struggling financially should be taking action but that has always been the case.

“There are still plenty of good deals out there and people with good credit records still have plenty of choice. There’s no need to panic.”

Access your Credit Report here…

Commenting on Nationwide’s decision to raise rates on its tracker mortgages and fixed rate mortgage deals by up to 0.6 per cent and withdrawing some of its most popular mortgage deals, Louise Cuming, head of mortgages at price comparison site Moneysupermarket.com, said:

” Yet another door has slammed shut in the face of homeowners with one of the UK’s biggest lenders giving the consumer the cold shoulder. Our own research showed that just three months ago, Nationwide was the UK’s most trusted financial brand, but this trust may now be damaged. I understand it wants to protect its margins in this frosty environment, but this decision might not help Nationwide in the long-term.

“This is the culmination of a dire week for borrowers, with a raft of smaller lenders also moving the goalposts for their customers by withdrawing product ranges and upping rates. People heading towards the end of their deals, who might be starting to panic, should stay calm and shop around early. Look around five months before the end of your term as there are some good value deals on the market, particularly for those with a good credit record and substantial equity in their homes.”

I think Louise is right and it looks like lenders are starting to pull their most competitive deals now. Mortgage industry experts are predicting that the Bank of England may cut interest rates in April and if Banks start to withdraw their most competitive deals now it gives them the time to re-position their mortgage products and increase profit margins.

Another major lender to withdraw mortgage deals last week was Alliance and Leicester. They withdrew the very competitive, 4.99 per cent two year Fixed Rate Mortgage as from the close of business on Saturday 29 March 2008.

 Head of Mortgage Products at Alliance & Leicester, Richard Taylor, says: “Over the past few days we have seen a high demand for our 4.99% two year fixed rate product and therefore we have taken the decision to remove it from the range, in order to manage the volume of business we are receiving at present.”

This is the last thing the 1.5 million remortgagers in 2008 need, lenders pulling their most competitive mortgage rates…Compare Mortgages Now!

Interest paid on savings accounts savings accounts is looking far more healthy than this time last year when savings rates were just better than the Bank of England Base Rate! And so it’s savers who are reaping the benefits of 6 per cent and higher interest rates. There are even some current bank accounts offering up to 8 per cent interest.

Borrowers are however having to pay more interest, particularly on their loans loans which are averaging just over 2 per cent above base rate. The figures from Moneysupermarket.com reveal how quickly the UK personal finance world has changed since the US credit crunch and how quickly rates in the UK high street have been affected.

Tim Moss, head of loans at price comparison site Moneysupermarket.com said: “Poorer Brits are now paying the price for banks’ poor lending decisions of the recent past. Their lending mistakes in the US, in particular, are now hitting people here who can least afford it.

“Lenders are ramping up their rates to claw back profits. For every happy saver in Britain, there is a now a disappointed borrower.”

Kevin Mountford, head of savings and current accounts at http://www.moneysupermarket.com said: “Savers though, back in July, were barely getting any return above the base rate, but now they are consistently seeing rates one per cent or more above the Bank of England’s figure.

“Add to that, the current accounts from Alliance and Leicester and Abbey paying eight per cent or more and savers have never had it so good.

“Banks know they need to increase their level of savings so they are now fighting for new customers.”

The growth in house prices has slumped to a 12 year low According to new figures released today from Nationwide.co.uk

Even though we’re seeing a slump in house price growth it’s not all bad news, Nationwide’s Chief Economist, Fionnuala Earley explains;

“House prices fell for the fifth consecutive month in March. The price of a typical house fell by 0.6% during the month, bringing the annual rate of house price growth down to 1.1% - its lowest rate since March 1996.  A clear change in sentiment since the late summer has led to the sharp slowing in house price growth, even in the less volatile 3-month on 3-month series. Prices on this measure are now 1.5% lower than three months ago. The price of a typical house in the UK is now £179,110, only £2,027 more than this time last year.  However, prices are still 11% higher than two years ago and 47% higher than five years ago - the equivalent of a price rise of more than £30 per day for the last five years.”

Fionnuala Earley continues to comment on the possibility of Base Rate cuts in April; “The minutes of the March MPC meeting were relatively dovish and while recognising that the MPC still had a difficult path to tread, were perhaps more accepting of room for a cut in rates sooner rather than later. The minutes acknowledge that a back-to-back cut in rates in March may have given an overly strong signal that growth, rather than inflation, had become the priority.  This barrier has now been removed and, since the last meeting, the collapse of Bear Stearns and the fallout from false rumours of problems in a major UK bank may have helped to shift the focus of the MPC to the need to loosen conditions in the financial markets.  We think these latest developments, along with the continued weakening in the housing market, will mean that the MPC will bring forward its rate cut to April.”

So what does this mean for house prices? The bottom line is that, yes, house prices will fall this year but if you look at the fall in context with the last few years and if house prices continue to fall as expected then they will still be higher than they were 2 years ago. Fionnuala Earley says that “A moderate fall in prices at this stage should not be unwelcome and should help to ensure greater stability in the market going forward.”

If you’re one of the 1.5 million people looking to remortgage remortgage this year make sure you compare mortgages to ensure you get the best deal.

The Department for Communitites and Local Government (DCLG) said that the average household council tax bill in England would rise from £1,101 to £1,146, the government say these are the lowest increases in the last 14 years.

The government told councils that they should keep any increase below 5 per cent last year but the chairman of The DCLG said this would be a tough task; “Councils have been under a real financial squeeze during the annual struggle to keep bills down.”

“The stark reality is that low council tax rises have come at a cost and many councils have had to make tough decisions on spending.”

This is yet more bad news for people struggling to keep up with family finances. The cost of living in the UK is getting ridiculous it seems as though everywhere you turn prices are going up; fuel, energy, food, and now perhaps the worst type of price increase to swallow; a tax increase.

You might have seen the TV advert by now but if not Confused.com are giving users the chance to win £1 million just by getting a car or a home insurance quote. Your name will automatically be entered into a prize draw, taking place on 15th May 2008.

See the full terms and conditions here; http://www.confused.com/pages/giveaway_terms_of_trade.jsp

Since annoucing the £1 million giveaway Confused.com has seen a huge increase in car and home insurance quotes and they say it shows that consumers are becoming more sophisicated in the way they compare and purchase their insurance products. I’m thinking along the lines of; who wouldn’t want the chance to win £1 million, just for getting a quote!?

Anyway with the cost of living rising it pays to compare when making purchases like motor and home insurance, or choosing energy suppliers, even when it comes to your personal finances you can save money on interest charges by choosing the cheapest loans and lowest rate credit cards.

According to confused.com almost 50 per cent of customers now buy their insurance online and one third of those people buy their insurance through confused.com

Managing director of Confused.com, Debra Williams said: “The aim of our £1 million giveaway is to motivate people to shop around for a better deal on their insurance and these record breaking figures clearly show that it is working. Debt is at an all time high and in these times of heightened financial awareness consumers need to make insurers compete for their custom by offering the most competitive price. People could save hundreds of pounds on their car and home insurance just by shopping around for a lower quote and using a comparison site like Confused.com means that we do the hard work for them.”

Well said; don’t be fooled by short-lived, headline grabbing discounts, make sure you compare home insurance and compare car insurance every time you get your renewal quote. This is the only way you can save money on insurance.

Just remember Confused.com get all the additional customer data from all these people entering their details to get a home or car insurance quote. Your personal details, like name, address, date of birth, car and home insurance renewal dates and other peices of information will be well worth the effort of giving away £1 million.

MoreThan.com have commented on Sainsbury’s home insurance offer;

Sainsbury’s has rolled out a seemingly appealing discount offer for new customers, but look closer and it’s easy to see the deal is just another short-lived, headline-grabbing promotion.

Essentially, the offer is 25 percent discount for joint buildings and contents cover, with an extra 10 percent off for buying online. But only those fortunate enough to buy before 26th May will be able to benefit, and furthermore as the offer is only applicable in the first year customer loyalty is not rewarded.

Keith Maxwell, Product Manager at More Th>n said: “MORE TH>N seeks to attract new customers with great offers but also reward their loyalty every year through new initiatives such as Free Contents cover for Life - worth an average £100 per year.  It also offers a 20 percent discount when the customer buys over the phone or 25 percent when they buy online. Existing MORE TH>N customers are also rewarded for their loyalty through a range of exclusive discounts at a number of leading high street retailers.“

I’d like to pick up on a few points here, firstly, “the offer is 25 percent discount for joint buildings and contents cover” So how many people do you know who have buildings cover with one insurer and contents cover with another insurer? That very rarely happens because it makes no sense to buy them separately.

Secondly “only those fortunate enough to buy before 26th May will be able to benefit” well they’ve got just under 2 months to make an application! Fair enough you miss out if your home insurance isn’t due for renewal before 26th May.

Thirdly “furthermore as the offer is only applicable in the first year customer loyalty is not rewarded.” In the age of price comparison people who stay with the same insurer longer than a year for car insurance or home insurance are not getting the best deal, it’s as simple as that.

I’d bet that even with the ‘offers’ of further discounts or even ‘free’ partial cover in additional years, you could find a different insurer that would be cheaper.

The offer of ‘Free contents cover for life’ is designed to make customers think twice about moving their buildings and contents cover. I wonder how much More Th>n have to charge on their buildings cover to make up for giving away all this ‘Free contents cover for life’ you can bet you’ll be paying for it somewhere along the line.

It’s all very well offering 10%, 20% or 25% discount “when you buy over the phone or online” and so on…But, the bottom line should be is the insurers quote the cheapest or most competitive for your circumstances? And how do you really know how much discount you’re getting, 10%, 20%, or 25% discount on what? You don’t know what the price should be in the first place because the insurer gives you the quote!

So yes as More Th>n say - don’t be fooled by short-lived, headline grabbing discounts, make sure you compare home insurance and compare car insurance every time you get your renewal quote. This is the only way you can save money on insurance.