Save £2,012 in 2012
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Want to save £2,012 in 2012? Find out how to do so, using only lovemoney.com itself...
Save an easy £1,000 on your credit card
Average unsecured debt per household that actually has any is £15,432 according to Credit Action. That might be £7,716 per adult in many homes then.
Paying £300 per month at 19.4% (average credit card interest rates according to Moneyfacts) will cost you £1,190 in interest. If you switch to a 0% balance-transfer credit card deal for a 3% fee and continue paying £300 per month, you'll pay just £230 in costs, saving £960.
Pay for next Christmas by remortgaging now
Barclays estimates that we'd save £1,200 every year if we remortgage to lower interest rates from the standard rates, but my estimate is £500, thanks to the costs of switching. Surveys this year have estimated our Christmas food and presents budget to be around £500, so that should pay for next Christmas.
Bear in mind that we're in strange times where some people have got unusually cheap standard rates but, at the same time, long-term fixes of seven to ten years are so cheap that there will probably never be a better time to do so.
Energy tariff savings still exist, despite hidden traps
I have seen some websites estimate that you'll save between £350 and £450 by switching gas and electricity, which is far too optimistic. A good minority of people probably do save £300, but more realistic average figures, when using data taken from switchers using lovemoney.com's energy switching tool, for example, are between £160 and £200.
But that's before you take into account the many little tricks the suppliers use to eat into those savings, such as shunting you onto another tariff or cancelling all your cashback when you move on. Therefore, I'd say that average savings are probably more like £100. That's just an educated guess based on an awful lot of energy-price research and database building over the years.
Shave roughly a fifth from your car insurance
There's no way to measure the average price that loyal customers pay without holding insurers' arms behind their backs and forcing it out of them. However, I've worked in the industry, and from my experience I'd say that you can easily pay 10% to 40% for your car insurance too much by not shopping around regularly. A particularly sly trick is when your insurance premium should come down due to you gaining a better age or experience profile, but you're just told the “good news” that it won't be going up.
My experience and anecdotal evidence suggests that some insurers charge 30% more for renewal customers as a matter of routine than they would if you were a new customer, but this can often take a few years to build up, so let's assume you've been with your insurer two to three years and estimate a 20% mark-up. Using figures from the AA's benchmark of shoparound prices, this means you pay around £230 too much, on average, when you don't switch regularly.
Average comprehensive car insurance “shoparound” prices
2011: £921.38
2010: £791.82
2009: £568.62
2008: £503.43
2007: £463.07
Even higher mark-up with buildings and contents insurance
Although some individuals will find it cheaper to buy separately, on average, you might save around £20 by buying your buildings and contents together, according to the AA's index of home insurance prices, with the average shoparound price being £206.
Where you shop around also makes a difference. The AA has no comparison service, and yet it still estimates shoparound prices from price-comparison sites only is £30-£40 lower at £170 per year.
Home insurance is not as good value-for-money for customers as car insurance, believe it or not. It is more profitable for insurers, particularly since we don't shop around as much, so they feel less pressure to offer existing customers fair prices. Hence, I would expect that the mark-up is even greater, on average, than with car insurance. Let's call it £50, which is roughly 25% more than regular shoppers.
Stop your bank lending your money out for free
Finally, all that money in all our current accounts adds up to a pretty penny, and banks get to profit from it, while usually paying us next to nothing in return. Some accounts are better than others though.
Each person in the household can open a Santander or first direct account, both of which will pay £100 for joining, subject to usual conditions of paying in enough money. Santander also pays perhaps £30 to £80 in interest for the first 12 months, depending on your tax rate and average balance.
So that takes us to roughly £2,012 of savings next year, and I haven't even needed to add on figures from other comparison tools, such as cutting your life insurance costs. It's shocking how much money we're unnecessarily throwing at the banks and energy suppliers.
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