Five things you're wasting your money on

It's easy to waste money. So here are five ways to stop throwing your money down the drain...

I hate wasting money. I find it so frustrating when I realise I’ve paid too much for something – such as when I discover an item I bought a week ago is now in the half price sale.

However, wasting money is something we’re all a little prone to doing. So here, I’m going to reveal five things you need to stop wasting your money on!

1) Paying interest on your credit card

Spending on plastic is so easy these days. No need to worry about getting cash out from the ATM – you can simply pay for everything on your card instead. But if you're in the habit of spending regularly on your credit card, are you forking out a lot of interest for doing so? If you are, now is the time to stop!

If you currently have a balance on a credit card that’s racking up a lot of interest, make sure you transfer it to a 0% balance transfer credit card. Right now, the best 0% balance transfer cards include the NatWest Platinum Credit Card MasterCard and the RBS Platinum Credit Card MasterCard, both of which offer 16 months interest-free. (Bear in mind you will need to pay a 2.9% transfer fee.)

So that means you have well over a year to pay off your debt without worrying about paying any interest. After all, why pay interest when you don’t have to?

Alternatively, if you’re planning to go out spending and you know you won’t be able to clear your balance in one go, make sure you use a 0% on new purchases credit card such as the Tesco Bank Clubcard Credit Card MasterCard. The Tesco card offers 13 months interest-free on any purchases you make. So you can spend away, without worrying about being hit by interest.

Just remember to pay off the bill in full before the interest-free period comes to an end – otherwise you’ll be hit with a hefty interest rate. Don't simply accept the rate you're moved onto - instead, make sure you transfer your debt across to a 0% balance transfer card before you start getting charged.

And finally, don’t get caught out by that sneaky trick known as negative order of payment – so don’t spend on your balance transfer card and don’t transfer a balance onto your purchases card. Otherwise, again, you could end up paying interest when you shouldn’t be!

2) Late payment fees

How many times have you been late with a payment? Perhaps you missed a payment on your credit card, or maybe you forgot to pay a direct debit one month?

Each time you do this, you'll end up forking out late payment fees - which could be anywhere between £10 and £40. So this can soon get expensive. What’s more, if your credit card has an introductory deal (such as an interest-free period), you’re likely to lose that too – meaning you’ll suddenly end up having to fork out a lot of interest on your payments.

To remind yourself to make your payment on time, make a note in your diary when your next payment is due. And ensure you have enough money in your bank account so that your payments won’t bounce.

3) Your overdraft

It’s easy to slip in the red from time to time. But if you’re doing it on a regular basis, make sure you’re not paying a high price for doing so. Many overdrafts on current accounts charge extortionate rates of interest – in fact, according to Moneyfacts, the average authorised overdraft rate stands at 14.22%. And that means you could be throwing a lot of money down the drain.

The good news is there’s absolutely no need to pay these high rates of interest. Simply switch to a current account that offers an interest-free overdraft instead. The Santander Preferred Overdraft Rate Account, for example, offers 12 months interest-free on overdrafts up to £5,000. After this period, the rate reverts to 12.9%. 

Alternatively, if you only need a small overdraft, the Norwich & Peterborough Current Account offers a £500 overdraft interest-free for the first six months. After that, providing you pay £1,500 into the account each month, the interest rate remains low at 11.74%.

Or if you require a longer-lasting interest-free overdraft, take a look at the Citibank Access Account which also offers £500 interest-free. To qualify, you need to fund your account with £1,250 a month.

And finally, First Direct offers a slightly smaller interest-free overdraft of £250 on its 1st Account. What’s more, if you apply for this account, you’ll receive £100 just for switching over. And if you’re not happy with your account and decide to close your account within 12 months, you’ll be given a further £100!

Just be aware that you will need to fund the 1st Account with at least £1,500 a month. And if you go over the overdraft limit of £250, you’ll be charged an interest rate of 15.9%.

4) Mobile phone insurance

I’m really not a fan of mobile phone insurance. Personally, I think it’s a complete rip-off and an utter waste of money. So if you’re paying for it, cancel your policy immediately!

Mobile phone insurance policies are often riddled with catches, which means that even if you think you’re covered for something, in reality, you’re probably not. For example, in most cases, you won't be covered if you leave your phone unattended. And basic policies usually don't cover problems such as wear and tear or mechanical failure.

It’s also worth bearing in mind that you’ll probably have to pay an excess of around £15 to £25 if you do successfully make a claim – so you need to weigh up whether you really think this is worth it.

Personally, I think you’re better off checking whether your home insurance policy covers your mobile phone sufficiently. And if it doesn’t, you may prefer to simply put some money aside into a savings account each month so you have something to fall back on if you were to lose your phone.

Alternatively, why not simply have a spare phone at home so that if you lose yours, you’ll have another one to use? Duplicate SIM cards are easy to pick up cheaply and if you’re on a monthly contract, your old phone should at least tide you over until you’re due an upgrade.

5) Your current account

Another big waste of money in my book is packaged current accounts. Personally, I don’t see the point of paying to put my money in a bank account – despite any so-called perks that come with the account.

Perks usually come in the form of travel insurance, car breakdown cover, mobile phone insurance or identity theft protection. But of course, they come at a price – usually somewhere in the region of £5 to £25 a month. So you need to consider carefully whether you really think the perks are worth it.

What’s more, you should always read the terms and conditions carefully. Will the insurance you receive cover all of your needs, and is it really the cheapest policy on the market?

Personally, I think you’re much better off avoiding packaged accounts and plumping for a standard current account that offers a cash reward for signing up, or offers a decent rate of interest – neither of which you have to pay for.

As I have already mentioned, the First Direct 1st Account gives you £100 when you switch over to it, as does the Santander Preferred In-Credit Rate Account. However, the Santander account also pays an interest rate of 5% for the first year!

Alternatively, the Halifax Reward Current Account pays out £5 each month you pay in £1,000 – whether you’re in credit or overdrawn.

So why waste your money paying for a current account, when your current account could be paying you?

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