7 money pitfalls to avoid
BY READERS DIGEST
1st Jan 2015 Managing your Money
You might think you’re doing well with your cash, but there are common pitfalls that can easily cost you
1. You only make minimum payments on your credit card
It takes 25 years to pay off £2,293 (the average credit-card debt) if you only make minimum repayments. Making more than the minimum payment will guarantee you clear your debt quicker and pay less interest.
2. Your loyalty blinds you
Whether you don’t have the time or don’t like change, you’re losing money by sticking with the same provider. Switching your current account, broadband company or energy supplier are easy ways to become better off.
3. You sign up to extended warranties at the till
When you buy any product, you’re protected by the Sale of Goods Act. This means if your product develops a fault, you have the right to get it replaced or repaired. Think twice before you buy an expensive extended warranty.
4. You regularly use your overdraft as if it’s “your” money
Almost one in four (23%) Brits have got into debt due to overdraft changes, according to MoneySuperMarket. When you use an overdraft you’re borrowing money from the bank, with penalties and high interest on any unauthorised borrowing. Switching your bank account could increase your free buffer. It can also reduce how much you’re charged.
5. You think it won’t happen to you
Our research found around 71% of Brits have faced an unexpected cost. This could be car repair, dental treatment or even a vet bill. If you can put aside £3 a day, you’ll start to build a savings buffer.
6. You try to save money by not buying travel insurance
Going on holiday without it can be very expensive if you get ill or injured. The average medical claim is £930, but the average policy cost is just £32, according to the Association of British Insurers.
7. You’ve stopped counting the pennies
Small savings add up quickly. The difference between taking a packed lunch to work and buying one over a working year is £805, based on average prices.
