Five ways to cut those monthly bills
By Damian Clarkson     31st October 2007

With sky high bills placing an ever increasing strain on our finances, here is our quick guide to freeing up some disposable income in time for the manic holiday season.

And don’t worry, it won’t involve living off dry bread or reading by candle light in order to 'economise’.

We just offer simple advice on fine-tuning your monthly outlays on financial products in a way that won’t inhibit your lifestyle but will improve your financial situation.

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trimmer #1: Mortgage repayments
It’s your biggest monthly outlay and the best place to look for possible savings. If you are currently languishing on your lender’s standard variable rate then expect a lump of coal in your Christmas stocking this year.

This is the biggest financial mistake you can possibly make, and you could save hundreds of pounds every month by switching to a more competitive deal.

But before we begin our mortgage hunt, let’s get the bad news out the way first – the Bank of England has hiked the base rate five times since August 2006, pushing the cost of mortgage deals up with it.

Use our mortgage comparison tables to find a better deal

If you like a gamble, go for a tracker mortgage
According to the B of E, the average rate on a two year fixed rate mortgage was 5.41% last September, but this rose to 6.33% just one year later. Clearly lenders have responded to higher interest rates, sub-prime lending fears and the credit slowdown.

The good news is the spate of rate hikes seems to be over, and a recent poll of more than 60 economists found that a 0.5% base rate cut in 2008 is the most likely scenario.

If your current mortgage deal is nearing an end, you could make a significant saving by locking into a tracker mortgage now – you would cut monthly repayments by £45 on a £150,000 mortgage if the rates fell as predicted.

A word of warning though; any estimates as to what the market will do are just that – guesses. If you couldn’t afford a sudden increase in the base rate, you’ll be far better served locking into a fixed rate deal instead.

Use our mortgage comparison tables to find a better deal

Bill trimmer #2: Utilities
Energy suppliers tend to reserve their cheapest tariffs for areas where they are looking to increase their presence.

That means generic tables that show the average cost of each supplier are largely meaningless, and the only way to find out which is the cheapest for you is to check a price comparison site for yourself.

That said, there are a few tricks that you can employ to reduce your bills regardless of which supplier you choose. First make sure you sign up online, as this is where competition is the fiercest (and prices the lowest), and it could save you up to £100 a year. A recent survey found only one in eight customers have done so, meaning the vast majority of us are paying more than we need to.

Next, make sure you pay by direct debit, as suppliers tend to charge customers who pay on receipt of bill a far higher levy.

Finally, never assume that the dual fuel option is always the cheapest. Logic states that suppliers would offer the best discounts to customers who were paying them for both gas and electricity, but choosing the cheapest standalone tariffs can work out up to £20 cheaper.

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trimmer #3: Insurance
The most important thing to remember when buying insurance of any kind is that loyalty never, ever pays.

Insurers are only interested in attracting more customers, and to achieve this they reserve all their cheapest deals for newcomers.

So simply renewing your policy when it expires is unlikely to offer any real rewards. Inertia is the insurer’s biggest money spinner – make sure you always shop around when your current deal expires.

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Smaller firms can be cheaper Another important factor to keep in mind is that big isn’t always best when it comes to insurance.
They may spend a fortune on advertising to ensure they are first to mind when you go shopping for a new policy, but household name insurers can cost as much as 25% more than some of the smaller players.

Remember that insurers tend to target a specific type of customer as their core audience, and offer the most competitive premiums to attract them specifically. So if you don’t fit into that exact demographic you won’t get the cheapest cover.

When you do shop around, make sure you don’t overlook the little guy.

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Bill trimmer #4: Mobile phone contract
Britons waste a massive £1.8 billion by purchasing mobile phone contracts that offer far more than they need.

According to uSwitch, the average mobile user leaves 100 minutes and 73 texts unused every month. To make sure you aren’t throwing money down the drain, consider the following key factors before signing up to a contract:

- When do you make the majority of you calls (peak or off-peak times)?
- How many minutes do you use in total each month?
- How many texts do you use on average every month?
- How much do you ideally want to pay each month?
- Is there a particular handset you want?


Read more about mobile phone bills here

Bill trimmer #5: Credit cards
With the holiday season rapidly approaching, companies are gearing up to ensure you get in the festive spirit by spending bucket loads of money on worthless tat.

If you plan to pay for this by plastic, beware. One of the fastest ways to rack up debt is allow your credit card to rack up interest – the average rate is now an eye-watering 17.27%!

If you do plan to make a spate of purchases this festive season, avoid interest charges by applying for a card that offers an introductory interest free period on new purchases. The Halifax Purchase Card is probably the best around at the moment, offering you 15 months interest free.

If you already have debt that is accruing interest, opt instead for a 0% balance transfer card and shift it over immediately, the difference will be astounding.

If you are unable to pay off the debt within that period, simply switch the debt again and repeat as necessary. If you’re vigilant enough about it, you’ll be able to avoid interest completely, cutting a massive chunk from your monthly bills.

Compare new purchases credit cards here

Article produced by EveryInvestor.co.uk