Here are some steps to spring clean your finances

Spring is now officially in the air and, especially after the financial impact of the pandemic the past 12 months, this will be the perfect time of year for consumers to take stock and give their personal finances a spring clean.

To spring clean your personal finances is easy and could save money each month as consumers switch to lower repayment options and evaluate existing deals they are on. Here are a few pointers to help make it easier, we’ve highlighted the key areas to look at when taking stock of personal finances.

Consider remortgaging to lower monthly repayments

Homeowners with a mortgage find it is normally the mortgage that is their most expensive monthly outgoing. To ensure that they are not paying more than they should on their repayments, they should check the interest rate currently being charged and consider switching if possible to a lower deal.

For example, some borrowers who have been on a fixed rate deal may realise that they are now on their lender’s standard variable rate (SVR) if they didn’t remortgage when the initial fixed deal ended. The SVR is often significantly higher than rates being offered on current two and five year fixed remortgage deals, so these borrowers may find that they are able to reduce their monthly repayments simply by locking into a new deal. Homeowners considering remortgaging should visit our remortgage charts to compare deals available, as well as using our mortgage repayment calculator to see how a new rate will impact their monthly repayments.

Mortgage borrowers who are unsure of whether they will be able to switch to a new mortgage deal or who want advice as to whether it is the best option for them, should consider speaking to a mortgage broker who will provide advice on what mortgage options are available for their individual circumstances.

Check your credit score

Research carried out by Experian found that 46% of the public have never checked their credit report and a further 69% do not know what their credit score is. Clearly, checking credit scores is often one of the most overlooked aspects of keeping personal finances in good shape, but credit scores can have a significant impact on consumers’ finances, especially when applying for a mortgage or looking to borrow money, for example when taking out a credit card or loan.

Checking credit scores is easy to do and can be done for free online.

Reduce and clear debts

For many consumers, the last 12 months of lockdowns have had a massive impact on their finances, resulting in some people needing to borrow additional money to cope with the financial pressures. Although different regions of the UK are still in lockdown, with restrictions set to ease over the coming weeks and months, now is a good time to get an understanding of how much is owed and making first steps to reduce and clear debts.

For those with outstanding credit card debt, it might be worthwhile considering transferring balances to a 0% balance transfer card as this will provide an interest-free period in which to reduce and, ideally, clear the debt. The longest interest-free term currently available on a 0% balance transfer card is 29 months , but those considering transferring credit card debt should compare all deals in our 0% balance transfer credit card chart.

Consumers with debts with various lenders can consider consolidating debts into a low interest personal loan. Personal loan rates have remained highly competitive over the last year, so consolidating debts into a personal loan could be a good option that will help to make the debt easier to manage and could reduce monthly repayments. All personal loan deals currently available can be compared in our personal loan chart.

For those with a high level of debt, for example £20,000 or more, and who own their own home, consolidating debt into a secured loan is an option, but those considering this should be aware that if they are unable to keep up with repayments, it could result in them losing their home. For more information about secured loans, visit our secured loans page.

For those who are struggling with debt, it is important to get expert help and advice by contacting a free debt charity or Citizens Advice.

Switch savings accounts to earn better interest

While the last 12 months of lockdowns have negatively impacted some consumers’ finances, for others it has resulted in them having more money available to put into savings pots. In fact, research published last month by Paragon Bank found that the average balance in easy access accounts had increased by 10% year-on-year. Unfortunately for savers, the last year has also seen average saving rates fall to their lowest levels on record and a number of savers are earning just 0.01% interest on their savings.

As such, savers should review their current saving rate and consider switching accounts if there are higher rates available. As well as this, savers may want to consider opening a savings account with less familiar banks, such as Bank of London and The Middle East (BLME) or Paragon Bank , as they normally offer competitive rates that are often higher than rates offered by long-established high street banks.

Long-term savers who are willing to take a risker option than a traditional savings account, could consider investing instead. Unlike saving accounts or cash ISAs, investments do not guarantee a return on investment and some, such as stocks and shares ISAs, have the risk of investors losing all their money, including their initial capital. Saying this, investing can offer higher returns on investments compared to savings accounts and cash ISAs.

For more information about the different types of investments available, visit our investment page. Alternatively, those considering investing in stocks and shares for the first time can find out how to start investing in the stock market here.

Evaluate insurance policies to ensure you’re getting the best deal

With a new tax year approaching and the possibility of monthly bills rising, now is the ideal time for consumers to see where they can make changes to reduce outgoings by shopping around for new home, car and pet insurance. Often, insurance companies do not reward customer loyalty, so consumers should annually assess their deals to ensure that they are getting the best policy for their money. As well as this, often circumstances change, for example extensions are added onto homes or pets become ill, meaning that policies need to be updated to reflect the changes.