Yahoo Finance 
How I saved my sister thousands of pounds in just an afternoon
I never thought I would be the one dishing out tips to my older sister about what to do with her personal and household finances.
But that’s exactly what ended up happening one afternoon.
As a mum of two, she’s taken the difficult decision to go part time at work in order to cope with childcare, while her other half continues to work full time.
The change means there has been a noticeable drop in household income, so money has become more of a concern.
Here’s what happened when our catch up coffee turned into a money makeover.
Gas and electricity: £500 credit plus £50 a month direct debit saving
Starting with energy, it wasn’t difficult to find the two major ways to boost their household finances.
First off I spotted their account with npower was massively in credit.
They had a cool £500 sitting there doing nothing. Ofgem rules say you should be able to get any credit you have on your energy account back automatically. npower’s policy was that it wouldn’t hold on to more than £5 as long as it had updated meter readings.
Unfortunately neither my sister nor her partner had supplied readings in over a year, so not only were their bills being estimated they were paying more than they needed on their direct debit each month, resulting in the massive build-up of credit.
The second easy fix was to switch their energy deal.
They had ended up on a standard tariff, which is a default tariff you revert to when a fixed deal comes to an end. These tend to be more expensive and uncompetitive.
After quickly comparing energy deals using loveMONEY’s energy comparison engine we found a few quotes. However, based on her usage there wasn’t much of a saving by switching so she decided to move to npower’s suggested cheaper fixed rate deal for ease.
A quick phone call meant she got npower to refund their £500 credit and switched onto a fixed tariff lasting until October 2016 reducing her direct debit from £151 a month to £101 – a £50 monthly saving.
[See if you could save hundreds on your gas and electricity bills]
Broadband, phone and TV: £648 annual saving
I moved onto their broadband, phone and TV deal next as I had a suspicion this was not something my family had considered either.
My sister told me they pay £90 a month for Sky TV, phone and fibre broadband. I was horrified. How could they justify spending £1,080 a year? She explained it was the TV part costing the most money as they had to pay for Sky Sports to watch Formula One. As avid fans, she and my brother-in-law never miss a race.
It was clearly a luxury she didn’t want to give up, but as the only thing they watched was Formula One, I knew of one way to bypass the pricey subscription and bring their costs right down.
Sky offers daily, weekly and monthly ‘passes’ through the Now TV service which allows you to stream its most popular channels without the expensive contract. It’s available through an app or via a dedicated Now TV box to plug into your TV.
The Now TV Sky Sports Pass includes access to all Sky Sports channels including Sky Sports F1. It costs £6.99 for a day pass, £10.99 for a week pass or £31.99 for a monthly pass.
As they were still in contract for their phone and TV until February 2016, they got Sky to scrap the TV and give them a fibre broadband and phone deal for £36 a month.
This means they are now saving £54 a month compared to what they were paying before which will work out as a £648 annual saving.
With only seven races left of the season (four of which are on the BBC), they will only need to pay for three day passes which will set them back an extra £20.97.
Credit cards: £140 monthly saving
As I delved deeper I asked about the situation with credit cards.
My sister has had the same Barclaycard credit card for years. And as she was happy with the way she could handle her account online, she didn’t see it as a problem that she was paying 16.7% APR on her balance of a couple of grand.
She wasn’t the only one though; my brother-in-law also had some expensive debts on credit cards and together they were in the red to the tune of £5,600, costing them around £140 in interest.
I told her they didn’t need to pay any interest at all on their existing debt by moving it to a 0% balance transfer credit card. Referring her to the best buy tables I showed her that she could get a deal lasting up to 37 months with a 2.79% fee.
She found the Virgin 32-month Balance Transfer Credit Card deal, which she decided to go for because of the more affordable 0.99% transfer fee.
They applied, were accepted for the card, and are now using the £140 of interest they were paying to hack away at the balance each month.
[Got card debts? See if you can save a fortune in interest with a 0% credit card]
Car and home insurance: £528 annual saving
Invigorated, I didn’t even have to suggest the next area we should look into – she wanted to know what I could do about her car and home insurance, which were both up for renewal.
My sister is no stranger to shopping around and comparing quotes, but the stress of a kitchen refit last year and an intense project at work meant she just let them both auto-renew.
Their car insurance renewal quote with Admiral this year was a whopping £804.13, but using the loveMONEY car insurance engine they got a much better quote of £348.52 with Hastings Direct, a saving of over £455.
Their renewal quote for home insurance with Endsleigh was a much more reasonable £203, but we found a quote for £129.25 a year for buildings and contents cover with Allianz, a saving of over £73.
Neither of the existing providers could match the cheapest quote online, so she managed a combined annual saving of ££528.
Loan: £93.48 saving on monthly repayments
To fund a garage conversion and kitchen refurbishment a couple of years ago, my sister and her husband took out a home improvement loan from Anglian via Shawbrook for £10,000 over 60 months at 18.4% APR.
At this sky high interest rate, they would have to pay back a total of £14,911.54, making the cost of credit a whopping £4,911.54.
At the time it suited them as it was offered by the company doing the work, but considering personal loan rates are at record lows I suggested taking out a cheaper loan to drive down the monthly cost as well as the total amount repayable.
They had just under three years left on the loan with a total of £8,714.06 left to pay, which was being taken in monthly instalments of £248.72.
But a quick look at the cheapest personal loan best buy tables revealed rates as low as 3.6% on borrowing (they're even cheaper now, down to 3.3%).
They applied for a £6,000 loan taken out over three and half years with First Direct and got a rate of 4.9%, which they coupled with some savings to clear the more expensive loan.
The new loan now costs them £155.24 a month, and the total amount repayable is £6,529 meaning they’ve freed up £93.48 a month to help with reducing other debts and they’ve managed to save over £2,300 on the total cost of the credit.
How much we saved
Here’s a summary of the household and personal finance areas we looked at and what we did in order to make savings.
What we looked at | What we did | Annual savings achieved |
Gas and electricity online account | Claimed credit on account and switched tariff | £1,100 |
Existing Sky phone, broadband and TV deal | Cancelled TV and haggled for better deal as still in contract | £648 |
Outstanding credit card debts | Shifted all credit card debt to a 0% balance transfer credit card to freeze interest | £1,680 |
Car and home insurance renewals | Shopped around for new quotes and switched | £528 |
Old home improvement loan | Shifted debt to cheaper personal loan reducing monthly repayments and the total cost of credit | £3,421.76 |
Total annual saving | £7,377.76 |
As you can see in just one afternoon we managed to save over £7,300.
My sister says it’s made a massive difference and means the family now have extra money to pay down debts quicker as well as afford a few treats.
