The best way to spend £10

Have you ever had one of those brilliant moments where you pull on an old coat and find a crunched up tenner in the pocket? Or your granny slips a tenner into your hand, as though she’s forgotten you’re a grown-up with a job?

Ten pounds isn’t a life-changing sum, but it’s a nice amount. You could go for a few drinks, buy a curry or take the kids swimming – it’s enough to do something fun with.

But could it be worth much more if you spent it the right way?

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Tenner temptations

I asked some friends how they thought they would spend a spare tenner. Here’s what they had to say:

“I’d buy beer, bread and milk - the essentials.”

“There’s no best way to spend a tenner when you’ve got kids, it just goes!”

"I'd have to give it to whoever I owed it to. I always owe someone a tenner somewhere.”

“I watched a tramp pick a half eaten sandwich out of the bin in Leicester Square on Sunday - I would give it to him!”

“It would go to whatever I had been going to spend my next £10 on anyway.”

“Best way - I'd treat my friend to coffee and cake. Reality - It would go in the 'for the tax man' pot.”

“I'd probably put it in the savings account for my gap year. Or maybe just go to the pub…”

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How to make your tenner worth much, much more

But if you could free up an extra tenner every month, you could make a substantial difference to your long-term finances.

Ploughing an additional £10 a month into your debts could be worth much more over time. Take a look at some of these sums:

Paying an extra £10 off your credit card

Let’s say you have a credit card debt of £500 at an annual percentage rate (APR) of 18.9%, and with a minimum repayment of 3%.

If you’re paying the minimum back each month, it will take you nine years and seven months to clear the debt (this is why you should always pay more than the minimum!).

But by paying back an extra tenner a month on top of that, you’d clear the debt six years and eight months sooner, and save yourself £248.32 in interest.

[Related link: Top cards offer 0% for 23 months on balance transfers]

Overpaying your mortgage by a tenner a month

When people suggest making overpayments to a mortgage, you probably assume they mean at least a couple of hundred extra a month.

But even just an extra tenner could make a substantial difference. For example, if you had a mortgage of £150,000 over 25 years and were paying a rate of 4%, you would pay £792 a month.

The total repaid over the 25 years would be £237,527. Pay an extra tenner into that mortgage each month and you’d own your house outright seven months sooner. You’d also save £2,112 in interest.

Spend a tenner a month on a bank account

If you can free up an extra £10 a month, then one possible way to save would be to upgrade your current account to one with a fee.

Many such accounts offer customers free products, including breakdown cover, mobile phone protection and travel insurance.

As long as you would use the services included, you could save money.

For example, the NatWest Select Silver account charges £8 a month, but comes with mobile phone insurance, European travel insurance, five music downloads a month and three DVD rentals from Lovefilm.

As long as those perks are worth more to you than the £96 annual cost of the account, you’ll be better off.

The Co-Operative Bank charges £9.50 a month for its Privilege Current Account, but it includes worldwide family travel insurance, mobile phone cover for up to four handsets and free access to the Co-Operative Legal Services Helpline.

Again, there’s no point paying for this account if the perks aren’t worth more than £114 a year to you, so think carefully before committing your spare tenner.

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How would you spend an extra tenner? Would you be sensible or have some fun? Would it just get absorbed into your general spending? Share your thoughts with other readers in the comments below.