Halloween is nearly here – and if you want to banish some nasty financial surprises that could be lurking, it’s worth making sure you know the pitfalls to avoid.
Here are some common money horrors to watch out for, as well as tips on how you can avoid getting caught out…
1. Missing credit card repayments
While juggling day-to-day tasks, it’s easy to let credit card repayment dates slip your mind. Missing a payment can be harmful to your credit score though, which can also make it harder to access credit and be offered more favourable deals.
To avoid getting caught out, it could be worth setting up automatic payments to clear at least the minimum amount every month, or – ideally – the full balance for those who can afford to.
Remember also that only paying off the minimum each month can also be a money mistake, as you could end up paying much higher amounts in interest over the longer-term and take longer to clear the full balance.
If you’ve set up payments to automatically pay the minimum each month, don’t forget to make additional payments to pay down your credit card balance, as and when you can afford it.
2. Not reviewing where your savings are kept
Savings rates have surged in recent months, so if you haven’t checked what interest rate you’re getting for a while, now is a great time to do so.
But higher savings rates could also mean that some people are pushed over their personal savings allowance limits. The limit depends on which income tax band you’re in. Basic rate taxpayers, for example, can receive up to £1,000 in savings interest without paying tax on it.
Chris Irwin, director of savings at Yorkshire Building Society, says: “With savings rates rising over the last 18 months, we may have a silent horror around the corner with the current personal savings allowance (PSA) limits no longer protecting savers’ interest.
“When the PSA limit was initially set it would have seemed a reasonable limit, but, in a rising rate environment, the allowance could leave ordinary savers facing extra costs. It’s a problem everyday savers are facing right now, but many won’t even realise it yet.”
Isas are one way to ring-fence money from the taxman. Up to £20,000 can be newly saved per adult into Isas in the current tax year.
3. Being scammed
Scammers will use a wide range of tricks to dupe people into handing over their cash, whether it’s offering fake tax rebates, dodgy “investment opportunities”, bogus cost-of-living payments or fake or non-existent goods as shoppers look for bargains in the run up for Christmas.
In general, remember the advice of the Take Five to Stop Fraud campaign and take a pause to think it through before parting with any money or personal information.
Criminals often use pressure tactics, to make you do something you’ll later regret, so if someone’s encouraging you to act quickly, ask yourself if it could be a scam.
4. Letting little-used subscriptions eat away at your budget
Subscriptions which are little-used can eat significant chunks out of your bank balance over time. Go back through your bank statements over the past year or so and check whether there are any regular payments you could cancel, or any subscription packages you could renegotiate if you’re not using everything in the package.5. Not shopping around for insurance
Insurance quotes have been increasing, as insurance firms pass on their own increased costs. If you’ve been “spooked” by this, make sure you’ve checked out what other insurers are offering, by using comparison websites and speaking to firms directly.
Laura Hughes, manager of general insurance at the Association of British Insurers (ABI), says: “Shopping around could help you cut your insurance bills. Just make sure that the policy you choose best reflects your needs.”
6. Putting off pension saving
Starting early makes pension saving easier, as it gives time for the interest on your pension pot to roll up. You can get more “involved” with your pension by downloading your provider’s app, so you can see how your money is doing and where it is invested.
Hetty Hughes, manager, long term savings policy at the ABI, says: “It’s important to pay your pension some attention, so that you’re not panicked by retirement. It will pay in the long run, and it’s never too early to start.
“The trick to treating yourself to a comfortable retirement is to make sure you know where all your pensions are, and that you regularly review how much you and your employer are putting in. You can even look and choose how your pension money is invested.”