Top ways to save cash

AS turmoil at major British firms like Marks & Spencer, HBOS, Barclays and Taylor Wimpey has shown with alarming frequency, boardroom bosses on vast salaries were no better prepared for the slowdown in the British economy than families gamely trying to balance household budgets.

It’s possible that both are hit by the same thing – bricks and mortar falling in value after a decade or more in which we assumed house prices only ever went in one direction.

But while big companies go cap-in-hand to City backers or sovereign funds in oil-rich states to restore their finances, piecing household budgets back together again is a more mundane task.

With more than a million people coming off fixed-rate mortgages this year and the cost of borrowing soaring, many families have to act fast to ensure they have enough to fill the petrol tank and pay energy bills set for another surge.

Says Andrew Hagger at financial data specialist Moneynet.co.uk: “Many consumers don’t use a basic monthly budget to help manage their finances, and those who do probably see it as an annual task.

“With incomes ravaged by increasing fuel, food, energy and borrowing costs, it’s time to take a long, hard look at our financial situation to see how we can get through the rest of 2008 in the most cost-effective way.”

Hagger says that with little sign of oil - or much else - getting cheaper in the medium term, it’s vital to “look at ways of reducing monthly expenditure in order to balance the books”.

Here’s his checklist to boost your spending power: 1. If mortgage repayments are a problem, see if your lender allows a temporary switch to interest-only terms. Anyone with a £140,000 mortgage at 6% who does this for three months frees up £200 a month; on a £220,000 loan, the saving is £320 per month.

2. Go food shopping once a week and plan your meals in advance. Only buy what you need, and save money by avoiding regular trips to the cornershop.

3. Before making any big purchases, check online price comparison sites like pricerunner.co.uk or kelkoo.co.uk to be sure you are paying the going rate.

4. Try to cut interest charges on credit card borrowing; anybody paying 16% plus, not uncommon in today’s market, should consider switching to a balance transfer for life card.

“The Citi Platinum iTunes card, which has a salary requirement of £20,000, currently offers a very attractive 4.9% APR rate for as long as it takes to repay your balance. You could take four or five years to pay off this sum, but the rate has been locked in,” Hagger says.

“With minimum repayments of 2.25%, a £1,500 balance could be serviced for £33.75 per month.”

MBNA’s Platinum plus card also offers 4.9% for life on balance transfers, with no salary requirement.

If possible, Hagger says you should try to keep new purchases on these cards to a minimum – because most balance transfers deals charge a much higher interest rate on those.

Cardholders should always try to pay more than the monthly minimum as soon as financial circumstances allow; it cuts interest charges and shortens the repayment period.

5. Buy petrol and food on a credit card with a cashback – the American Express platinum moneyback credit card pays 5% cashback for the first three months (maximum £200).

If food and petrol cost £500 per month, you could recoup £25 per month for three months.

Esther James at Moneyfacts.co.uk likes the Shell MasterCard currently offering a 3% rebate on Shell fuel purchases, plus 1% on other spending, alongside a 0% balance transfer deal running for a year.

“Anybody buying fuel at ASDA with an ASDA MasterCard can receive a rebate of 2p per litre. The card also offers a 0% AS turmoil at major British firms like Marks & Spencer, HBOS, Barclays and Taylor Wimpey has shown with alarming frequency, boardroom bosses on vast salaries were no better prepared for the slowdown in the British economy than families gamely trying to balance household budgets.