They might not be obvious or seem totally unrelated, but there are a few things you might be doing that could have a negative impact on your money.
1. Not registering to vote
Registering to vote means you can have your say on elections. But did you know it also improves your credit score? This is because it helps companies confirm your address when you apply for credit with them.
A good credit score means you have a better chance of getting approved for credit. Lots of things can improve it, like paying your bills on time and staying under your credit limit. But registering to vote may be one of the quickest. You can do it online in about five minutes, or by post.
You only need to register once, unless you move house (you have to register again with your new address if this happens). Your local council will also send you a Household Enquiry Form every year to keep your information up-to-date – you must fill this in or risk getting fined.
2. Staying financially tied to your ex
A financial association means your credit report is connected to someone else’s. In other words, their data can affect your chances of getting approved for credit. This is a risk you have to accept if you want to share finances with a partner. But what happens if you break up?
You may be able to sever an old financial association by closing any joint accounts and contacting the UK’s three credit reference agencies – Equifax, Experian and TransUnion – with proof that the financial connection has ended.
Usually, both you and your partner need to give permission to close a joint account. You can’t close it unless the balance is zero – so try and talk to your ex about how to divide savings or repay joint debt. If you can’t come to an agreement, you may need to use a mediator, like a solicitor.
3. Only comparing the interest rate
It’s easy to focus on interest rates when you’re looking for a new bank account or credit deal. But you should also factor in things like fees and cashback. Otherwise, you may get a worse deal than you realised – or miss a really good one.
Try looking at the APR (Annual Percentage Rate) to compare credit deals. APR reflects both interest rates and any compulsory charges, giving you a better idea of the true cost of credit. Just remember, you might not get the advertised APR – the rate you actually get can depend on things like your credit score.
You can use AER (Annual Equivalent Rate) to compare savings accounts. This reflects compulsory fees and compound interest to give you a better idea of what you’ll earn on your savings.
4. Forgetting when your interest period ends
Many credit cards offer a promotional period for new customers, giving you a lower rate for a set number of months. But once the period ends, you’re normally put on the credit provider’s standard variable rate. This rate is often a lot higher – and it’ll be applied to any debt you still have on the card.
It’s also common to get a fixed rate period on your mortgage that ends after a few years. When this happens, your mortgage rate normally becomes variable. This means it can go up and down at any time.
It’s important to find out when your interest rate will change so you can plan ahead. You may need to budget for increased payments, or you could start looking for better deals.
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