• Around two in three adults (66%) reported that their cost of living had increased in the last month, according to the latest Opinions and Lifestyle Survey (OPN) from the ONS. The most reported issue facing the UK today was the cost of living (87%). Around 1 in 4 adults (23%) reported that they would be unable to pay an unexpected but necessary expense of £850.
• Consumers could save around £430 by switching their £3,000 credit card debt, without paying a fee.
• Free cash of up to £175 is up for grabs if consumers switch current accounts.
• Overdraft users could save over £8 per month by switching their current account.
• Remortgage customers could save £370 a month by locking into a new fixed rate deal.
• First-time buyers may need to increase their monthly savings due to rising house prices, but saving £350 a month for three years could be enough to get a 5% deposit.

Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said:

“Consumers are still struggling with the cost of living, and while some might be optimistic about the future, there are still many people finding it a challenge to cover rising costs. There are ways to save some cash and reduce spending, but it will require consumers to knuckle down and budget in the first instance. It is vital to cover essential commitments, but so is having an emergency savings pot in place, and ensure it is fending off eroding inflation by offering a decent return of interest. It might seem stressful to get started, but taking simple steps to review, switch and save can go a long way to get on top of the finances.”

Budget on the go

“It might seem a hassle to budget, but it is worthwhile to put some time aside to get a clear picture of each financial commitment and become more conscious of behavioural spending. Budgeting can be done on the go, and keeping sight of everyday spending can help someone be more mindful of their spending habits but could also reveal a necessity to make cuts. More than a third of consumers (40%) say they have not just had to make cuts to their usual spending but expect to have to do so again in the future, according to a recent YouGov poll. There are efficient ways to start budgeting and to keep tabs on income and outgoings, such as using an app which can connect current accounts, savings accounts, credit cards, and even a mortgage all in one place through Open Banking. It’s also useful to set up saving targets to build up a nest egg for the future.”

Maximise loyalty cards

“Loyalty cards are great for frequent shoppers, but it can be easy to leave a physical card at home and miss out accumulating points. Thankfully, shoppers can keep a whole variety of loyalty cards digitally on the Stocard app. This app is free and simple to use, where shoppers can have their loyalty cards scanned quickly, plus the app can use location settings to notify users of discounts at their favourite stores. A word of warning though, loyalty points can expire, and it will be up to consumers to keep track of these and exchange them for any rewards or vouchers, but the latter can also have a specific expiry date to diarise. As an example, Tesco Clubcard vouchers are valid for two years.”

Automate your savings

“The upsurgence in app-based savings providers gives savers an opportunity to take the hassle out of making deposits, as some providers will do it automatically. Plum and Chip are a couple of examples of apps that can make automatic deposits because they connect to a current account through Open Banking and assess someone’s spending habits to save sensibly. Saving little and often is the key to build up a nest egg, but it can be difficult for consumers to get into the right mindset. If someone saved £3 a day, they could accumulate almost £100 in a typical month.”

Take advantage of ISAs

“Cash ISAs remain a popular choice for savers, particularly those impacted by fiscal drag and want to protect their hard-earned cash from tax. Numerous debates on what can be done to improve savers investing in the UK has led to speculation for cash ISAs to take a hit. However, there will be many savers who simply do not want to invest their cash on the stock market, so any reforms must be considered carefully. ISAs also can now offer more flexibility, so those that dip into their pots can deposit the difference later down the line during the same tax-year, but they must ensure they stay within their yearly allowance. There are also providers who can split someone’s allowance across different cash ISAs, great for those who want to spread their cash between an easy access cash ISA and lock into a higher fixed rate ISA. There will be many consumers expected to pay higher-rate tax at 40% this tax-year, around 2.5 million in fact, according to the Office for Budget Responsibility (OBR). Savers may then unexpectedly breach their Personal Savings Allowance (PSA), which allows basic rate taxpayers to take home up to £1,000 worth of savings interest tax-free each year but only £500 for higher rate taxpayers.”

Build a safety net with an easy access account

“Easy access accounts are popular for their flexibility, ideal for savers who only want to put away a little bit of cash to grab in emergencies. Using a current account to save every month may be convenient, but these are not always the best home to build a safety net over time, particularly when some pay little to no interest. It will be up to savers to compare and switch their accounts, but it worth pointing out that £300bn is sitting in UK current or savings accounts earning no interest whatsoever, according to the Bank of England. Saving each month will be essential for first-time buyers, but they may have to increase their deposit due to rising house prices. According to HM Land Registry, the average house price in Great Britain for first-time buyers has risen by 5.6% annually, with the average price now £227,114. Those looking to build a 5% deposit to secure a house worth £227,000 would need to put aside £350 every single month for the next three years to build a deposit of £12,600, which could cover upfront mortgage fees or removal costs.”

Tackle credit card debt

“Debts hanging overhead can be frustrating, so getting into the habit of clearing debts is wise, but not every borrower will be instantly able to clear their credit card. These are a flexible safety net, and offer shoppers greater consumer protection, but worryingly around 49% of credit card balances incurred interest in January 2025, according to UK Finance. A balance transfer credit card is a smart choice to consolidate debts and borrowers could even find a deal that doesn’t charge a transfer fee, such as the 14-month 0% balance transfer offer on the Barclaycard Platinum Balance Transfer Visa. Customers could save around £430* if they were to switch a £3,000 debt from a card that charges 24.9% APR, if their aim was to make a fixed payment of £250 every month.”

*Credit card repayment for a £3,000 purchase, based on an interest rate of 24.9% APR, minimum fixed repayment of £250 (thereafter a minimum of 1% plus monthly interest or £5, whichever is higher) would take one year and two months to pay back, costing around £430 in interest over this term.

Consolidate debts or make home improvements with a low-cost loan

“Bank holidays can be a useful time for homeowners to make improvements and according to Aviva, almost seven million UK homeowners plan to renovate their homes in the next two years. Some borrowers might also need a cash injection to pay off any credit cards or an overdraft that temporarily covered costs. An unsecured personal loan could be a great option, but the interest rates do vary depending on how much is borrowed. Those looking to borrow £5,000 over three years can find the top rates are lower than 8%, but those borrowing more can find lower advertised rates of less than 7%. Consolidating debts is always worth investigating, it might seem a hassle, but it could save someone a significant sum and help those who need a strict payment plan. Borrowers do need to keep in mind that these are advertised rates and, out of all successful applicants, a minimum of 51% are offered this rate.”

Remortgage and reduce monthly repayments

“As a flurry of lenders move to reduce their fixed mortgage rates, it could be a suitable time for borrowers to compare deals and consider refinancing. This is more pressing for those borrowers who are sitting on a standard variable rate. However, before entering any arrangement it is wise for borrowers to seek advice and ensure they pick the right deal based on its overall package, not just because it offers a headline grabbing low rate. Based on a £250,000 mortgage over a 25-year term on a repayment basis, the monthly repayment on the average two-year fixed rate of 5.20% would be £1,490. Compared to the current average standard variable rate (SVR) of 7.60% the repayment would be £1,863, so this would see borrowers save £373 per month.”

Switch a current account and get free cash

“Switching current accounts is quick and easy to do thanks to the Current Account Switch Service (CASS) and according to Pay.UK, 89% of customers who used the Service in the last three years said they were satisfied with the process. Free cash switching offers don’t last long, they come and go so it’s wise for consumers to keep an eye out for lucrative offers over the summer. Consumers will find a couple of free cash switching offers with first direct offering up to £175 while NatWest is offering £150 to switch to its Reward Bank Account. As with any current account its important consumers assess the overall package of any deal before they commit, such as any fees or incentives. However, a free cash boost may be the ultimate sweetener for cash-strapped consumers who want to avoid dipping into their overdraft.”

The convenience of an overdraft comes at a cost

“There will be times when consumers have little option but to dip into their overdraft should they run out of disposable income or indeed overcommit to paying off other debts, like a credit card. An overdraft is a convenient way to borrow over the short term, but this comes at a cost, with some of the biggest brands charging nearly 40% EAR. There are much cheaper alternatives available, and it’s worthwhile for consumers to consider accounts that have an interest-free tariff as a safety net. Starling Bank charges 15% EAR, whereas Lloyds Bank charges 39.9% EAR so the total cost for borrowing £500 over 30 days would be £13.86, compared to £5.81 with Starling Bank.”