Beat the prices at the pumps
Just a few months ago it seemed like petrol prices would just go up and up, with the national average price of petrol reaching 119.5p for unleaded and 133p for diesel in mid-July. However, while the price of oil seems to have eased slightly, the pain for motorists is far from over.
"Oil prices are widely predicted to rise again, so we’re likely to see pump prices creeping up once more towards the end of the year," warns Louise Doherty, spokesperson for petrolprices.com.
While it’s less likely that petrol prices will reach the 150p-a-litre figure that some experts were bandying around earlier this year, the cost of petrol still takes up a significant amount of the household budget. Fuel is now the third-largest monthly expense for UK families, after mortgage payments and food, according to swiftcover.com.
The introduction of new vehicle excise duty (VED) bands in 2009 will add to the costs of running a car - owners of less ‘green’ vehicles will have to cough up even more money. Six new bands will target the bigger polluters and car owners in the top tier (band M) will have to pay a £440 charge for cars that emit more than 225g of carbon dioxide per km.
The government initially suggested that most motorists wouldn’t be affected by the new bands. But Angela Eagle, treasury minister, has since admitted that she expects 44% of car owners to be worse off because of the changes. The rules will be backdated to 2001. This means that even those who bought their cars before the consideration of CO2 emissions became routine will have to pay hefty road tax charges - in some cases VED will more than double from £210 to £440.
If you’re buying a car, it makes economic sense to choose a more environmentally friendly one - and not only because of road tax. According to the RAC, if you buy a £10,000 car, you could save around £12 a week with a more fuel-efficient model. Visit dft.gov.uk for the 10 most fuel-efficient cars.
Even if a new car is not top of your shopping list there’s much you can do to lower your motoring costs. A great place to start is reducing the amount you spend at the pumps. Just as a savvy consumer would use price comparison sites to find the best deals, you should shop around to make sure you’re getting a good price on your petrol.
Petrolprices.com, a free website, helps you locate the cheapest pumps in your area. Once you’ve registered, type in your postcode and petrolprices.com will list petrol stations near you that offer the cheapest prices. You can also select how far you’re prepared to travel to find the cheapest prices so you have more options. There are approximately 10,000 garages in the UK, so with 9,725 petrol stations on the database and daily updates on at least 8,000 garages, the website is pretty comprehensive.
As the table shows, shopping around can save you hundreds of pounds a year. For example, it would cost you £2,805.66 to fill up a 65-litre Volvo estate at the priciest Harrow garage (based on filling up three times a month), compared with £2,548.26 at the cheapest forecourt. That’s a saving of £257.06 a year if you’ve managed to locate the cheaper petrol.
Loyalty schemes are another way to keep your petrol costs down. Tesco, for example, allows cardholders to collect points on fuel purchases. With a Nectar card you can collect points at Sainsbury’s forecourts and BP garages.
If you have a credit card, cashback schemes could earn you up to £200 a year, as long as you pay off the card balance each month and depending, of course, on how generous the terms of the offer are and how often you frequent the same forecourts. The Citi Shell Mastercard rewards customer loyalty, giving 3% on Shell fuel purchases and 1% on all other spending. Asda credit cards give users 2p back on every litre of petrol that you buy at an Asda forecourt.
However, like any special offer or store card, it’s not worth driving to a garage for discounts if you could get the petrol cheaper elsewhere. For example, while you get an impressive sounding 15 points for every litre of petrol you buy with Morrisons Miles Card, you’ll need 4,995 points (333 litres) on your card just to get a £5 shopping voucher.
It’s not uncommon for supermarkets to run promotions on their petrol too. Sainsbury’s and Tesco both regularly offer 5p off a litre vouchers (valid up to 100 litres) when customers spend £50, so keep your eyes peeled at the checkout.
Driving in a more economical style is another way to lower motoring costs. Swiftcover.com, the online insurer, calculates that the average motorist could save £290 a year simply by driving in a more fuel-efficient way.
"Simple things like taking excess weight out of the boot, limiting heavy braking and keeping your car serviced can have a huge effect on cutting your fuel bill," says Tina Shortle, the insurer’s spokesperson. For example, carrying a heavy load in the boot or on a roof rack (100kg) uses 5.9% more fuel in a medium-sized car, and 4% in a smaller vehicle.
However, saving money through such strategies as coasting or filling up your car at night are simply urban myths. As Vanessa Guyll, an AA technical specialist, points out: "If you’re following the general advice to combine local errands into one trip and do less cold starts, when are you going to be close to a petrol station at four in the morning?"
If you keep your car in top-notch condition, you’ll improve its miles-per-gallon efficiency significantly. For example, a poorly tuned engine can increase fuel consumption by as much as 50%, and, according to AA figures, when you drive on under-inflated tyres, you will use 5.8% more petrol in a small car than if you take the trouble to keep them fully pumped up.
Air conditioning also uses a lot of fuel, so on a short trip or if you don’t really need it, switch it off - the RAC calculates you could improve energy efficiency by up to 8%. On the other hand, if it’s hot and you’ve got the windows down, the air drag could make the engine work harder than the air conditioning would. So it’s basically a question of common sense.
Other simple steps you can take include planning your route before you leave; accelerating gradually without over-revving; travelling in the correct gear; and not speeding - the AA says that driving at 80 miles per hour instead of 60 uses 41% more petrol.
At the start of the year, the AA carried out an experiment with 50 employees to see how effective a change of driving style and maintenance is in terms of saving petrol. The group, on average, saved 10%, but the best result was a saving of 33%. Reducing speed and reducing excess weight stood out as making the most noticeable differences to fuel efficiency.
And of course if you really want to cut your fuel costs you can also review how often you use your car. Reducing your reliance on four wheels won’t just save you money, it’s better for the environment and could even burn a few more calories too.
This is more usually a feature of car insurance but it can also crop up in contents, mobile phone and pet insurance policies. An excess is the amount of money you have to pay before the insurance company starts paying out. The excess makes up the first part of a claim, so if your excess is £100 and your claim is for £500, you would pay the first £100 and the insurer the remaining £400. Many online insures let you set your own excess, but the lower the excess, the more expensive the premium will be.
Everything you own: all your assets (property, cars, investments, savings, insurance payouts, artwork, furniture etc) minus any liabilities (debts, current bills, payments still owed on assets like cars and houses, credit card balances and other outstanding loans). When you’re alive this is called your wealth; when you’re dead, it becomes your estate.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.