Remember loyalty doesn't pay
Steve Sweeney, head of car insurance at moneysupermarket.com, says: "The amount of money that Brits are missing out on by staying loyal to their car insurer is unbelievable.
"The average saving you could make by shopping around is £224 – when multiplied by the 22% of motorists who automatically renew with their insurer, this comes to a total missed saving of £1.6 billion."
Even greater levels of apathy can be seen with home insurance. Only 16% of us bothered to switch last year, despite the fact that the average saving was £132.
And it's not only your insurance where you could be wasting money by not shopping around. Kevin Mountford, head of banking at moneysupermarket.com, says that without a regular review your savings could also be losing you money.
"Given the low number of products that offer a return above inflation, savers need to keep a close eye on the interest rate, especially on fixed-term accounts where the rate can come crashing down after the term ends," he says.
For example, while the Halifax Web Saver pays 0.25%, the best rate you can get is 5% with providers – including ICICI Bank UK and Coventry Building Society.
On a balance of £1,000, over a year, this would equate to a difference of £38 in interest for a basic-rate taxpayer.
It also pays to keep an eye on your credit card. The average saving by taking out a better credit card deal is £218, according to moneysupermarket.com, but you could save much, much more if you've got a balance racking up interest.
Your utility bill could also be super-charged. The average potential savings by switching to a new provider is around £270. "Check your deal regularly," advises Scott Byrom, head of energy at moneysupermarket.com.
"Online products continue to lead the way in terms of value, with monthly direct debit payments offering the highest level of customer discounts."
To be sure that you get the best value from your financial products, a regular review is essential. How often you need to do this will vary between products.
For savings accounts (other than penalties on fixed deals), there's nothing, apart from the time involved, to stop you switching as much as you like.
This means it's sensible to check rates every few months, or when your fixed-rate deal is coming to an end.
Your credit card can also benefit from a regular review. If you regularly clear your balance, it's likely to be less important because you won't be paying any interest.
However, if you leave a balance on your card, shop around for 0% deals, and keep a note in your diary to find another at the end of the term if you're unlikely to have cleared it by then.
If you're a mortgage holder you should also keep a note in your diary of the date a term is due to finish, so you don't end up on the standard variable rate. It takes two to three months to remortgage, so it's wise to start looking round early.
When it comes to insurance, however, there can be penalties for cancelling a policy, so Sweeney recommends checking costs every year when the policy is up for renewal.
"Even if you think your renewal quote can't be beaten, spend a few minutes on a comparison website making sure you really do have the best value policy to suit your needs," he says.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).
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.
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.