Generating an improved bank balance does not need to be complicated or challenging. In fact, it is possible for an individual to improve their financial situation by taking a few simple steps that do not require a significant amount of effort. With that in mind, here are three areas that could make a real difference to the finances of a wide range of consumers over the long run.
Savings accounts
With interest rates still being close to record lows, it continues to be a tough period for savers. In fact, the average savings account has an interest rate of just 0.6% at the time of writing. Unless an individual has a significant amount of cash, that is unlikely to yield a satisfactory income return over the long run.
Switching to a higher-interest savings account could make a major difference to the amount of income received per year. For example, Goldman Sachs recently launched its Marcus savings account, which pays 1.5% in interest. Compared with an account with the industry average rate of interest, a Marcus account could represent an increase of 150% per year. With the first £1,000 of interest income received each year being tax free, most consumers are likely to receive all of the increase in income from switching to a higher rate.
Debt transfer
For consumers who have debt on an existing credit card, it may be worthwhile to obtain a balance transfer credit card. This card allows individuals to transfer their existing debt onto a new card that charges 0% interest for a set period. The 0% interest period can be as long as 32 months, which may have the potential to slash the amount paid in interest each month.
For example, an individual with a £2,000 credit card debt paying £100 per month at an interest rate of 18.9% could save £380 in interest costs over a two-year period. If that person maintains repayments at £100 per month, they may also be able to repay their debt four months earlier than if they had kept their previous card. While balance transfer fees may apply with some cards, such fees are generally significantly lower than the amount of interest that could be saved over the 0% interest period offered by a balance transfer card.
Current accounts
There continue to be a number of enticing offers available for consumers who want to switch their current account to a new provider. Offers may take the form of cashback or vouchers, with their relative appeal being dependent upon an individual’s personal circumstances.
Switching current accounts is very straightforward. A consumer’s new bank will take care of all the details, including changing direct debits and standing orders, with the process taking up to seven working days. Any payments made to the old bank account will automatically be transferred to the new account.
With the ability to read online reviews of the various bank accounts on offer, consumers may even be able to find a better service to go alongside a cash or voucher reward.
Takeaway
Achieving an improved financial situation may seem like a challenging task, but spending even a modest amount of time can yield impressive results. Simple steps such as switching savings and current accounts as well as obtaining a balance transfer credit card could make a real difference to an individual’s bank balance over the long run.
