If your credit card or overdraft has been piling on the pounds over the festive season, it’s time to think about getting your finances back in shape. We explain how.
Many of us will currently be thinking about joining a gym to counter our Christmas overindulgence.
But it is just as important to deal with the consequences of the heavy spending that the festive period usually brings.
Here are 10 easy ways to sort your money and get your bank balance fighting fit again.
1. Pay more than the minimum payment
Don’t just pay off the minimum on credit cards: clear as much of what you owe as possible.
This reduces the debt faster and saves money on interest. And if you are paying interest, switch the debt if you can to a card with a 0 per cent per cent balance transfer deal.
Nerys Lewis, head of credit cards at Confused.com, says: "Moving a £3,000 balance to the current market-leading 0 per cent deal could save you around £981 in interest charges over 30 months."
This is based on switching from an average 17.9 per cent rate after paying balance transfer fees.
2. Never buy in bed
"Avoid using your tablet computer in bed at night," says Dr Dimitrios Tsivrikos, consumer and business psychologist at University College London.
"We tend to browse on sites we’ll end up buying from and if we’re bored it’s easy to seek the thrill of a ‘bargain’ online.
"Reality usually only dawns when the goods arrive, which is when we may regret those impulse purchases."
3. Draw up a budget
It’s never going to be an exciting job but drawing up a budget is worth doing to save on bank or card charges.
Jot down your income and tot up your spending, including mortgage or rent, food shopping, bills and train fares or petrol.
If you’re spending more than you’ve got coming in, look for ways to cut back such as checking you’re not shelling out on old direct debits for magazines, clubs or forgotten mobile phone contracts.
4. Shop when you’re smiling
"Avoid shopping when you’re hungry or emotional," says Professor Karen Pine from the University of Hertfordshire.
"These are the times you’re more likely to splurge, so stay away from the shops and do something that’s better for your health and purse, like visiting a friend or going for a walk."
5. Raid your savings
This isn’t for a spending spree but to pop them in your current account, as you might be able to earn more interest this way.
Most easy-access savings accounts pay less than 1 per cent annual interest.
But current accounts such as Santander’s 123 account pay up to 3 per cent on balances of £3,000 or more, providing you pay in £500 a month and set up at least two direct debits.
There is however a £2 monthly fee with this account.
And you can earn up to 5 per cent on balances up to £2,500 with Nationwide’s FlexDirect account, providing you pay in £1,000 a month. After a year the rate falls to 1 per cent so shop around again.
6. Get a diary
Being organised saves money. So jot down reminders a month before your car insurance and home insurance policies run out, for example.
This means you’ll have time to shop around and won’t fall into the trap of sticking with your existing insurer or risking not being covered.
Do the same with savings deals or for discounted credit card rates. Some 0 per cent card deals can last two years so without a reminder it’s easy to forget to switch if you’ve got a balance to clear.
7. Ignore your pay rise
"Use a pay rise to boost your savings and pretend you haven’t had it," says Pine.
"Or use the extra to overpay on a debt which makes far better use of that ‘extra’ income than if you simply spent it."
8. Clear your overdraft
Sounds sensible advice but if you don’t have cash savings how can you balance the books?
"Pay off your overdraft with a money transfer," says Lewis. "Credit cards that let you transfer money to a bank account can be a cheap alternative to a loan."
Shop around as only around 20 per cent of the cards on the market allow this super balance transfer. Fees are typically up to 4 per cent of the debt transferred.
9. Avoid the sales
Purchases you’ll use all year round such as laptops, sofas or cameras can be worth snapping up in the January sales, but be careful with clothes.
"Don’t buy anything just because it’s cheap," says personal shopper Jane Busby.
A fabulous party dress may seem like a bargain at less than half price but will it sit at the back of the wardrobe till next year?
"It’s only a bargain if it suits you and you’ve got an occasion to wear it," says Busby.
10. Get ready for Christmas
Ok so we’ve just had one but now’s the time to plan for next Christmas.
Start putting away a bit of cash each month. "Set up a direct debit for a fixed amount to leave your current account just after payday," says Pine.
And go for a cash ISA so you get tax-free interest. You can save up to £5,760 in the current financial year, which ends on 5 April.