Five Money Habits that should be Extinct

By Nathan Lee, TLE Correspondent

None of us are perfect, but being a dinosaur with your dough can cost us hundreds of pounds each year.

From auto-renewals to payday loans, there are a copious amount of money traps out there eating into your bank balance, which is why now is as good a time as any to be reviewing how you deal with your personal finances.

As Jurassic World roars into UK cinemas this week, Money Expert Andy Webb from the Money Advice Service has taken a look at some scary money habits that really should be extinct.

1)    Make it extinct: The Auto-renewasaurus

We’ve all been drawn in by a great subscription deal from our gym, broadband provider or insurance policy, but letting this roll over could be costing you dear. Whether you feel like you don’t have time to cancel or switch, or simply don’t like to change, you could be losing hundreds of pounds each month to the auto-renewasaurus.

21^st century tip: Cancel those autorenews and consider switching providers

Take half an hour to go through your bank statement and pick out any regular payments for subscriptions. Ask yourself if you are making the best use of them and if the answer is no cancel the subscription. There is more information about how to cancel subscriptions on the Money Advice Service website.

You could also be saving money by reviewing your service providers for energy, broadband and insurances or by switching bank accounts. There are some great deals out there at the moment so take a look at the Money Advice Service website for tools and information to help.

2)    Make it extinct: The Veloci-Payday-Loan-raptor

A payday loan might get you some quick money, but like trying to outrun a velociraptor, it might not be the best idea. There are plenty of alternatives to help you get your hands on the money which don’t have such a big bite.

21^st century tip: Be creative about finding the money instead

If you need money for something important, why not try some of these first:

• Release some money by selling some things that you don’t need.
• Ask for a pay advance
• Borrow from friends or family
• Use a credit card – Try finding one with 0% interest
• Use an authorised overdraft
• Borrow from a credit union
• Get an interest-free loan from the Social Fund

Why not take a look at our pay day loan advice tool for more ideas about how to source the money you need.

3)    Make it extinct: The minimum-asaurus

Although this is preferable to missing a repayment altogether which would impact on both your credit rating and your wallet, only making the minimum repayment is never a good idea.

If you pay back a percentage of the debt each month, the amount you actually knock off the debt will keep getting smaller. This means it can take years for you to clear the money you owe. And in all that time, you’ll keep accumulating interest.

21^st century tip: Pay off as much as you can each month

The best option is to pay off as much as possible each month. Choose how much you can afford and pay that same amount (or more) via a Direct Debit.

4)    Make it extinct: The Tyrano ad-hoc-asaurus Rex

We’ve all been there, you get the email about your monthly bill which you fully intend to pay on pay day or on an ad-hoc basis and then promptly forget it until you receive a warning that you’ve been charged.

21^st century tip: Pay by Direct Debit

Setting up a regular direct debit or standing order can help you avoid penalties and fees for missing payments. For many bills, paying by Direct Debit can save you money as well. It is worth reviewing these regularly to make sure you still need the items you are paying for and that you are getting the best deal.

5)    Make it extinct: The Bronto-matressaurus

One of the worst ways to stash your cash is to hide it under the mattress. Money really is better off in a bank where it is safe and secure and you can help it grow.

21^st century tip: Pop it in a bank account

Putting your money in a savings account will allow you to earn interest. With current account providers competing for your business, there are some high interest rates available that don’t lock your money away for years. If you are considering making long term savings then take a look at ISAs and savings accounts. Find out more about choosing a bank account here on the Money Advice service website.

The Money Advice Service has plenty of information available to help you make the most out of your money. Just visit www.moneyadviceservice.org.uk .