YOU could be paying £5,946 extra a year without even realising it by making simple money mistakes.
We all know the most obvious financial pitfalls: impulse spending, racking up debt and failing to set aside money in savings.
But what about the “zombie” mistakes that quietly drain your finances each month, simply because life is busy and you haven’t got round to sorting them yet?
There’s no time like the present, so why not grab yourself a pen and paper and see what you can fix to save yourself hundreds…
Auto-renewing your car insurance (or leaving it until the last minute) – £1,371
When your car insurance policy is up for renewal, your current insurer will usually give you a quote about a month in advance.
You can choose to do nothing and just stick with that quote, and you’ll be automatically rolled onto the new policy when your current one is up.
But you can usually save yourself money by haggling for a better deal.
It’s generally recommended to buy car insurance 20 to 27 days ahead of your renewal to get the cheapest quotes.
Analysis by MoneySupermarket between January and April 2024 found the average quote made on the day of renewal was £2,277.
It was £906 when bought 26 days earlier – a huge difference of £1,371.
You should look around on comparison sites to see what other insurers are offering.
If you find something cheaper, you’ll need to let your current provider know.
Often they will try to match the cheaper deal you’ve found, which will help you cut down on admin.
Paying for subscriptions you don’t use – £400
We’ve probably all got a subscription or two we don’t make the most of, whether it’s a gym membership or a streaming service we rarely use.
Cutting out some of these “zombie” subscriptions could save you up to £400 per year, according to recent research by Nationwide.
The building society found 19% of subscribers don’t use every platform they pay for.
If you want to cut down, it’s worth going through your bank statements and noting down all the payments you make to subscription services.
Jot down when you last used them and the total cost – you may find there’s one you’ve forgotten about.
Double paying for your phone – £321
You could be among the five million people at risk of “double paying” on their mobile phone bill.
Double paying is when you come to the end of your mobile contract but your provider is still charging you the same amount monthly, even though you’ve already paid off the cost of your handset.
Phone providers are cashing in an extra £1.6billion because of our mistakes.
You can check if you are an unwitting double payer by texting INFO to 85075.
This is a free service that allows you to check if you are in or out of contract, and will also let you know if you would need to pay an exit charge to leave your contract early.
Uswitch estimates you could save an average of £321 a year just by switching to a SIM-only deal once your contract is paid off.
If you’re out of contract, use a comparison site to look at the best SIM only deals available.
Not switching onto a new mortgage deal – £3,036
If your mortgage deal is coming to an end, you should make sure you lock in a new one in time.
Not switching onto a new deal means you’ll likely be bumped automatically onto your lender’s Standard Variable Rate.
The average two-year fixed rate with 75% loan-to-value is currently 4.48%, according to Uswitch.
When it comes to Standard Variable Rates, the figure jumps to 7.25%.
If you still had £150,000 to pay off on your mortgage and got an average mortgage rate of 4.48%, you would pay £832 a month.
On a Standard Variable Rate of 7.25%, your payments would jump to £1,085.
Over the course of a year that would cost you an extra £3,036.
It’s worth starting to look for a new deal three to four months before your mortgage term ends.
You should shop around for the best rates – a mortgage broker should be able to help you with this.
Sticking with a low interest rate on your savings – £115
You could be missing out on free money if you don’t “ditch and switch” your bank every now and then.
That’s because if your cash is sat in a savings account with a low interest rate, you’ll be getting less return on your money.
If you had £1,000 sat in an account with a 2.5% interest rate, over five years you would earn £131.41 in interest.
But if you moved the same amount into the top-paying easy access account with a 4.5% interest rate, you would earn £246.18.
That’s an extra £114.77 you would earn without paying anything more into your account.
It’s worth shopping around for better rates on a regular basis and making sure you’re getting a good deal.
You should also be aware if your savings account has a “bonus rate” – this is an additional amount that boosts your interest rate for a fixed amount of time, usually a year.
For example, you might have an underlying interest rate of 3% but a bonus rate of 1% for a year, adding up to a rate of 4% for that year.
Make a note of when your bonus rate ends and aim to switch if you can find better deals elsewhere.
Keeping hold of your Help to Buy ISA – £571
If you have plans to get on the housing ladder, you may have opened a Help to Buy ISA before they were scrapped in 2019.
Help to Buy ISAs help you save tax-free and give you a 25% bonus on your savings when you buy your first home.
Savers who already hold Help to Buy ISAs can keep putting away up to £200 per month into the accounts until 2029.
But you could be losing out on money by not transferring to a Lifetime ISA instead.
Because there’s now little competition between banks on Help to Buy ISAs, the interest rates on the accounts have plummeted.
The best rate being offered now is 2.75% by HSBC. This is below the current rate of inflation at 3.2%, so you’re effectively losing money by keeping it in this account.
The top-paying Lifetime ISA account from Moneybox has an interest rate of 4%.
If you had £5,000 in the top-paying Help to Buy ISA and continued to pay in £200 monthly for the next three years, you would have £15,926 by 2029.
Moving your £5,000 to a Lifetime ISA and paying in the same amount over three years would leave you with £16,497 – an increase of £571.
Plus, you can pay in up to £4,000 a year into a Lifetime ISA versus the maximum of £2,400 for a Help to Buy ISA.
That means you can save faster for a deposit with a Lifetime ISA and also earn a bigger bonus.
If you maxed out your Lifetime ISA over the three years, you could increase your savings even more to £21,527.
If you are moving from a Help to Buy to a Lifetime ISA, you will need to request a transfer in from your bank to make sure you don’t lose the tax-free benefits.
It’s also worth looking into the pros and cons of having a Lifetime ISA before you decide to switch.
Not moving onto a new energy deal – £132
If your fixed energy deal has ended and you haven’t chosen a new one, your provider will likely move you onto their standard variable rate tariff automatically.
Standard variable tariffs are dictated by the energy price cap and they’ll move up and down with it.
If you’re on your energy provider’s standard variable tariff, you could be paying more.
That’s because the cheapest fixed deals are currently well below the energy price cap.
For example, if I were on my supplier’s standard variable rate tariff then it would cost me an estimated £795 a year.
If I switched to a one-year fixed deal with Ovo, it would cost me £663 – a total saving of £132.
Make sure you shop around for the best deal and use comparison sites such as MoneySavingExpert’s Cheap Energy Club.
