New Year’s Resolutions: Savings and Balance Transfers

More Brits are pledging to sort out their finances as a New Year resolution, as surveys of financial regrets show how priorities are changing.

According to First Direct, almost half of Brits have been unhappy with their financial position in 2011, compared with just over a third in 2010. The biggest regret listed for 2011 is ‘not saving enough’ (52%). 87% also regretted not making the most of their tax-free allowances.

This replaces ‘not paying off more debt’ (33%) and not paying more into pensions (14%), which were more prominent concerns at the end of 2010. People still see paying rent for property as wasteful compared to ownership; 12% said that they regretted not buying a house instead of renting.

The falling regard for pensions indicates greater concerns about the shorter and medium term future than the longer term during the economic slowdown. Families are seeking to build backup plans in the eventuality of job losses or cuts to state benefits.

The falling regard for debt, on the one hand, may reflect signs of confidence in the low base rate and a more competitive market for credit. On the other, it may be a sign that expectations about the ability to reduce debt are lower while the financial squeeze continues and real living standards continue to fall.

There is continued faith in property as a solid investment, with over one in ten expressing regret at staying in rented accommodation too long. The figures show, however, that there are different kinds of profligacy that Brits are prepared to tolerate. There were fewer regrets than 2010 about spending on expensive holidays or lavish weddings.

How, then, to turn these concerns into resolutions?

For savings, the focus falls on ISAs. With several months of the 2011-2012 tax year remaining, there is every reason to consider the range of short- and longer term ISA deals available. Which4U lists a wide range of variable rate cash ISAs (currently topped by the Nationwide at 3.1%), fixed-rate ISAs (currently topped by the Bank of Ireland’s 5-year product at 4.5%), and growth ISAs, such as L&G’s 5-year inflation-linked bond.

There is also the need to generate savings. A 0% balance-transfer is an ideal solution for consolidating credit card debts and reducing them more affordably. To pay less is, effectively, to save, making this move doubly proficient. Savings made on servicing debts can either go towards reducing the debt, or towards bolstering savings accounts. Barclaycard’s Platinum Card now offers a maximum of 24 months on a 0% balance transfer, making it an ideal New Year solution.

At Which4U, we wish you an excellent 2012, and we hope that we can help to make it better still.

Keith McDonald
Which4U Editor