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Five ways to manage your money better

We’re heading into September, bringing a ‘back to school’ moment for our finances. It’s time to check your sums and brush up your money management with five top tips from finance guru Abigail Foster. Are Premium Bonds back and better than ever? Is your cash nicer in an ISA? And what’s the latest insight all mortgage holders need to hear?

Abigail’s got the answers for your money overhaul this Autumn...

1) Premium bonds

What are premium bonds?

Premium Bonds are a savings account you can put money into where the interest paid is decided by a monthly prize draw. You buy £1 bonds and each has an equal chance of winning, so the more you buy, the more your chances improve. 

And are they popular?

Premium Bonds are the UK's biggest savings product, with more than 24 million people saving over £121 billion in them. + They've been around for years, and we are starting to see a resurgence. NS&I is increasing the prize fund rate to the highest level since March 1999 this week, increasing from 4% to 4.65%. The odds of winning in the Premium Bonds prize fund draw will also change, improving to 21,000 to one. 

2) Switching your savings account 

What are the benefits of a savings account?

For those with savings, you're being taken for a fool if your money in sat in an account to fester without a good rate 

The Financial Conduct Authority, which regulates banks, found that 40 per cent of all cash held in easy-access savings accounts with Britain's nine biggest banks was earning less than 1% in interest at the end of June. 

What are the best current rates?

Easy access rates are better than fixed accounts. Building societies and small banks offer better rates because they are trying to get people to notice them. The larger banks don't need to pull you in, in the same way. 

  • Furness Building Society - 5% 

  • Barclays Rainy Day - 5.12% 

  • Shawbrook Bank - 4.93% 

3) Understanding your payslip

What is a tax code:

Your tax code is used by your employer or pension provider to work out how much Income Tax to take from your pay or pension. HMRC will tell them which code to use. 

What do the letters and numbers mean?:

  • 1257L is the tax code currently used for most people who have one job or pension.

  • The numbers in your tax code tell your employer or pension provider how much tax-free income you get in that tax year. 

  • Letters in your tax code refer to your situation and how it affects your Personal Allowance. 

(C - welsh resident S - scottish, L- entitled to the standard tax free personal allowance) 

4) Understanding pensions

What is the difference between the state and workplace pensions?

The state pension and the amount you get is fixed once you cross the eligibility threshold and is provided by the government. A workplace is set up by you and your employer and what you put in it correlates to what you get out at pension age. 

Why is it so important to opt in to your workplace pension as soon as possible?

It is one of the most essential parts of retirement planning. Understanding the workplace pension isn't for everyone but people don't realise just how important it is. You are auto enrolled if you're over 22 and don't realise just how important it is. You are auto enrolled if you're over 22 and earning more than £10k a year. You could be leaving money behind as your employer may contribute towards your pension and if you opt out they don't have to contribute. 

5) Do's and don'ts of credit cards 

What would you say is the most important thing to remember regarding credit cards?

A credit card shouldn't be used to plug gaps in your income, there are benefits of course, from reward schemes and cash back but you should only spend within your limits. "Using a credit card in this way can be seriously damaging to your credit score. Many people see credit cards as 'free money', often because they haven't been educated correctly, so they can quickly rack up debts. It is all about forming good habits.' 

What are the benefits to using a credit card? 

Purchase protection: sometimes there could be a problem with your purchase, with credit cards, you have buyer protection for any purchases made on the card between £100 and £30,000. That means you can claim your money back from the card provider if there's a problem. 

Spreading out the costs: If you need to make a big purchase, a credit card lets you pay over several monthly instalments. Helping with budgeting and, as long as you ensure you make your repayments, it won't leave a huge hole in your finances 

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