the 60 second daily money tip

Do you have a piggy bank?

2007-09-14T09:36:00.000-07:00

Six months ago we started a piggy bank (actually a large Evian bottle with a slot carved into it) to see how much our loose change would add up to. To our surprise, we managed to accumulate over £75 simply by putting all our left over 1p, 2p, 5p, 10p and 20p coins into the piggy bank.

Even better though was our discovery of our local Coinstar machine at Sainsburys. Instead of spending hours counting and individually bagging your change, you simply tip your piggy bank into the Coinstar machine and it counts it for you. They charge a fee of 7.9%, which is high, but arguably worthwhile if you don't have the time to sit around counting...

So start that piggy bank today and see how much you can save. Coinstair reckon that there is over £400m of loose change floating around in British homes today!

Why you should start investing NOW

2007-09-13T09:52:00.000-07:00

The Motley Fool (http://www.fool.co.uk/) is one of our favourite financial web sites and today our tip is simple - go and read the article entitled 'The Miracle of Compound Returns'.

Not only are the calculators extremely useful - one showing you have much you'll end up with if you save a certain amount per month, the other showing you how much to save if you have a specific goal in mind - but the discussion of compound returns is illuminating.

The temptation to spend all our disposable income when we are young is palpable, but just by putting away a small amount each month, every month from the day we start working, we can end up with quite a formidable sum.

Suppose you start work at the age of 25 and set aside £50 a month for 30 years into a FTSE 100 Index Tracking ISA which returns 12% a year (the average return of the stock market). You'd end up with £184,009. If you increased your monthly contribution as your salary rose (which you should do!), you could end up with double or even triple this amount.

Our top tips:

Start investing as early as possible
Just £50 a month invested over a long period can end up producing a very large sum of money - don't be put off investing because you think £50 a month isn't worth it...it is...
Finding £50 is easier than you think - cut £25 from your weekly budget (cigarettes, alchohol, cutting bills, eating in, etc.) and add £25 to your income (Quidco, Ciao, ebay, etc.)
However, don't overstretch yourself - any stock market linked investments need to run over a minimum of 5-10 years to smooth out any ups and downs in the market and selling before this time is up could result in losing some of the money invested

Thinking about buying a house or flat?

2007-09-12T10:21:00.000-07:00

The housing market is currently full of uncertainty...

Will interest rates rise or fall?
Will buy to let tax relief be abolished?
How many homes will Gordon Brown actually build and will it make a difference?

In such a climate, making sure that you drive a hard bargain is crucial. Our view at the 60 second daily money tip is that buying a house or flat (at the right price) is the best investment you will ever make. But before you rush off to the estate agents' office, remember that we said 'at the right price'. When the market is perceived to be high, you need to make sure that:

you are buying for the long-term
you can afford the monthly repayments even with several interest rate rises
you stick to the mantra of 'location, location, location' or find an area that is genuinely up and coming (look for: new builds, scaffolding on existing properties, more young people)
you love the property (this is not something most financial web sites would say, but if prices go down and you love your home, you are going to be happier staying put than if you bought a boxy, characterless flat in desperation to get on the property ladder)

Here is a great web site to work out whether it is more cost effective to rent or buy:

Mortgage v. Rent calculator

And another fantastic web site which shows which properties are being reduced around the country (a good way to find a bargain):

Property Snake

Although the current market isn't great for home owners looking to sell, it is a real advantage to buyers. Not only is there potential for a plateauing in prices (or even a slight fall) (we do not believe there will be a crash, at least in the South East where we are based), but the market has slowed and given much needed breathing space for home hunters. Take advantage of it.

Fantastic fixed-rate savings deals

2007-09-11T09:58:00.000-07:00

On Friday we looked at the best instant access savings accounts; today we are looking at the best fixed-rate deals if you can afford to lock your money away for a year or longer.

The reason for the sudden surge in very competitive deals is interesting (or at least we think so!).

As you are probably aware, we are in the middle of a so-called 'credit crunch'. Basically, the banks (and other third party lenders) have lent too much money to people who are struggling to re-pay it and now need some more to continue their traditionally profitable business of lending. In order to get this money into the system, banks need to lure savers with good offers, hence the emergence of highly competitive fixed-rate savings deals over the past few weeks.

Leading the pack is Derbyshire Building Society with a one year fixed rate of 6.85%. Other places to look include: West Bromwich Building Society, Northern Rock, Heritable Bank and Icesave. Whilst there is not a huge difference between the rate offered with these fixed rate deals, bear in mind that some economists are predicting that interest rates could fall quite rapidly in 2008 to help buoy up the economy. Perhaps now is a good time to lock away some cash?

If you don't yet have any cash to lock away, take a look at our growing guide to making money online.

Make a little extra money online

2007-09-10T09:22:00.000-07:00

The internet is full of scams and bogus offers to make you rich. However, if you dig a little deeper, you will find that there are a number of companies which offer a genuine opportunity to make a little extra money on the side with a little extra work.

If you're a regular reader, you'll already know that we love Quidco, a web site that allows you to earn cashback with thousands of popular companies, and that we think Agloco is worth signing up to on the basis that there is no risk and you may get paid a few dollars a month just for having an unobtrusive little bar at the bottom of the screen.

Now we're adding Ciao to this list of reputable money making web sites. As always, we test sites thoroughly before recommending them to our readers and we've had an account at Ciao for some 6 months now during which time we've earned over £15. All you have to do is sign-up to receive surveys and then answer them - each survey pays from a few pence up to over £1.

As with investing, where broad exposure to different companies/asset classes is best, we believe signing up to multiple, high-quality money making web sites is the best way to maximise your online income. The added benefit with Ciao is that you get to influence the behaviour of big companies too.

Click the banner below to sign-up with Ciao:

Is your savings account a good one?

2007-09-07T10:09:00.001-07:00

Yesterday we discussed moving current accounts to get a high rate of credit interest on your money. Since most of these high paying current accounts have a maximum balance on which the competitive interest rate will be paid (except for Coventry Building Society with their Coventry First account), you need to find a home for any money left which exceeds this limit.

As is the case with most financial products, the market has become increasingly competitive over the past few years. ING started the war with its instant access savings account (now totally uncompetitive) and others have followed.

The three leading companies for hassle free, instant access savings are Icesave (run by the Landsbanki, an Icelandic company), Sainsbury's Bank and ICICI (run by ICICI Bank of India). Icesave currently pays 6.2%, Sainsbury's Bank 6.25% and ICICI 6.3%.

If we were selecting a new account, we'd rule out ICICI immediately as they are not a signatory to the Banking Code, meaning that you do not get the full protection afforded by UK banking regulations. There is not much between Sainsbury's and Icesave, although we do have an Icesave account and have been very impressed by the simple web site and responsive customer service.

Setting up a new savings account is so easy and can be done online within about 5-10 minutes. If you don't fancy the hassle of switching your current account (which really isn't that much hassle nowadays) get yourself a high paying savings account and make sure you put most of your money in there where it will work harder for you.

If you've already used your ISA allowance for the year, using a high interest savings account as your emergency fund is the next best option.

Would you be better off with a new current account?

2007-09-06T09:18:00.000-07:00

Most current accounts pay a pitiful rate of credit interest, but renewed competition between banks and building societies means that there are some excellent deals available if you are prepared to switch.

Leading the pack is Alliance & Leicester with current accounts that pay 10% credit interest if you are between the ages of 16 and 21 and 6.50% for everybody else. However, if you're not in the 16 to 21 age bracket, you'll be better off with Abbey who are paying 8%. Other places to look include Lloyds TSB with their 6.4% Current Plus account and Coventry Building Society with their Coventry First account (this account paying the interest rates on balances up to £250,000 rather than the usual £2,500 limit).

Switching accounts takes time, but once you've filled out a couple of forms, your new bank should take care of all the arrangements, including switching your all important direct debits and standing orders to make sure you don't miss any payments.

Before switching make sure that:

You will be able to pay in the minimum required amount each month to benefit from the high interest rates
You will not be using an overdraft and, if you plan to, make sure that the interest rate on this is competitive (some of these accounts rely on people going overdrawn and then stinging them with high debit interest rates)
You have a separate high-interest savings account to put any extra money in - any amount over the maximum will receive a very low and uncompetitive rate of interest

By switching from a bank account paying just 0.1% interest to Abbey's 8% rate, you could make an extra £200 a year before tax.

Save more on your supermarket shopping

2007-09-05T10:03:00.000-07:00

A short tip today.

Whilst most of us spend time comparing prices on most things we purchase, how many of us have the time and inclination to compare the cost of our weekly supermarket shop across all the major supermarkets?

We think the answer is probably none.

Thankfully, a new web site promises to do all the leg work for us and compares prices across Tesco, Asda, Sainsbury's and Ocado. The only caveat we'd add, is that the deep discount stores, such as Aldi and Lidl, can offer even better prices on some goods, although it's a matter of trial and error to discover which products are of comparable quality with one of the main supermarkets.

Click here to go to mysupermarket.com and compare the price of your weekly shop.

Once you have visited mysupermarket you may also be interested in our tip on comparing petrol and diesel prices in your area.

Install a water meter and save?

2007-09-04T10:03:00.000-07:00

Cutting the cost of your water bill is not as simple as cutting the cost of your gas and electricity since there is no competition between different water companies (when the sector was privitised they simply carved up the UK for different water suppliers, e.g. Thames Water in London, and gave them a monopoly over their designated territory).

In view of the above, the only way to cut your water bill is to voluntarily apply to install a water meter.

At the moment, houses without water meters have their bills assessed based on their rateable value (how much they could be rented out for), which has absolutely no bearing on the amount of water used. Accordingly, if only one person lives in a house with a high rateable value, they will likely be paying over the odds for their water and could be better off with a meter.

There are two ways to check if you could save:

Go to uSwitch.com and use their water calculator
If you get a good indicated saving from uSwitch, call your water company and get them to do the calculation (this will be more accurate)

If you decide to go ahead with installing a water meter, you could save a couple of hundred pounds a year, but there are a couple of drawbacks. First, although you have the option of going back to your unmetered bill if you don't save with the meter, subsequent purchasers of your property won't and will be stuck with the meter. Second, the pipework between the meter and your house becomes your responsibility and, in the unlikely event it leaks, could cost you a small fortune to put right. Third, you'll now have to watch you water usage more carefully (this is also a good thing for the environment though!).

We'd be very interested to hear what sort of savings people achieve so please do get in touch.

Get out of debt - the next steps

2007-09-03T09:28:00.001-07:00

In our first article on getting out of debt, we looked at how to breakdown what you owe, negotiate better rates on your outstanding balances and create a plan to pay them off.

In the second installment, we offer specific advice on how to deal with the different kinds of debt that you may have outstanding. Some of these are readily transferable and, therefore, easier to negotiate lower rates on; others are almost impossible to move and require a different approach.

Step 1

Identify whether the debt is transferrable or not (you'll soon find out if you call up your provider and say that you want a better rate otherwise you'll move to another company). As a general rule, certain types of debt will be difficult to transfer (mortgages, car finance packages and personal loans) whilst others will be far easier to move (credit and store card balances).

Step 2

Move those that you can. For credit and store card balances you should find the best balance transfer offer, taking into account both the length of the interest free period, the level of the balance transfer fee (charged as a percentage of the transferred balance) and the required minimum payment each month. Go to uSwitch.com and click on credit cards. A good offer at the moment is the Virgin Money Mastercard which is offering 15 months 0% interest on balance transfers with a 2.98% fee.

By transferring your outstanding store and credit card balances to a 0% card, and continuing to pay at least the minimum each month, you will increase the available funds you have to tackle your less easily re-negotiated/transferrable debts.

Step 3

With those debts that you cannot move or re-negotiate (hopefully not too many fall into this category), start a dialogue with your lender. The sooner you speak to the lender, the more help they will be able to provide. Whatever you do, always try and pay your required installments on time - as soon as you get behind with payments, your lender will start to get jittery. Use the extra money you have from paying less on your credit and store cards to help.

Remember also that reducing your debt through negotiation is only one way of dealing with the situation. Another is to try and increase your income. Think about other ways of making additional cash (selling items on eBay, delivering flyers round your neighbourhood, taking a second job) to try and meet your obligations.

In the next tip, we'll be looking at a number of ways to drive down the cost of everyday goods to help free up money to pay off debts.

Debt is a serious problem, but there are ways out. If you need free specialist advice, please go to the Credit Action web site. They have a freefone helpline number and lots of useful articles to download.

Abbey launches a 5% cashback card

2007-08-31T10:12:00.000-07:00

First Capital One and American Express launched 4% and 3% cashback offers (click here for details), now Abbey is throwing down the gauntlet and offering a 5% cashback card.

So what's the catch?

Well, (i) it only applies to the money you spend in a major supermarket and (ii) the total amount eligible for cashback is limited to £1,000. But this is still a cracking deal. Just for applying for this credit card and using it at the supermarket, you're getting £50 of free cash to use as you wish.

The usual cautions apply:

Pay off the balance in full each month (or, if using the 3 months interest free period on purchases, make sure you pay off the balance in time and budget accordingly)
Don't apply for more than 3-4 credit cards a year as this has the potential to damage your credit rating
Make sure that you confirm with the Abbey that the card can be used in your favourite local supermarket...you wouldn't want to have to travel miles just to use the card
When you've got the cashback (and not before!), cancel the card and move on to the latest offer (staying with cards that give you nothing back for your spending is just plain silly)

Agloco - controversial but profitable?

2007-08-30T10:55:00.000-07:00

Agloco is a new venture which promises to pay you money for downloading a small advertising bar, placing it at the bottom of your screen and surfing the internet as normal. If you refer friends, you will also get paid money for the time they spend on the internet. Sounds like a scam you say? Well, yes, to some extent it does, but suspend your disbelief for a few moments...

Agloco is brought to you by the same people who launched AllAdvantage during the dot com boom. Despite burning through investor money and collapsing (along with hundreds of other start-ups), Alladvantage was unique in that it did actually pay out money to its members. (I received over $250 during a 3 month period before it all went south - Ed.). Further, it is true that advertisers will pay a lot for targetted advertisements and there is no reason why this revenue cannot be shared with the end user.

Perhaps this time, they have learnt from their mistakes and will build a sustainable business?

Before you rush off to sign-up and start referring friends, here are the key pros and cons:

Pros

No cost to sign-up (we'd avoid spending any money to attract referrals)
Advertising bar is non-intrusive, taking up only 1cm at the bottom of the screen
You may earn a few dollars a month which is better than a kick in the teeth

Cons

Lawyers tell me that there is no obligation on the operators of the company to pay out a share of the revenues since they will only do so when they consider the total amount of revenue to be 'sufficient'
If you are very concerned about your privacy, you may not want Agloco tracking your web surfing habits (though you can turn it off if you want)
Trying to refer friends is tough and you're earning potential is limited if you don't

To sum up, Agloco is an interesting opportunity - there is no cost to sign-up and it will only take 5 minutes of your time...

If you prefer a sure thing, have a look at one of our favourite sites, Quidco.

How to get started with investing

2007-08-29T09:55:00.000-07:00

Investments can take many forms - shares, bonds (government and corporate), unit trusts, direct investments in private companies, property, art, wine, etc. - and your portfolio should contain a lot, a little or none or each of these asset classes depending on your attitude to risk and the length of time you can leave your money to grow.

Today we are going to look at unit trusts.

Unit trusts are essentially a pool of money which investors pay into to get exposure to certain asset classes. For example, you could buy a FTSE 100 share tracking unit trust which will track the performance of the 100 largest shares in the UK. For a small investor, it would be enormously expensive (with buy/sell fees) to buy a tiny holding in 100 shares and then constantly readjust it as the value of the companies within the FTSE 100 change and companies drop in and out of the index. A unit trust allows you to get the broad exposure you want to build a well balanced portofolio in return for a small fee.

Research is absolutely key when it comes to making investments and we would highly recommend looking at a web site called Citywire (click on the Fund Peformance tab), which shows the performance of nearly every unit trust available in the UK today. When looking at performance, remember not to be won over by the 3 month and 1 year performance and look for a fund that is consistently ranked in the top 25% and has a highly rated manager.

Before you go off to Citywire and see what sort of returns you might have achieved by investing in unit trusts, here a few key things to think about:

Fees can eat into the return you make on your investment. In general, the cheapest unit trusts our trackers and the most expensive are those that are actively managed in niche market sectors (for example, emerging markets or commodities). An index tracker can be a great place to start from just £50 a month.
Paying in a lump sum is more risky than paying in a small amount per month. This is because of a phenomenon known as pound-cost-averaging: by paying in each month, every month, you buy more units when the market is down and less units when the market is up, which smoothes out returns.
If you haven't already used it, make sure that you invest in a unit trust in an ISA so that you benefit from favourable tax treatment on your returns (unit trusts are subject to capital gains tax otherwise).
Finally, do not be swayed by the impressive returns from certain niche sectors. At the moment, some China funds have returned 30%+ over 3 months, but these funds are more volatile than others and can drop significantly in detiorating economic conditions (remember everybody over investing in technology in 1999/2000). That's not to say you couldn't have 5% of your portfolio here if you take a long-term view, but it is a case of buyer beware.

Cutting the cost of your home telephone service

2007-08-28T11:49:00.000-07:00

In previous posts, we've explored how to cut the cost of your electricity and gas and how to find the cheapest petrol and diesel. Now we are going to look at how to reduce the cost of your monthly landline bill.

In order to find the best deal, you need to work out how much you use your home phone and when you make calls. Most providers now offer packages with free bundled calls (weekends, evenings or 24/7) which can save you a great deal if you use the phone a lot.

Regular landline users

For those who regularly make calls from their landline, the best starting point is a price comparison site (see our regular favourites uSwitch.com and Energyhelpline). These allow you to enter details of the calls you make (time of day/week, number of calls, etc.) and then show you which provider is cheapest. From personal experience, we are a big fan of Primus' service as they offer very cheap packages and a good online billing platform.

Infrequent landline users

For those who rarely use their landline (perhaps you just need one for the internet or to receive calls), you need to chose the provider with the cheapest monthly line rental. At the moment, BT charges £11 a month (discounted to £10.50 if you sign-up for online billing), but the Post Office charges just £9.95 (a saving of £1.05 a month off BT's regular price). For more information and to sign-up with the Post Office, click here.

Cutting your monthly expenses is one of the easiest ways to increase the amount of money you have left at the end of each month. Why not follow our tips, cut your bills and then earmark the money you have saved to start an investment nest egg?

Credit cards are NOT always evil - Part Deux

2007-08-03T08:13:00.000-07:00

As most of us head off for our summer holidays we are unlikely to pay much attention to how much our credit or debit card company charges us for spending money abroad, but we should. 99.9% of card providers charge a whooping 2.5-3% 'loading' whenever you spend money abroad, adding up to £3 for every £100 you spend. Cunningly, this figure is not clearly displayed on your statement, but instead incorporated within the exchange rate. Beware.

Thankfully a couple of credit card providers have seen the light and offer credit cards with no loading. Our favourite is the Post Office's card since it offers no extra charges when using the card abroad, a 3 month 0% interest rate on purchases (and a favourable rate thereafter) and also allows you to transfer balances at 0% should you want to (we'll address 0% interest cards more fully in another tip, but essentially they allow you to pay no interest for a set period provided you continue to make the minimum repayment).

So far so good - apply for the Post Office card and you'll save a good wedge on your next holiday.

However, be careful when withdrawing cash. Typically you will want to do this on your debit card otherwise you will be charged interest from the day you withdraw the money to the day your pay your credit card bill (these so-called cash advances on credit cards should be avoided at all costs). We'd advise getting out a good chunk of cash on each visit to the cashpoint to minimise the charges and trying to use your credit card in as many places as possible.

We are now off on holiday for 3 weeks and will be back on 27 August all being well. If you like what you read here, please do tell your friends. If you don't, please tell us as we want this to be the best blog on the internet for snappy, savvy financial advice.

Make £4 and get DVDs free for 30 days

2007-08-02T08:15:00.000-07:00

In our first two cashback tips we explained how to make a minimum of £39.50 with only a few minutes of your time. If you haven't read these tips yet, then click here and here to get up to speed. This week, we're explaining how you can make £4 and get DVDs free for 30 days (not so much cash, but more time to enjoy your free DVDs).

Here's the deal:

(1) Sign in to Quidco
(2) Search for 'WHSmith' and then click to sign up for the free 30 day trial (as before, ensure that you clear your cookies first)
(3) Enjoy your free DVDs for 30 days and then make sure you cancel before the expiry of the free trial (obviously if you like the WHSmith service and think it's good value you could carry on, but we're looking at this solely as a money maker and so would cancel)

How simple was that? Another £4 in your Quidco account. Assuming you signed up for all the offers we've mentioned, you've now earned a minimum of £44.50.

Why paying more than you have to isn't always bad

2007-08-01T08:14:00.000-07:00

Buying a house is the biggest financial commitment most of us ever make and our mortgages are likely to be our biggest single debt. Most people accept that they'll be servicing this debt for 25 years, sometimes more, and that having a mortgage is simply a fact of life, but it doesn't have to be this way.

Making regular or one-off overpayments to reduce the outstanding capital can reduce your mortgage term significantly and save your thousands of pounds at the same time. Before you get started, there are four key things to consider:

(1) Does interest accrue on a daily, monthly or annual basis?
If it is daily, you can make overpayments at any time and they will have an immediate impact. If it is monthly or yearly, wait until the end of the month or year and keep the money in a high interest savings account until then

(2) Is there a limit to how much you can overpay?
Some mortgages cap the maximum you can overpay at £500/month or 10% of the outstanding balance. If you go over these limits there will likely be significant penalties and it is usually better to hold the money in a savings account until you can make the overpayment without incurring penalities.

(3) Could your money be better off elsewhere?
If you can earn a higher rate of interest than your mortgage rate by saving or investing the money (taking into account tax) then it may be better to do this and hold off overpaying. In any case, you should definitely max out the cash element of your ISA (for more on ISAs, click here) as these offer a high tax free return. In essence, this is about balancing risk - some people want to get rid of the mortgage as quickly as possible so they are secure in their homes, some take a slightly more bold approach and look to invest to get higher returns than their mortgage interest rate.

(4) Is there a possibility you may need access to cash soon?
Overpaying is great because it saves money, gets rid of the mortgage more quickly and, for basic rate and higher rate tax payers, is likely to offer a better return than most savings accounts. However, it is rarely possible to get back the money you have overpaid and you should always ensure you have a sufficient emergency fund before you consider overpaying (for more on emergency funds, click here).

How much will you save?

Check out this calculator from Channel 4 to find out. By way of an example, overpaying £50 on a £100000 mortgage over 25 years reduces the term by 3.7 years and saves £15019.24.

How much are you paying for gas and electricity?

2007-07-31T08:14:00.000-07:00

Becoming financially secure is about maximising your income (by getting qualifications, promotions, working overtime, etc.) and minimising your outgoings. The latter is far easier and less timing consuming to achieve than the former, yet people still don't pay enough attention to how much money is leaving their account unnecessarily each month. Utilities, and gas and electricity in particular, are essential items of expenditure, but why not pay as little as we can for them?

Before the creation of comparison sites it was almost impossible to accurately compare the different companies and their tariffs, but thanks to some technical wizzardry we can now find out which tariff will be cheapest for us in about 5 minutes. We ran the same figures through the main comparison sites and they all came out suggesting we should switch to Scottish Power Online Energy Saver 4 (which we've duly done and saved over £150 a year...thank you very much!).

Now it's your turn....

uSwitch.com
Energyhelpline

Do let us know how you get on and how much you save.

Find the cheapest petrol and diesel

2007-07-30T08:07:00.000-07:00

The cost of motoring in the UK increases on an almost daily basis, but now, thanks to a frankly brilliant web site, it's possible to drive down the cost of fuel by comparing the price of petrol and diesel within a 10 mile radius of your home or office.

Although you may think the savings are barely worthwhile, the range of prices on the site is actually pretty wide. The cheapest unleaded is 93.7p/litre whilst the most expensive is 107.9p/litre. The cheapest diesel is 93.9p/litre with the most expensive coming in at 106.9p/litre. Assuming you drove 10,000 miles a year, and your car does 30 miles to the gallon (6.6 miles per litre), you'd spend £1419.70 on petrol at the lowest price and £1634.85 at the highest price, resulting in a potential annual saving of £215.15.

In reality it's unlikely to be so extreme, but prices within your area may vary by up to 5p/litre so it is well worth shopping around. Two further tips I picked up from the site were: (i) avoid premium/performance fuels unless you're got a Ferrari F430 (or similar) and (ii) don't drive 10 miles each way to pick up fuel that is only marginally cheaper as you'll wipe out the saving!

Check it out, Petrolprices.com.

Credit card are NOT always evil

2007-07-27T07:58:00.000-07:00

You heard it here first. Despite the fact that credit cards are partially responsible for the huge level of personal debt we shoulder in this country, they can also be used to our advantage. That's right, if you're debt free (or near enough) and disciplined, you can use credit card to make money.

Really?

Yes.

Credit card companies charge shops, businesses, etc. 3-5% of the purchase price for the privilege of accepting their credit card. Usually the credit card companies keep all of this and laugh themselves all the way to the bank (ha ha). But some have seen the light and offer cashback cards which do exactly what it sounds like - they give cash back on every purchase you make. Whilst the percentages have never been that big before, Capital One and American Express have come out and thrown down the gauntlet to their rivals with stonking introductory and ongoing rates.

Capital One

This card offers 4% cash back in the first 3 months and 1% thereafter. If you're thinking about doing a big purchase using cash, why not use the card and get cashback? Say you're doing some home improvements (new kitchen, bathroom, whatever) and you spend £8,000. Using the Capital One card, you'll get £320 at the end of the card's first anniversary. Brilliant.

Click here if you want to apply for this card.

American Express

This card offers 3% cash back in the first 3 months and then tiered cash back up to 1.5% thereafter (0.5% for aggregate amounts up to £3,500; and 1% for aggregate amounts from £3,501 to £10,000; and 1.5% for aggregate amounts in excess of £10,001). This means that you'll be better off with this card in the long run if you spend in excess of £20,000 per annum. One for the big spenders then.

Click here if you want to apply for this card.

Remember, using cashback cards is only worthwhile if you pay off the balance in full every month. Start paying interest, and the benefits quickly disappear.

Make £14.50 and get DVDs free for 14 days

2007-07-26T08:13:00.000-07:00

Last week we explained how to make a minimum of £15 in 15 minutes using Quidco. If you haven't read this tip yet, then click here to get up to speed. This week, we're explaining how you can make £14.50 and get DVDs free for 14 days.

Here's the deal:

(1) Sign in to Quidco
(2) Search for 'Lovefilm' and then click to sign up for the free 14 day trial (as before, ensure that you clear your cookies first)
(3) Enjoy your free DVDs for 14 days and then make sure you cancel before the expiry of the free trial (obviously if you like Lovefilm and think it's good value you could carry on, but we're looking at this solely as a money maker and so would cancel)

How simple was that? Another £14.50 in your Quidco account. Assuming you also signed up for Galabingo, you've now earned £39.50. We'll say that again, just by visiting the 60 second daily money tip and following our tips, you've made £39.50 without leaving the comfort of your computer chair.

Get out of debt - the first few steps

2007-07-25T00:47:00.000-07:00

More Britons than ever are in debt, with each household owing an average of £8,816 (excluding mortgages) according to Credit Action. There are some good types of debt (for example, a sensible mortgage or a business loan to develop a well thought out new business idea), but a lot of people fall prey to the temptations of bad credit by putting non-essential purchases on credit cards, store cards or by raising personal loans.

Today, we are going to look at the first few steps when making a plan to get out of debt. Like most things, it requires commitment and determination and, often, cutting out unnecessary expenditure from your monthly budget (this could be cigarettes, eating out, going to the pub, etc.). When times our tough, remember than getting out of debt is the first, and arguably most important, step on the way to building wealth and securing your future.

Step 1

Sit down and work out exactly what you owe and what the interest rate is. If you are not sure, ring the credit card/store card/loan provider and ask. Although it might be intimidating at first, putting it all down on paper (or into a spreadsheet for computer whizzes) is an important step.

Step 2

Once you've worked out how much you owe and at what rate, it's time to pick up the phone and do some negotiating (make sure you don't call 0870/0871 numbers - click here to find out why). Phone every company and ask them to reduce your rate. This works particularly well with credit cards and store cards since there are now a lot of 0% offers in the market and you can use this as a bargaining tool. Don't be shy. Threaten to leave if you need to. If you're not having any joy, persist and ask to speak to supervisors.

Step 3

With your new lower rates (hopefully) update your table. You should now aim to pay off the debt with the highest interest rate first as this is costing you the most money. If there is a small debt with a lower rate of interest that you can get rid of quickly, you might want to blast this out of the way so you can cross one debt off your table (a good morale booster). Whilst you're tackling the most expensive debt, don't forget to keep paying the minimum repayments on the others. Update the table after each payment you make and each debt you clear.

In the next tip, we'll be covering what to do if you can't get your rates lowered.

Debt is a serious problem, but there are ways out. If you need free specialist advice, please go to the Credit Action web site. They have a freefone helpline number and lots of useful articles to download.

What is an ISA?

2007-07-24T08:08:00.000-07:00

ISA stands for Individual Savings Account and they were introduced by the government to encourage more people to save. They do this by providing tax-free returns on a range of different investments (cash, unit trusts, shares, etc.) and they are split into Mini ISAs and Maxi ISAs. You can have two Minis or one Maxi each tax year.

Having two Mini ISAs allows you to put up to £3000 into a cash ISA and up to £4000 into a stocks and shares ISA. If you opt for the Maxi ISA, that's £7000 just in stocks and shares. These limits are reviewed each tax year and should be increasing soon.

Today, we are concerned only with Mini Cash ISAs. These should form the bedrock of your cash investments and a Mini Cash ISA would be the ideal vehicle for an emergency fund (for more on emergency funds, click here). The maximum contribution of £3000 per year is equivalent to £250 per month. The only time a Mini Cash ISA is unsuitable is if you need to move money in and out on a regular basis, since each time you put money in you use up a proportion of your £3000 annual allowance which is then gone forever.

There are many providers of Mini Cash ISAs, with the best paying over 6% interest.

To understand the benefit of tax-free returns, have a look at the following example:

Mr X pays £3000 into a Mini Cash ISA at 6%. Mr Y pays £3000 into a regular savings account at 6%. At the end of the year, Mr X will gain £180 in interest (not too shabby). Mr Y, on the other hand will gain only £108 as a higher rate tax payer or £140.40 as a basic rate tax payer.

To get started and find the best Mini Cash ISA for your situation, check out moneysupermarket (ensure that you click on 'Mini Cash ISAs' in the first column). For those with a minimum of £1000 to start, the National Savings and Investment Direct ISA (6.3%) or the Guaranteed Performance Mini Cash ISA from BMW (6.7%) might be of interest. ING Direct also has a 6 month introductory offer at 6.55% with a minimum deposit of just £1, but it then reverts to a not particularly inspiring 5.13%.

Have you got an emergency fund?

2007-07-23T08:09:00.000-07:00

What would happen if you lost your job?

How would you pay the mortgage/the rent/the bills?

The answer most people give is 'I don't know'. Even though it's not a particularly pleasant thing to think about, it's important to have a financial plan that allows us to keep strutting even when things go slightly awry. Experts advise that we should have 3 months worth of our salary in a readily accessible savings account. This is pretty tough to achieve, especially with inflation and increasing taxation constantly diminishing our take home income. Still, it's a good idea.

In the event that having this much cash set aside is just unimaginable then you should do a couple of things:

(1) Open a new savings account (preferably one that pays over 6% gross) and set up a standing order/direct debit for £50/month or £20/month or whatever you can afford. By making this payment automatic, you'll grow accustomed to it simply leaving your account and get used to living on your take home income minus the amount you are paying into your new emergency fund.
(2) Whilst you are building up your emergency fund in the way described in (1) above, it's important to leave enough headroom on your credit card(s) to allow the purchasing of essentials during a time of no income. If you have an unused credit card with a couple of thousand limit on, don't cancel it, rather put it away somewhere safe as your emergency card.

Having an emergency fund may not be essential when you are in your 20s, moving flats every 6 months with the option to crash at your mates, but as we get older and our financial commitments increase, we should start thinking about ways to cover any mini-crises. Set up your emergency fund now and you'll soon feel a whole lot more secure.

Make £15 (or more) in 15 minutes

2007-07-20T07:57:00.000-07:00

We all know that there's no such thing as a free lunch, but here is one exception to the rule (and hopefully we can add more in the coming weeks, months and years).

Follow these simple steps to get a minimum of £15 in cold hard cash:

(1) Sign up for an account at Quidco (Quidco is a cashback co-operative which gives you money back for all transactions conducted through its web site. It charges a £5 annual fee, but this will be deducted from the cashback you earn. There is no obligation to pay over any of your own money and we would advise against using any sites that require cash upfront.)
(2) Once your account is setup, select the Galabingo offer - £30 cashback for signing up to Galabingo and then depositing and playing through £10. Ensure you clear your cookies before clicking the link ('Tools', 'Internet Options', 'Delete Cookies').
(3) Choose any of the games at Galabingo. Deal or No Deal is fun and seems to offer a good chance of retaining a substantial portion of your £10 stake, but I got lucky and won £36 at roulette from a £1 bet (8 black!) so play around and have some fun.
(4) If you have any money left after you've bet £10, withdraw it.

Here's how the maths works:

You get £30 cashback from Quidco minus the £5 annual fee minus the £10 you had to deposit and bet. Assuming you are terribly unlucky and win nothing, you will end up with £15. If you win, you could end up with a lot more. Just ensure that you don't play any more than your £10 initial deposit!