Tips to help you save money through winter and the festive season as interest rates rise
PayPlan, one of the UK’s largest free debt advice providers, has outlined some of its expert budgeting tips as we face the financial pressures of winter and the festive season.
With the summer behind us, it’s now time to start thinking about how to efficiently heat your home, especially given everything happening with rising interest rates at the moment.
Here are a few ways to make the most out of your money and heat your home for less:
- Keep radiators and heaters clear so heat can circulate – don’t put furniture in front of them or dry washing on them.
- Draw your curtains in the evenings to minimise heat loss through windows.
- Draught-proof your windows and doors. Heat can escape through the smallest of places, which means as soon as your heating is turned off, you’ll lose the warm feeling sooner rather than later.
- Invest in an electric blanket – you can move the blanket from your bed to your sofa, so you’re warm wherever you decide to settle!
Check what extra financial support is out there
It’s also important to ensure you’re getting all the help you’re entitled to, such as:
£400 Energy Bill Discount
All households in England, Scotland and Wales are set to receive a non-repayable £400 in energy bill discounts as part of the new cost-of-living help package by the government. The money, part of the Energy Bill Support Scheme, will be paid in six monthly instalments starting from October. It runs until March.
Cold Weather Payment
If you receive certain benefits or Support for Mortgage Interest (SMI), you may be able to receive this payment. You’ll get a payment if the average temperature in your area is recorded as – or is forecast to be – 0°C or below over seven consecutive days. You’ll receive £25 for each seven-day period of very cold weather between 1 November and 31 March.
Winter Fuel Payment
If you were born on or before 25 September 1956, you could get between £100 – £300 to help you pay your heating bills.
Warm Home Discount Scheme
You could get a one-off discount of £150 on your electricity or gas bill between October and March. To qualify, you’ll need to be in receipt of the Guarantee Credit element of Pension Credit or be on a low income and meet your energy supplier’s criteria.
Having checked your eligibility for the above schemes, it’s time to breakdown interest rates and find out what the changes actually mean for you:
Parliament tasks The Bank of England with keeping the rate of inflation at 2%. Putting up interest rates is the main thing it can do to stop prices from rising so fast and bring down the rate of inflation. The Bank of England rate often influences the rates charged by lenders and paid to savers
Banks are not obliged to follow Bank of England interest rate decisions, but they can influence the cost of borrowing, or how much interest you can earn on savings.
What impact does the interest rates rise have on mortgages?
If you have a loan or mortgage that charges you a variable interest rate, you might find that the cost of your repayments goes up.
If you’re on a fixed rate you won’t see any change until the end of your fixed period.
It’s important to understand how a change in interest rates could impact your ability to pay. You can use a mortgage calculator to work out how your monthly payments might be affected.
When, and if, your mortgage repayments are affected by an interest rate change will depend on what type of mortgage you have and when your current deal ends.
If you have a variable rate tracker mortgage, linked to the BoE base rate, you’re likely to see an immediate impact on your mortgage repayments if there’s an interest rate rise.
Those on a standard variable rate mortgage will probably see an increase in their rate in line with any interest rate rise. The change is decided by your lender, so this isn’t guaranteed but is highly likely. If you’re unsure, check the terms and conditions in your original mortgage offer document.
People with fixed-rate mortgages are likely to be affected once they reach the end of their current deal. An interest rate rise could make re-mortgaging or a product transfer to a new fixed rate more expensive.
You can explore ways to keep your mortgage costs down here.
If you’re worried about debts, it can be difficult to know where to turn. At PayPlan, we’re specialists in finding solutions for people with multiple debts, and over the past 30 years, we’ve helped over one million people take control of their finances. Get in touch by calling 0800 072 1206 or visiting www.payplan.com/bfawu