Stash spare cash in a rainy-day fund

Whether it’s an emergency fund, some cash towards the cost of Christmas, most people strive to put some money aside. Even though savings rates from banks and building societies are subdued at present, stashing away cash on a regular basis will always be a smart move.

Even a rainy day fund of a few hundred pounds will help if you are suddenly faced with an unexpected bill and can save you having to turn to expensive plastic. The hardest part of saving for most people is getting started. You may have good intentions of setting aside some of your salary each month but by the time you get there it’s been spent.

A way that works for some is to set up a standing order so that your money is switched to your savings account the day after you get paid, that way it won’t be in your current account tempting you to spend it. A number of banks and building societies offer regular savings accounts and although the interest rates are often three or four times higher than standard savings products, the rules are pretty strict. Most don’t allow any withdrawals during the 12 month term of the account and you must also make a payment every month to qualify for the headline interest rate.

Although the terms and conditions may seem harsh, for some people it helps instil financial discipline. If you’ve got a current account with First Direct or M&S Bank you are eligible for a regular saver account paying 6 per cent AER. HSBC offers the same rate for its Premier and Advance customers and 4 per cent to Bank Account holders.

Other regular saver deals where you don’t need a current account to qualify include Nottingham Building Society (branch only) paying 4 per cent AER, and Leeds Building Society (available online) paying 3.05 per cent AER. Once you get into the habit and have built a savings pot, it opens up a much wider range of rewarding savings choices.

Virgin Money shakes up home insurance market

Buying and renewing your home insurance ought to be straightforward, but with different prices charged depending whether you buy direct from an insurer or via a comparison site, trying to get suitable cover at the right price has become a real chore. However, things may be about to change after Virgin Money launched a home insurance product with the promise customers will be offered the same price whether they buy by phone, online or a price comparison provider.

Another welcome promise from Virgin is that its fair and transparent pricing structure means it won’t play games at renewal by quoting a higher price and then backing down if challenged by a customer – Virgin is taking the stance that it will offer its best price at the first time of asking.

It found more than 80 per cent of people shop around for a better deal on renewal but when they go back to their insurer to cancel after finding a cheaper deal elsewhere, their insurer suddenly offers a lower price to try to keep them.

A further plus point is that these products won’t have any hidden nasties buried in the small print with Virgin eliminating the charges often levied by insurers for cancellation or for a minor amendments to your cover. Customers are fed up with the games insurers play in order to extract maximum profits from them, let’s hope Virgin provides the wake up call the industry needs.