The kids are back in school, Christmas is coming, and the coffers are severely depleted. So what can you do to boost your spending money?
Well, it may involve a bit of effort – OK, quite of bit of effort in fact – but there is one way you can return more euro to your bank account this autumn. And no, it’s not some hare-brained get-rich-quick idea or a risky investment.
It's really just about taking back control of many of your everyday household expenses, by either switching – or threatening to switch – a host of service providers.
Although I often find myself writing about the benefits of switching, I admit (somewhat shamefully) that I have been a bit slow to engage in a bit of ruthless switching myself. But not anymore.
During the summer, my fixed-rate mortgage was up and, emboldened by the savings on offer when I looked into this, I set myself a challenge of a switch a week.
So how did it work out?
Heating
A number of years ago we made the move from oil to gas, and at the time I carefully selected the best value company. Fast forward a few years, and I haven’t thought twice about the rate (apart from bemoaning the size of the winter bills of course) until a friend mentioned that utility companies drop you from the best rate at the end of each 12-month contract period back onto the standard rate.
So had this happened to me?
Well, I got onto my provider and found that, true to my friend’s word, I was indeed now on a “standard rate”. So, it was definitely time to switch. One of the easiest ways I found of comparing offers was with bonkers.ie, and I soon discovered I was entitled to a “retention” discount of 22 per cent with my current provider. Bingo.
To apply for the new rate, you just need to fill in some details on the website – including your GPRN number, which you’ll find on your bill. The whole process took just five minutes. Well, not quite five minutes. Even though I was sticking with my own provider, I still had to provide a meter reading and, of course, I couldn’t find the little key to open the meter box.
But, very efficiently, Bonkers delivered a new key to my door the next day – for free. It turned out that the key didn’t fit the box in the end, but I still managed to open it and get my meter read thanks to Bonkers’ helpful guide.
A few days later a letter arrived from the provider confirming the switch. And what did it say?
“We would recommend that you contact us towards the end of the 12-month period to check your renewal date and review any special offers.” So the point is clearly made if you ever took the time to read these letters.
Of course, saving on the cost of gas is only part of the battle. As my most recent bill showed, just 26 per cent of my bill was actually related to the gas we had used. Carbon tax accounted for 2 per cent, supply a further 60 per cent, and VAT the remaining 12 per cent. So there’s really only so much you can do to try to cut costs.
Nonetheless, as I am now so efficient, I have also made a note of the date of my new contract. Twelve months hence, I will have to go through the same process to achieve the lower rate.
Result: Savings of €133.30 a year on standard gas usage with current provider
Electricity
Again, when it when came to this bill, it was a rate that we had signed on to some years ago and hadn’t thought about since. However, this meant that our rate, of 0.1513 a unit, was about 16 per cent higher than the lower priced rate of 0.1267. In fact, our provider was far more expensive than all the others. So, savings should be easy to come by.
Again, bonkers.ie offered typical savings of €158 a year by switching to another operator. But first I decided to ring my own provider to see if they would match this offer. They never rang back. That hastened my desire to switch.
It took a bit longer this time, as switching to a new operator means not just getting a meter reading, but also giving all your bank details etc to set up a new direct debit, which can be a bit tiresome, but is necessary.
Another point to note is that, if you are a couple, it can be a bit more cumbersome to switch. If it is your partner’s name on the bill, you will have to get them to ring to add your name also, which can delay the process depending on how efficient or otherwise your partner may be!
Again, the cost of the actual electricity is only one part of the bill – just 23.5 per cent in fact for our most recent one. You must also pay a standing charge and public service obligation (PSO) levy. This has just increased, from €5.90 to €7.69 per month, as of October 1st. That means it makes more sense than before to keep costs contained by getting the cheapest rate of electricity out there.
Result: Savings of €158 on standard electricity usage by switching provider
Mortgage
This is undoubtedly the biggest expense in most people’s households – apart from childcare costs, perhaps. That means the potential savings can be considerable, particularly if you have bought in recent years and are stuck on a stubbornly high rate.
Thankfully, mortgage rates continue to slide, which means that there are real savings to be made out there. And most banks also offer contributions towards the costs of the legal fees involved in switching.
If you’re on a “relatively” cheap tracker rate, you can of course stop reading this section now, as you won’t save by switching; but there should be savings for most other home-owners.
To secure a better rate, I was ready and willing to switch mortgage provider. But on the day I rang my bank to discuss the issue, they had just cut their rates and offered me a reduction of 0.6 of a percentage point in my interest rate, making it one of the market leading rates at the time.
So, I locked in again and my monthly repayments duly fell by about 7 per cent a month.
Happy days. Possibly not. Some time later, rates fell once again. I would have done better by holding out and switching lenders.
Do remember that special offers – such as a cashback on your mortgage – may not as attractive as they first appear. The Competition and Consumer Protection Commission recently warned that these incentives are typically offered in conjunction with higher rates, so tread carefully.
Switching a mortgage is not a trifle and there can be quite a bit of administration involved. However, the upside is that it can save you thousands of euro.
But if you’re not up to facing the paperwork involved, you might be able to secure a further reduction from your current lender if the loan-to-value – ie the ratio of your outstanding mortgage to the current value of your house – has declined. And, given the direction house prices have taken, this is quite possible.
Result: Reduction in mortgage repayment of about 7 per cent a month
Life assurance
If you’re a home owner or have children, you’ll likely have life insurance – but have you ever bothered to change this since you took out your policy?
Unlikely isn't it, but this is one area I wanted to consider as part of the switching to save exercise. Most of us tend to buy our life insurance product from the lender that gives us our mortgage. Bank of Ireland figures, for example, show that seven in 10 of its customers do so, while a survey from the National Consumer Agency (NCA) revealed that, out of 17 different categories, customers are least likely to switch their life insurance and mortgage protection.
Buying a mortgage-related life policy from your mortgage lender is rarely the cheapest option. But, if we’re not inclined to switch, why would providers offer us better rates?
There are a number of sites now available that help you consider your options, including bonkers.ie or chill.ie. By doing so, I found a reduction of about 15 per cent on what we were already paying.
Before I made the switch, I again rang my own current provider to see if they could do anything better on my policy. And could they? Well, a 10 per cent reduction was offered straight away.
The difficulty with switching life insurance is that your health, or that of your partner, may have changed since you initially took out your policy. And, of course, you will also be some years older. So tread carefully. Conversely, however, if you were a smoker or had health issues when you first got protection, and are no longer affected by these, you could save substantially by switching, or informing your existing provider of these changes.
Result: 10 per cent reduction by staying with my own provider; 15 per cent reduction to switch
Cable TV/broadband
If you find that most of your television-viewing these days comes courtesy of Netflix or iTunes, or an occasional foray for news or sport onto the terrestrial channels, you might, like me, have considered “cutting the cord” and cancelling your cable.
After all, recent price hikes have seen the cost of a television/phone/TV package soar north of €80 a month. And if you’re not really availing of your cable service and you’re paying a further €10 a month for your Netflix subscription or iTunes downloads, why would you keep paying it? Particularly given that you can still get RTÉ, TV3, TG4 and the BBC and ITV, Channel 4 on Saorview.
While you can expect a significant set-up charge – about €200, depending on the box you opt for to switch to Saorview – once you bite the bullet on this, you will no longer have monthly TV bills.
This means that you can shop around just for broadband and, if required, a home phone, to cover your home entertainment needs.
One of the better offers at the moment is €30 a month for broadband for a year, discounted from the usual €55, with Sky Fibre Unlimited. And as the contract is only a year, you should be able to switch at the end and thus avoid the higher rate. However, you have to be a new customer to avail of it.
With a switch in mind, I had a look once more at bonkers.ie. The problem is that there are myriad offers. And you can often get a better tailor-made deal by talking to someone, so I rang some of the competitors.
What I found is that it really is difficult to compare like with like; installation fees, extra TV channels, boxsets etc, all conspire to make switching difficult unless you’re very clear on what you’re looking for. At first, the deals on offer can appear more attractive, until you ask whether you’re getting a particular favourite channel, and find out that it will be an extra €10 a month just for that.
So I also rang my own provider, told them I was thinking of switching and they offered me three months at half-price, which in the end I went for.
But between now and this contract ending, I’m going to investigate the Saorview box options with a view to cutting those bills in half this time next year and getting rid of cable altogether.
Result: Three months at half price with current provider; €150 or so by switching
