Save a small fortune in 2021 by sifting through your direct debits

Are you looking to streamline your finances running into the New Year?

A great way to start is by sifting through your direct debits and standing orders to pin down exactly what you need and don’t need spending. It can be hugely satisfying to weed out the superfluous expenses.

Covid-19 restrictions have made many subscriptions redundant, from gym memberships to travel cards, and these could be cut completely. Alternatively, you could take some time to shop around for cheaper deals and providers. 

Streamline your finances running into the New Year? A great way to start is by sifting through your automatic payments to pin down exactly what your spending.

Research released by Finder.com last August revealed that Brits spend more than £2billion every year on subscription services. 

These services are most popular amongst 18 to 34-year-olds, with 1 in 4 (23 per cent) signed up to at least one service. But with many feeling the pinch of the pandemic, here are some top tips to cutting back. 

Subscription traps 

One of the first things to do is to do a deep clean and look out for any subscriptions you didn’t know you were paying for.

Many people sign up for ‘free trials’ and plug in their card deals. If these trials aren’t cancelled within a certain amount of time costly subscriptions can ensue. 

Amazon, for instance, offers all customers a one time only free 30-day trial of its Prime service at check out. This includes free next-day delivery along with access to its music, TV and music streaming services.  

But if you don’t cancel membership before the end of the trial, £7.99 will start slipping out of your bank account every month. However, customers can claim a refund if they can prove they have never used any of the membership perks. 

Or they can opt for the slightly cheaper annual payment if they want to keep Prime. 

Some apps – for example music, fitness and dieting – also offer introductory free periods and ask you to plug in your payment detail upÏfront. Then the charges start. 

With Apple Pay, you just pay with fingerprint sensor, so it’s very easy to accidentally sign up for something.

Terms and conditions are frequently not clearly and prominently displayed and key information is often hidden, but the UK government has committed to tackling the problem of subscription traps with a push for legislation. 

Amazon offers all customers a one time only free 30-day trial of its Prime service at check out. But if you don't cancel membership before the end of the trial, £7.99 will start slipping out of your bank account every month

Amazon offers all customers a one time only free 30-day trial of its Prime service at check out. But if you don’t cancel membership before the end of the trial, £7.99 will start slipping out of your bank account every month

Give services the chop

Many people waste hundreds on services and products they never even use. During the coronavirus pandemic, many memberships have become redundant, with restrictions limiting movement. 

Are there any services you could cut? 

Many gyms and fitness clubs are freezing memberships or offering free months when they reopen. London-based lawyer Ralph Fearnhead told This is Money: ‘I haven’t cancelled my gym, Better, as they have stopped taking payments during lockdown. This has been really helpful.’

Watch out for your monthly phone payments: if they vary and are higher than expected it could be because you are not on the right package and keep going over your data allowance. Or you might even have unwittingly signed up for something via your phone that is tapping your direct debit every month. 

Unused travel and leisure 

Check your fitness club’s policy and check if you are being charged. The same goes with sports season tickets, with this matter at the discretion of the clubs. 

If you pay a direct debit for an annual bus or rail cards check what your rights are if you haven’t been using the services.

The Robin Hood Network, which offers annual bus, tram and train travel cards for the Nottingham area states on its website that customers could be eligible for a refund.

It adds: ‘If you are unable to travel for more than 14 consecutive days due to the current Covid-19 restrictions, we will be able to add any unused days onto the end of your current season product once things return to normal and you need to travel again.’ 

If you are a member of certain organisations, such as the National Trust or London’s Royal Academy of Arts, you might want to consider if you are getting your money’s worth. 

If you pay a direct debit for an annual bus or rail card check what your rights are if you haven't been using the services

If you pay a direct debit for an annual bus or rail card check what your rights are if you haven’t been using the services

Shop around 

After getting to grips with your monthly outgoings, take a look at the fees and think about whether you could get better value for money by switching provider. 

After being with O2 for many years, I noticed my monthly mobile charges were much greater than I’d planned as I was getting hit by overseas fees. 

I swapped to Three as this provider offers roaming at no extra cost for its customers in over 70 destinations, including the U.S., Australia and New Zealand. 

When it comes to household bills, such as gas, electricity and internet, use price comparison websites such as www.comparethemarket.com and www.uswitch.com to check if you’re paying over the mark.   

Set payment reminders 

Once you’re happy with where your direct debits stand, keep track of when they go out so you don’t get caught out. 

Serving up a top tip, This is Money reporter George Nixon says: ‘I’ve started putting all of my subscriptions and direct debits into my phone calendar.

‘This way, I get an alert when they come out and the day before. It’s very useful.’  

Another way of tracking payments is to set up push notifications via your banking app. This will allow you to see direct debits and standing orders in real-time, along with card purchases and ATM withdrawals.   

To prevent getting caught out by subscription traps, plug the expiry date of your free trial in your phone or computer calendar to alert you to cancel it the day before.

Use the jam jar approach to split your money into different accounts, with one reserved just for bills and direct debits

Use the jam jar approach to split your money into different accounts, with one reserved just for bills and direct debits 

Use the jam jar approach 

Split money between two different current accounts: one for regular bills paid by direct debit and the other for leftover spending money. 

This tactic will help you to budget and prevent any mistakes with payments going out when you are close to your limit. Many people use a digital-only bank for this purpose, as they are good for showing you balance updates in real-time.

Banking services provider Thinkmoney also offers a special ‘jam jar account’ which lets customers split their money into different ‘jars’ in the same account. 

Whenever payments go into the account, money to cover direct debits (e.g. rent, utilities, council tax, etc) is automatically set aside into its own ‘jar’ which is off-limits to everyday spending.

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