Make money from your purse

Written by admin on February 12, 2010 – 5:16 pm

You probably feel like you only ever open your purse or wallet in order to spend money, but what if you could actually make cash from the contents?

Chances are you carry around a number of things you could make real returns on. In fact, in this article, we look at how you could make more than £600 with what’s in your wallet.

Current account – make £160

Open your wallet and take out your debit card. Look at it, what’s it ever done for you? Probably not a great deal – not many of us leave money in our current accounts long enough to earn any interest.

But you could earn £100 by switching to the Alliance & Leicester Premier Current account.

It’s offering that much as a cashback incentive when you apply online and use its switching service to transfer your direct debits.

On top of that, the account offers a 0% equivalent annual rate (EAR) overdraft and no fees for pre-agreed overdrafts for the first 12 months. After that you’ll pay 50p a day if you dip into the red, but that’s capped at £5 a month.

It pays 0.50% on balances up to £2,500. The account also packs a handy perk; with free annual multi-trip European travel insurance, worth up to £60. If you’re a frequent flier, that’s going to save you money.

Credit card – make £381

How do you use your credit card? If you pay off the balance each month then you could actually earn rewards.

Plenty of people use a credit card for the convenience and the extra protection it offers – after all, with a card, your provider is jointly liable with the seller for any purchases of more than £100, under Section 75 of the Consumer Credit Act 1974.

So, if you’re one of those people, why aren’t you making money with your card?

For example, the American Express Platinum Cashback Credit Card pays customers 5.00% on spending up to £2,000 during the first three months – meaning you could easily make £100 just by sticking your shopping on the card.

Once that introductory rate finishes, you can earn unlimited cashback, but it’s staggered. So, you earn 0.50% on the next £3,500 spent, 1.00% on spending between £3,500 and £7,500 and then 1.25% on spending above £7,500.

That means if you do all your household shopping on your current credit card, you’re missing out. Someone spending £2,500 each month with an Amex Platinum card could earn £381 over a year.

Of course, that’s only the case if you settle the balance each month. If you don’t, the amount you are charged in interest, will be more than the value of the cashback because Amex charges an annual percentage rate of 19.90%.

If you’ve got outstanding balances on any credit or store cards in your purse, you may be better off transferring the debts elsewhere.

This can be especially true for store cards, which often have higher-than-average APRs. Oasis’ VIP card for example, has an APR of 28.90%, while the rate on the Dorothy Perkins card is 29.90%.

Virgin’s Credit Card is the market-leading deal for balance transfers as you can benefit from a 16 month interest-free period. There is a 2.98% transfer fee and once the 0% offer has ended you’ll be charged the standard rate of interest of 18.60% on any debt still remaining, 16.60% on any purchases. The Virgin card is issued by MBNA so you won’t qualify for this balance transfer offer though if you are looking to move a debt over from another MBNA card.

The Barclaycard Platinum is a good alternative however. It is offering a 15-month interest-free period on balance transfers, after which the standard APR is 15.90%. The balance transfer fee on this card is 2.90%.

Moving cards can be well worth it, the savings can be huge. Take, for example, someone with an outstanding credit card balance of £2,500, paying the average APR of 18.37% and making minimum payments each month.

If they moved that balance to the Virgin Credit Card, they’d pay a fee of £74.50 but save £520.16 over the 16 months. That means they’d be £445.66 better off.

Of course, if you do transfer a balance, it’s best to make more than the minimum payments and trying to clear the outstanding amount before you start getting charged.

Loose change – £120

What do you do with your shrapnel? A few years ago, Virgin Money worked out that the average person has £10 of unspent coppers rolling round their pockets each month.

A few pennies here and there can obviously really add up, but four in 10 of us refuse to count them out at a till, preferring to break a note. In fact, it claimed an amazing £11million a month was being literally thrown away by some people discarding their pennies.

If you can’t bring yourself to spend it then bank it. If trekking along to the bank once a month is too much hassle, you could invest in a penny jar and then add it to your savings once it’s built up a little.

Speaking of savings, what rate is your account paying? Millions of people have money lingering in accounts paying just 0.10%. Lots of providers offer a great rate that falls after the first year because the bonus period finishes.

The top easy access account just now is the Coventry Building Society 1st Class Postal (4), paying 3.15%.

You’re only allowed four withdrawals a year and the minimum amount to take out is £1,000, but for that you get base-rate beating returns. Keep in mind that 1.15% is a bonus, so you may need to move after the first year.

Total money – £661

So, the total money you might be missing out on is an impressive £661 – which would pad your wallet out nicely!

Of course, there are also ways to save. Perhaps you never go to the gym but have a membership card stashed at the back that represents a direct debit of about £50 a month – that’s £600 over a year.

Maybe you routinely use a store loyalty card but hardly ever cash in the points – you could be wasting tens of pounds in savings.

If you’re planning to sort out your finances, your purse or wallet is a good place to start.

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