2 Great Ways to Lower Your Monthly Outgoings: Insurance and Debt Costs
Published 28th of August 2012·Updated 7 April 2026
Reviewed by: Reviewed for accuracy April 2026
Two of the biggest drains on your monthly budget are insurance premiums and debt interest. Addressing both strategically can save you hundreds of pounds a year without any major lifestyle change. This guide covers practical steps for each.
Short Summary
Shopping around for insurance at renewal is one of the most reliable ways to cut costs. Insurers consistently offer better rates to new customers than they do to existing ones who simply let a policy renew automatically.
If you carry debt on a credit card or loan, the interest you pay each month is costing you real money. Moving high-interest debt to a 0 per cent balance transfer card can eliminate that cost for 12-30 months while you pay down the balance.
Paying insurance premiums monthly rather than annually typically adds 15-20 per cent to the total cost. If you can borrow more cheaply (for example, on a 0 per cent credit card) and pay the annual premium upfront, you will save that difference.
Free debt advice is available from StepChange and Citizens Advice. If your debt feels unmanageable, speak to one of these services before taking out further credit.
How to reduce your insurance costs
Insurance is a non-negotiable expense, but paying more than you need to is not. Most people who have been with the same insurer for several years are overpaying.
Car insurance
Car insurance is the most significant insurance cost for most households. Use comparison sites including Compare the Market, MoneySuperMarket and Go.Compare at least four weeks before your renewal date. Prices are typically lowest when you buy around three to four weeks ahead, according to data from MoneySuperMarket.
A few specific steps can also lower your premium: removing named drivers who rarely use the vehicle; reducing your annual mileage estimate if it is genuinely lower; and checking whether a telematics (black box) policy would be cheaper if you are a low-mileage driver.
If you cannot pay the full annual premium in one go, consider putting it on a 0 per cent purchase credit card and spreading the cost interest-free. Monthly payment plans through the insurer typically charge 15-20 per cent interest.
Home and contents insurance
Check whether you are insured for more than you need. Over-insuring your contents (estimating their value too high) inflates your premium without benefiting you at claim time. Combining buildings and contents into a single policy with one provider is often cheaper than two separate policies. Compare the combined cost against buying them separately to be sure.
The golden rule for all insurance
Phone your existing provider just before renewal and ask for a better rate. Insurers have significant discretion to reduce premiums for customers who threaten to leave. If they will not match a comparable quote you have found elsewhere, switch.
How to reduce your debt costs
Debt costs money every month in interest charges. The faster you reduce that debt, and the lower the interest rate you pay, the more money you keep.
Pay off the most expensive debt first
List every debt you have alongside its interest rate. Pay the minimum on all of them, then direct any surplus cash at the most expensive debt first. This is known as the avalanche method and minimises the total interest you pay over time.
Use a balance transfer credit card
If you have credit card debt, a 0 per cent balance transfer card lets you move that balance to a new card and pay no interest for a promotional period, typically 12 to 30 months. Providers including Halifax, Barclays and MBNA regularly offer these deals. A small transfer fee (usually 1-3 per cent) applies, but this is almost always far cheaper than continuing to pay interest on your existing card.
To make this work: transfer the balance, do not use the new card for new spending, and pay off as much as you can during the interest-free period. Set a reminder before the promotional period ends so you can switch again or clear the balance before the standard rate kicks in.
Sell unused items to pay down debt
Any lump sum you can direct at debt reduces the interest you pay going forward. Selling unused electronics, furniture or clothing through eBay, Facebook Marketplace or Vinted generates cash at no ongoing cost. A single clear-out can raise £100-£500 for many households.
| Debt type | Typical interest rate | Priority |
|---|---|---|
| Credit card (standard) | 20-30% APR | High - tackle first |
| Overdraft | 15-40% EAR | High |
| Personal loan | 6-20% APR | Medium |
| 0% balance transfer card | 0% (during promo period) | Low (during promo) |
| Mortgage | 4-6% APR | Lowest |
If you are unsure how to prioritise your debt, StepChange offers free, confidential debt advice online and by phone. Their advisers will not judge you and can help you find the most suitable approach for your situation.
Frequently asked questions
How much can I save by shopping around for car insurance?
The saving varies by driver profile, but comparison sites regularly find differences of £200-£500 per year for the same level of cover. Younger drivers and those who have not switched recently tend to see the largest savings.
Is it better to pay insurance monthly or annually?
Annually is almost always cheaper. Monthly payment plans through insurers are effectively a loan at 15-20 per cent interest. If you cannot afford the lump sum, paying on a 0 per cent purchase credit card and clearing it over several months is cheaper than the insurer's instalment plan.
What is a balance transfer credit card and how does it work?
A balance transfer card lets you move existing credit card debt to a new card that charges 0 per cent interest for a set period (typically 12-30 months). You pay a transfer fee of 1-3 per cent upfront, then no interest on that balance during the promotional period. You must make at least the minimum monthly payment to keep the 0 per cent rate.
Will applying for a balance transfer card affect my credit score?
Yes, every credit card application adds a hard search to your credit file, which can temporarily reduce your score by a few points. If you are planning to apply for a mortgage in the near future, timing is important. Consider using an eligibility checker (such as those on MoneySuperMarket or ClearScore) that uses a soft search to show you your approval odds without affecting your score.
What should I do if my debt feels unmanageable?
Contact StepChange (stepchange.org) or Citizens Advice. Both offer free, confidential debt advice and can help you explore options such as debt management plans, individual voluntary arrangements (IVAs) or, in severe cases, bankruptcy. These organisations will not charge you for advice.