How to combat the rising cost of living

Take a look at your monthly income and outgoings. Try to cut any unnecessary subscriptions or look for areas you might be able to save money. Where possible, try to stick to a monthly budget so you’re covered for the whole month, and not waiting until payday to buy something essential.

If you do need to borrow right now, make sure you borrow from a lender who is regulated by the FCA (Financial Conduct Authority). That way, they can be held to account if something goes wrong, and you can complain to the Financial Ombudsman Service.

Keep an eye out for ‘loan sharks’. These are illegal moneylenders who will often charge very high interest rates. They are more prominent in times of financial struggle and are not regulated by the FCA. That means you won’t be protected if something goes wrong.  

There’s also been a rise in popularity of buy now pay later (BNPL) services. Not all parts of BNPL services are regulated. As such, using them could affect your eligibility for credit. 

These payment methods may be added to credit reports, and lenders will be able to see how frequently you use these services, and if you’ve ever missed a payment. 

With any credit you use, only borrow what you can afford to repay, and always make at least your minimum monthly repayments.

If you’re paying interest on a current credit card balance, you should consider a credit card with a balance transfer offer.

A balance transfer offer lets you move a balance from one credit card to another, and gives you a set period to pay off your balance, interest-free. So, you can pay off the same amount for less.

This could help you reduce your outgoings every month if you’re struggling right now, or help you pay off your debts sooner if you’re worried things could get worse down the line.

One thing to look out for is a balance transfer fee. It’s a small charge, calculated as a percentage of the amount you transfer, but it usually works out as less than what you’d pay in interest if you didn’t transfer.

Try to clear the balance before the offer ends, otherwise you’ll pay interest on whatever remains. Plus, always make sure the deal is right for you before applying.

If you have multiple credit with different lenders and different interest rates, it could be easier to use a loan to clear the debts.

This is called a debt consolidation loan. You’ll get a lump sum which allows you to pay off any existing debts at once, but make sure it’s at a lower interest rate. Then, you can make just one payment each month. You’ll know exactly how much those monthly repayments will cost you upfront, as well as the entire cost of your loan.

If you need to borrow, here are some things you can do to make sure you get the right offer for you.

Where you can, avoid using Payday Loans, as these often come with very high-interest rates.

Make sure you check your eligibility with TotallyMoney. We have a large range of credit cards and loans available, and we’ll show how likely you are to be accepted for them.

Plus, we’ll find your Best Match, which we think is the best option for you, based on what you’ve told us. All the offers you see are shown on what’s best for you, not based on the commission we get from the lender.

To give you some peace of mind, and to take any guesswork out of your credit applications, look out for these three features:

If you’re pre-approved for an offer on TotallyMoney, it’s the closest thing to a ‘yes’ decision, before you apply! That means you can apply with confidence and without the worry of rejection, at a time when you need greater certainty.

Just make sure all your information is accurate and up-to-date. And, you need to pass some final checks with the lender directly.

We’ve also introduced TotallySure offers. These offers come with pre-approval and up to 4 guarantees so you can get even more peace of mind and certainty when applying for credit.

If you’re accepted for a credit card with a guaranteed limit, you’re sure to get the credit limit advertised, if accepted. On a loan, the amount you could borrow could be guaranteed.

This is great, as you’ll know if you’ll be able to borrow the amount you need.

A product with a guaranteed rate will give you the advertised APR, if accepted. So, you’ll know how much your borrowing will cost you, helping you to better plan your monthly finances.

Guaranteed offer length or loan term

For cards, a guaranteed offer length means you’ll know exactly how long you’ll be able to pause interest and save money on balance transfer and purchase cards, interest free. This helps you plan ahead, so you can clear existing credit card debt for less, and save when making big purchases. For loans, iIt lets you know how long your loan terms will be before you apply, making sure you have enough time to make the repayments.

Some energy companies may offer cheaper tariffs than the average rate. So, it’s a good idea to look around and see if you can find a better deal with another provider. Make sure to check all costs before you make the switch.

The Energy Price Cap is not a cap on how much you pay but a cap on standing charges and electricity unit rates. If you’re on a standard tariff, the prices are dictated by the Energy Price Cap which changes every three months. So, if you’re deciding to switch providers or to a fixed plan, you’ll need to not only compare rates but also look for reliable predictions from finance experts to ensure what is a good deal now, stays a good deal further down the line too.

A car may be an absolute necessity for you, but it can be expensive to buy.

There are several options to help finance your car if you can’t afford to pay upfront. For more information on the options available to you, check out this
guide.

Interest rates are still very high since the Bank of England increased them to combat inflation, and it seems this won’t change much for the foreseeable future. As a result, it’s possible your rent or mortgage costs have increased too.

If you’re a homeowner with a mortgage, your lender may have increased their variable rate mortgages to account for the base interest rate, set by the Bank of England, rising.

If you’re on a fixed rate deal, where you agreed an interest rate at the beginning of the term, you won’t see a price increase until the deal finishes. Generally these deals are for two, three, or five years.

Make sure you know when your deal ends. Set yourself a calendar reminder or make sure you know the month it expires. Six months or so before, start talking to mortgage brokers or lenders about a new fixed deal so you can lock in a rate that won’t change should the market rate increase.

Remember: If you don’t arrange a new deal, you could be moved on to a variable rate which can be increased in line with the Bank of England interest rate. This can be much higher than a fixed deal, meaning your mortgage payments become much more expensive. 

If you signed up before the cost of living crisis and interest rate rises, it’s likely the new interest rate, and therefore monthly cost of the mortgage, will be higher, so make sure you can pay it every month before committing.

If you’re on a variable rate or tracker mortgage, your monthly mortgage payment may increase if your lender increases their interest rates, in line with the Bank of England.

Keep an eye on any price increase emails or letters sent to you, and always make sure you can pay the new amount every month. If you can’t, get in touch with your lender as soon as you can. The Financial Conduct Authority (FCA) has told banks to provide support to struggling mortgage customers. This could mean changing the terms on your mortgage agreement to help you make payments. Don’t delay getting in touch if you need to, it’s free to do and won’t impact your credit score. If you don’t seek out help and miss payments, it could put you in arrears with the worst case meaning you lose your home.

When renting, you are paying someone else’s (the landlord’s) mortgage, plus any service charges, ground rent, property management fees, or included bills. These may go up as the cost of living rises, which means the landlord may increase your monthly rent.

If this happens, there are various ways to get support — or fight it if you think the increased cost is too much.

You can apply for housing payment, which is part of the universal credit system, if you’re struggling to pay your rent.

There are a few requirements to qualify for housing payment: you must live in the UK; be over 18 years of age and under the state pension age (as of April 2024, this is 66, although it may change in the future); and have £16,000 or less in money, savings, and investments.

You can apply for housing payment on the government website. You may need to have an interview at a JobCentre Plus, to discuss your claim.

If that’s the case, you’ll need to take a few documents with you: a signed tenancy agreement, a signed letter from your landlord confirming you live there, and details of any service charges you’re responsible for.

Make sure your landlord will accept you using housing payment to pay your rent, before you apply. Some landlords will not accept tenants on benefits.

There are other benefits that can be used if you’re struggling to pay your rent. You could still apply for housing benefit if your rent goes through your local council, or as part of your pension claim, if you fulfil certain criteria. That includes if you’re a pensioner or live in sheltered housing. You could also get help paying your tenancy deposit, or discretionary housing payment for covering costs such as rent shortfall.

If you think your landlord has increased your rent by too large an amount, first try and negotiate with them. You could explain you’ll struggle to pay the new amount, and/or offer a lower increase which you can afford, or show evidence that the rent increase is above the market rate for your area.

But, the landlord is under no obligation whatsoever to listen to you.

If you feel the rent increase is too large, or that according to your tenancy agreement, you believe the landlord can’t increase the rent, you could go to an independent tribunal. This will determine the rent amount which is payable, and consider arguments from both you and your landlord.

If you want to go to tribunal, Shelter has an excellent guide about the specifics.