Cash is the sharp end of your monetary affairs

In this chapter, six things that really matter:

• Accumulating an emergency fund
• Managing borrowing
• Controlling debt
• Reducing your mortgage
• Running your bank accounts
• Managing your credit cards

Cash comes and goes so quickly that it is vital to get it under control and also to make sure that it is always working for you, earning interest whilst in your hands.

Compare interest rates available by finding out the AER - annual equivalent rate. (In the case of borrowed money, it is called the APR - annual percentage rate - but is effectively the same.) These comparable rates allow for the timing of receipts/payments, whether of interest or capital.

Unused credit card balance.

The trouble with these facilities is that if you use them they are expensive, so you need to build up your emergency fund as soon as possible.

Another potential facility is your immediate family; would your parents, for example, be able and willing to make a temporary loan?

Depositing it safely

Use a bank or building society deposit account. Instant access is best, even though higher rates of interest are available on notice accounts, because the money might be needed in a hurry.

Higher rates are usually available on higher amounts, so it is worth using the same account for any short-term savings such as for your holiday. Postal and Internet accounts often offer higher rates.

Rates change and it is important to check regularly. Comparisons of rates can be found in newspapers, money magazines and on the Internet.* Such sites as this one or Money Supermarket or Uswitch are also good sites to look at. You can compare credit cards and loans on this site.

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