In My Wallet, Not The Banks'

After years of chipping away at unnecessary and unwanted debt, not including our mortgage I've had the pleasure of being debt free for a couple of years.

With that in mind, I've tried to start optimising our finances a little further and make a profit from the institutions we do business with. A profit? Yes indeed and here's what we currently do to achieve this and have the banks look favourably upon our business.

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• We don't use of overdrafts, but do have them set up to the tune of £500 as last ditch emergency funding should the need ever arise. My bank wants to charge me £1 per day for an overdraft of any size up to £2500, but I don't want to leave myself exposed to that very scary amount. Across three accounts that could leave us liable for £7500 in the event of ID theft, which would be ... unpleasant.
• We don't spend money on the credit card we can't pay off in full every month. As a result of this, we always choose a cashback credit card, and while there's often not a huge amount of money to be had (we have a Barclaycard 1% cashback deal) it's better than nothing at all. Keep in mind this only works if you can pay it off in total every month and thereby not incur their crippling interest rates.
• Drop your limit on your credit card to a sensible number. Credit card providers seem keen to bump up my limit if I do nothing, cough, burp or wiggle uncomfortably in my chair, and that's odd ... as I don't want or need a credit card with an eight thousand pound limit. You can't pay for a new car with that, as they freak out and ask for bank transfers, and what else of that magnitude would you put on a card? Drop the limit, and if you ever have a circumstance that needs it, phone them and have it increased for just one month.
  
• If you can guarantee you'll pay it off in full every month, spend on the credit card whenever possible. It provides greater recourse in the event of fraud or having to argue a transaction due to the goods being faulty, damaged or unsatisfactory. In addition, if you have a cashback card it makes you money when you spend money.
  
• Look out for the 0% interest free loans on items you want to purchase, and can afford. We bought a pair of sofas five years ago, and while we didn't have the full amount (around £1500) to buy them right there, they offered us a deal of 0% over three years. This equated to a monthly figure we could easily afford by skipping a meal out every month, and gave us the sofas we wanted at a price we could afford without being penalised by interest rates.

This of course is the easy part. Getting ourselves to the point of being debt free was the biggest struggle.