Controlling debt

If you get into trouble with repayments, the best thing is to contact your lender immediately - they may offer a solution. If not, try your local Citizens' Advice Bureau or telephone National Debtline - 0121 359 8501; both give free advice.

Licensed debt practitioners will help you to get out of trouble with debt, but be careful because there is no control over them. Any new credit they arrange might give rise to worse problems. Check the APR.

If you are paying extortionate interest you can get redress through the courts.

Reducing your mortgage

A mortgage used to help buy your home is a long-term loan. It is secured on your property and involves the payment of interest and some arrangement to repay the loan, either by instalments (a repayment mortgage) or by a lump-sum payment at the end, from an endowment policy, the lump sum from your pension, or PEP/ISA investments.

Although the interest rate is usually only some 2% above bank base rate, there is some advantage in paying it off early. It is unlikely ':hat you will be able to get a higher return by investing the money.

You need to have a mortgage that is flexible enough to let you make additional repayments without penalty.

If you have a repayment mortgage, check whether the interest is calculated daily or once a year. If it's once a year, time your repayment just before the relevant date.

Running your bank accounts

Most people have a current account to handle their cash transactions. Many couples have a joint account, usually on a one-signature basis.

Bank cards

These guarantee payments of a cheque for up to £50 or £100. They can also be used for cash withdrawals from cash machines. Watch out for charges for using the machines of some other banks.

Your card may be extended to the Cirrus system, whereby you can withdraw cash abroad wherever you see the Cirrus symbol, the charge being 2% in addition to the amount requested by them at any time.

The disadvantage of a direct debit is that you lose control: if the other party makes a mistake it can be difficult to get it rectified.

Charges and interest

Currently many banks pay a small interest rate on current accounts and do not impose charges for the services so far discussed, but this could change.

There are charges for other services, such as a 'bounced' cheque, where there are insufficient funds in your account to meet it, or an overdraft (especially if unauthorised).

Telephone and Internet banking

These have the advantage of being available at any time on any day. Internet banking has the added advantage of displaying recent transactions.

Managing your credit cards

A credit card is an easy way to pay without carrying large amounts of cash. It saves writing cheques and, best of all, it can give between one and two months' free credit. Also, if the card is used to buy goods or services in excess of £100 and something goes wrong, you should be able to get a refund from the credit-card provider.

However, if you do not pay in full, the interest cost can be high - up to 10% above bank base rate. There will be a limit to the amount you can have outstanding and you must pay 10% of the outstanding balance each month.

If you are a regular user of your card for longer-term credit, make sure you have a competitive interest rate - compare the annual percentage rate (APR). Take account of when interest starts and whether there is still a free period if you have not paid in full.

Most cards can be used to draw cash, but n that case there is no interest-free period, so it is expensive.

Credit cards are particularly useful for paying when abroad. The charge is usually " i on top of exchange rate difference - less :han the cost of travellers' cheques or foreign currency purchase. However, you should try to avoid letting your card out of your sight when you pay, in case of fraud.

Summary points

Build up an emergency fund or arrange a borrowing facility.
If you have to borrow money, use the cheapest source and aim to pay it off quickly.
Consider reducing your mortgage.
Keep your bank accounts under control.
Use credit cards carefully and pay in full each month if possible.

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