Making your money go further can simply be a matter of avoiding some obvious pitfalls and common financial mistakes, writes FIONA REDDAN

MAKING YOUR money work for you is as much about what you don't do, as what you do. This time last year, giving your money to Bernard Madoff to invest, or buying shares in Anglo Irish Bank, might have been top of the list of things to do - but you would have needed psychic powers to predict those particular calamities.

Much easier to foresee is the impact some common financial mistakes can have on your bottom line, and the good news is that they are easily avoided.

Don't keep money in an unattractive deposit account

WHILE opening a deposit account might be a much less riskier method of investing your money than the stock market, you can still get below-average returns if you leave your money in an account with a poor interest rate.

For example, if you left €10,000 lingering in an account paying just 1 per cent in interest, at the end of a year your investment will have made just €100, while at the end of five years, the return will be just €510. However, if you moved your money to an account with a rate of 3.5 per cent, you would have made €250 more a year, and €1,366 more over five years.

If you're a regular saver, consider switching the total amount saved at the end of each year into a deposit account which accepts lump-sums. For example, although AIB's Parent Saver account pays 5 per cent in interest on regular contributions, at the end of each year the money is transferred into a deposit account paying just 0.5 per cent. So switch this sum to a better rate, such as the 4 per cent offered by Investec on amounts over €20,000 fixed for 12 months, or Nationwide, which has an easy access account offering 3.55 per cent on deposits starting at €2,000.

Don't ignore bank guarantees

THE near collapse of Anglo Irish Bank, combined with the difficulties faced by Northern Rock in 2007, show how easy it could be for consumers to lose their deposits, even in apparently safe banks. So, with the Irish Government guaranteeing all deposits in the following institutions - AIB, Bank of Ireland, Anglo Irish Bank, An Post, EBS, ICS Building Society, Irish Life & Permanent, Irish Nationwide, and Postbank - until September 28th, 2010, such a consideration should be taken into account when looking for a safe place for your money. Once the scheme runs out, the maximum protected under the deposit scheme is likely to remain at the old figure of €100,000, so, if you want to keep more than this on deposit, come next September you should consider moving your money into different accounts to make sure all your funds are protected.

Similarly, deposits in UK banks, which have Irish operations, are protected under the UK's Financial Service Compensation scheme, up to a total of €50,000, while deposits in Dutch Rabobank are guaranteed up to €100,000. As many of the foreign banks are offering the best rates at present, if you have a significantsum which you wish to place on deposit, consider spreading your allocation to ensure all your money is protected.

Don't pay too much for your credit card

WHILE the last thing on your mind as you purchase your family holiday to Spain might be how much the holiday will actually cost you if you don't pay all your credit card bill off straight away, you may well be throwing money away by sticking to a card with a high Annual Percentage Rate (APR).

For example, a €5,000 debt on a card with a 15 per cent APR will actually cost you almost €800 to pay back if you just pay €250 off each month, and will take two years to do so. If you switch to a card charging just 10 per cent, you can reduce the amount you owe in interest to just less than €500, and clear the debt two months earlier.

Similarly, if you switch your balance to a card, such as that offered by Halifax, with an introductory offer of 0 per cent, you could make significant savings. However, remember that once the initial period ends, a higher rate of interest will be charged. At Halifax, the rate jumps to 11.7 per cent, but it is more onerous at other providers such as MBNA, which charges 14.9 per cent after the first 10 months.

Don't sign up to a store card in a shop

SIGNING up to a financial product at a time when you may be on a shopping buzz is not the best idea. So, the next time the cashier offers to reduce your bill by 10 per cent if you sign up to their store credit card, take the documentation and say you'll think about it.

When you do get time to consider the offer, you may realise that the 10 per cent discount is actually quite a poor deal.

Firstly, if you want a credit card you are already likely to have one, so by signing up for an additional store card you will have to pay another stamp duty charge of €30 each year.

Secondly, the APR on store cards is generally high. For example, although Brown Thomas charges an introductory rate of 3.9 per cent for purchases and transferred balances during the first year, it is hiked up to 15.9 per cent thereafter.

So, if you just make the minimum monthly payment on a purchase of €400 Jimmy Choos, it will actually take you two years to pay back the store, and cost almost an extra €70 in interest.

Finally, store cards are just another way of making you part with your hard-earned cash by offering you a discount and in some cases loyalty points which can be used against further purchases - often on products you may actually find much cheaper elsewhere.

Don't pay too much for investment funds

EXPENSIVE investment funds should come with a product warning, as they can severely restrict your returns. So, before getting carried away with the jargon of bonuses and projected returns, do your homework and work out exactly how much the fund manager is charging you for the pleasure of investing in its fund. The cost of €10,000 invested over 10 years with an average annual return of 5 per cent, in terms of fees and earnings foregone, ranges from to €796.36 for a fund which charges an annual management fee of just 0.5 per cent, to €2,979.69 for one with a fee of 2 per cent per annum.

So keeping your money in an expensive investment fund may well wipe out any returns the fund produces.

Don't overspend on transacting shares

LIKE charges on investment funds, the cost of buying and selling shares - particularly Irish shares, which also attract an additional 1 per cent stamp duty charge - can eat away at possible gains.

While Irish investors don't have access to the types of low fees charged by online brokers such as E*Trade - which charges from just £7 in the UK and $7.99 in the US - it is still worth your while to shop around for an execution-only online broker, as charges can vary considerably.

For example, AIB's online share dealing service, which it operates through its subsidiary Goodbody Stockbrokers, charges 1.25 per cent on trades up to €25,000, with the balance exceeding that amount charged at 0.5 per cent. There is a minimum cost per trade of €32, as well as a €26 annual account maintenance charge and an additional fee of €19.05 on all European and US transactions.

Over at Fexco Stockbroking, trades up to €9,000 are charged a fee of 1.25 per cent, with amounts exceeding this charged 0.35 per cent, in addition to an administration charge of €7.50 per trade, and an annual maintenance charge of €40.

However, if you are a frequent trader, you can bring your costs down considerably. For example, at Davy Stockbrokers if you make more than 20 trades a year, you will pay 0.5 per cent on the first €25,000, and 0.25 per cent on the balance, with a minimum commission levied at €15.

So, if you purchased 10,000 Bank of Ireland shares at €1.71, the transaction would cost you €213.75 at AIB, €148.35 at Fexco, and just €85.50 at Davy, before extra fees such as stamp duty and annual fees are levied.

Don't buy home insurance from your mortgage provider

YOU'VE finally gotten the bank to sign off on your mortgage when the issue of home insurance comes up. After weeks of back and forth between you and the mortgage adviser, the last thing you want is another complication. So, for the sake of an easier life, you take the bank up on its offer of home insurance without getting any other quotes. After all, the bank is offering the first three months free so it must be a good deal, right? Not necessarily.

With you as a captive customer, mortgage providers often charge over the odds for extra products such as insurance, so do your homework and take the time to get other quotes before committing. You could save yourself hundreds of euro by doing so.

Don't sign up to an expensive overdraft

USING an overdraft can be one of the most expensive ways to borrow money, with a set-up fee and a high double digit interest rate often charged. For example, customers of AIB's Personal Bank Account can expect to pay a €25.39 set-up fee, as well as a 14.79 per cent APR, while Bank of Ireland charges a €25 fee, and a 13.7 per cent interest rate.

And, if you exceed your overdraft credit limit, you will severely hurt your finances - AIB charges an additional 12 per cent on amounts exceeding your agreed limit, while at Bank of Ireland the fee is 7.2 per cent.

If you regularly need access to credit before your next pay-check, consider following a stricter budget to ensure you can live within your means. Alternatively, shop around for a better overdraft facility.

For example, if you get €1,500 transferred into your current account each month, then Halifax offers a rate of 11.52 per cent with no set-up fee, while at National Irish Bank, an overdraft is available at 11.43 per cent, with no set-up fee on credit limits up to €10,000.

Another option is to shop around for a personal loan with a lower APR, or if your needs are short-term, a credit card with a bonus introductory rate of 0 per cent for a limited period.

Don't pay for basic banking services

AS most banks offer at least one current account with no banking charges, the last thing you should be doing is paying for every-day banking services. Nevertheless, some banks still have accounts which charge.

For example, AIB's Personal Bank Account Plus, charges a quarterly fee of €4.50, with fees also charged on transactions such as standing orders or direct debits. However, if you meet certain criteria, such as using AIB's phone or internet banking service to make a debit transaction, you can qualify for free banking.

This is something you will have to keep on top of, given the current environment, as just because you are avoiding charges now, doesn't mean that this will be the case in a month, or a year's time.

As banks struggle to make money and keep their capital levels up, they will need to find additional ways of bringing in extra revenues, and charging for banking services is an obvious target.

And finally.... don't over-pack for your holidays

THE days of lugging home your holiday finds from local markets is over as excess luggage has increasingly become a luxury item.

Aer Lingus allows one free bag on long-haul journeys, but charges €40 per extra bag per flight, while on shorter trips, all baggage must be paid for.

If you check in online before the flight, you must pay €15 per bag for a one-way European flight, and €9 for every kilo in excess of the 20kg allowed. Once you get to the airport, these fees increase, up to €18 per bag, and €12 per excess kg.

Ryanair offers a baggage allowance of just 15kg for up to three bags. If checking in online, the first bag will cost €10, with the second and third bag rising to €20 each. Rates are for a one-way flight, while excess baggage will cost €15 per kilo.

So, to avoid a financial crisis at the airport, pack light, and leave all the souvenirs behind. Remember, that €5 bottle of wine may actually cost you four times the price when you factor in the cost of transport home!

"With you as a captive customer, mortgage providers often charge over the odds for extra products such as insurance