OUT with the old, in with the new. It's New Year and time for improvements, but will our pockets get the revamp we plan for our work and waistlines?

Vicky Pilcher looks at the changes you can make to improve your finances in 2005.

OVEREATEN and overspent. The typical hangovers of Christmas are just making their presence known and now is the time many of us will be taking a closer look at our money.

But if the numbers do not make happy reading then some shrewd financial rearranging can make all the difference to your New Year.

Cards

Last year UK spenders broke through the £1 trillion-mark of national debt and much of this was borrowed on credit cards. The temptation of plastic is great, but many forget that credit is exactly this, money loaned to you - at a cost.

The first task of the New Year is to review your credit lenders. Check what interest rates currently apply to store or credit cards. Store cards are notoriously high interest chargers. Make repayment of these accounts a priority.

Credit card debt can be managed by taking advantage of 0 per cent balance transfer deals but 2005 will see these deals increasingly disappear.

Some lenders have started to charge for account transfers. Barclaycard introduced fees in August and Virgin, Abbey and Alliance and Leicester are among others who declare a right to charge a fee. 0% transfers are available with Nationwide's Classic Credit Card (13.9 per cent after six months) and the Egg Card (0 per cent until September 2005).

Borrowing

If you owe more than one lender you are paying more than one interest rate. Consider consolidating your payments using a new loan to pay off straggling debts. The Alliance and Leicester and Direct Line are currently offering personal loans at 5.9 per cent.

Despite a tightening of credit legislation last year, it is still wise to proceed with caution. Stick to established lenders and ensure all conditions and charges are fully explained to you.

If you know you may over-extend your finances then an arranged overdraft on your bank account can save you interest and charges. Lloyds TSB, Barclays and the Alliance and Leicester offer customers interest free overdraft facilities on certain accounts.

Simon Teague, area manager for NatWest in West Malling, said: "We are already seeing clients who have been proactive since Christmas. The earlier you see your account advisor the better. Problems arise when debt is left to accumulate."

Mortgages

Reviewing your mortgage is one of the most significant means of reducing monthly spending.

Rising bank rates have cost mortgage lenders customers in recent months and lenders are greeting the New Year with significant discounts for clients. The Abbey and HSBC both cut rates in December and the Portman Building Society is the first lender to drop its rates below 4.5 per cent since last April.

But analysts predict the best is still to come with many more lenders returning to lower rates in 2005.

Insurance

Compare current deals on home, car, life and medical insurance.

Wye-based independent financial advisor Simon Webster said: "The cost of Life Assurance in particular has fallen in recent years - but many are still paying far too much for their cover.

“As there is no renewal people often forget to check whether they could buy cheaper. As long as they remain in good health it will often be possible to save a significant sum every month just by consulting an independent financial adviser."

Investing/Pensions

Personal pension provision is a must now, but 2004 was dominated by stories of crisis in the pension industry.

The traditional providers of personal pension plans insurance companies have largely failed to inspire with their performance and charges, so a shrewd move for 2005 may be a self-invested personal pension (SIPP).

An independent financial advisor will help you build your pension investment by guiding you on qualifying investments such as shares, investment funds and commercial property.

Utility Bills

Comparing energy suppliers is another must for 2005. Your traditional supplier may not be giving you the best deal. Internet site www.moneyexpert.com will compare energy suppliers using your current energy consumption.