Rip-off fees and how to avoid them

Beware of the high charges that often come with switching policies and companies. Chiara Cavaglieri investigates

With financial services, the devil is in the terms and conditions. The price may be right, but you could be hit with a punishing fee if you have to change an insurance policy, move mortgage provider, use your credit card or switch phone company. Here's our guide to the fees to watch out for and how to keep them to a minimum.

Car and home insurance

Admin fees are on the up. Research from analysts Defaqto shows that motorists could be hit with a number of fees for very minor policy adjustments such as change of address or marital status. In 2004, only 17 per cent of companies charged an adjustment fee to change policy details, but today that figure has soared to 67 per cent. This culture of imposing fees is spreading to home insurers, with consumer group Which? finding that three out of 10 providers now charge similar policy detail adjustment fees.

Action: Price comparison sites will give you a rundown of most fees that providers charge, but when you have a shortlist you can give each a call and ask what they charge for such things as change of address If you think you may have to change your policy details in the next few months, then factor this cost into your final decision over which provider to go for. You can also save yourself cash by paying the year's premiums in one go, rather than monthly direct debit.

Phone and broadband

Stiff competition has meant that many companies are simply dropping their rates to attract business, then stinging customers with bumped-up charges elsewhere. These can include set-up or connection charges, termination charges and premium rate phone numbers for technical support. If you're tied to a long contract you will also face exit fees if you switch. Another problem is the extra cost for those not paying by direct debit.

"If you pay any other way than direct debit, you are going to face additional monthly charges of about £1 to £5 on top of your usual fee," says Michael Phillips, product director at Broadbandchoices.co.uk.

Action: Pay your bills by direct debit, or use Post Office Home Phone as it is the only company that allows customer to pay over the counter with cash or a credit card without facing extra fees. Check all of the charges including set-up or connection fees to compare the overall cost. see if there's an exit fee for leaving your account before it expires.

Use sites such as Saynoto0870.com to find cheaper or free alternatives to premium customer service and technical help numbers.

Card charges abroad

Many providers charge cash withdrawal fees of about 3 per cent plus foreign loading fees of between 2.75 and 2.99 per cent. For example, using a NatWest Current Account Plus debit card at an ATM incurs a 2 per cent withdrawal fee, plus a 2.75 per cent transaction fee, adding an extra £31.27 in fees to 10 withdrawals of €50.

Action: Halifax Clarity and Santander Zero don't charge for overseas usage. For debit cards, the Nationwide FlexAccount current account is a good bet; at the moment there are no foreign currency charges on purchases within the Visa Europe region. From November there will be a 2 per cent charge and a £1 fee for cash withdrawals, but it is still the cheapest option available. You may also want to consider a prepaid card. "A prepaid card from CaxtonFX gives consumers the most spending power as they have no purchase, withdrawal or foreign loading fees," says Kevin Mountford, head of banking at Moneysupermarket.com.

Mortgages

Ignore mortgage fees at your peril. "There is a trade-off between low rates and low fees. For example, Alliance & Leicester has a couple of cheap tracker and fixed rates but these come with 2 per cent arrangement fees," says Andrew Montlake from mortgage broker Coreco.

Action: Make the most of online tools. Comparison websites and brokers such as London & Country (lcplc.co. uk/calculators) offer free calculators to determine how much a loan will cost with all the fees taken into account, and to show you whether it's worth remortgaging.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

PROMOTED VIDEO
News
Buddy DeFranco
people
Arts and Entertainment
British actor Idris Elba is also a DJ and rapper who played Ibiza last summer
filmIdris Elba responds to James Bond rumours on Twitter
Arts and Entertainment
Lena Headey as Cersei Lannister in Game of Thrones
film
News
i100
Sport
Yaya Sanogo, Mats Hummels, Troy Deeney and Adnan Januzaj
footballMost Premier League sides are after a striker, but here's a full run down of the ins and outs that could happen over the next month
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

    Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

    Selby Jennings: Quantitative Research | Equity | New York

    Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

    Selby Jennings: SVP Model Validation

    Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

    Selby Jennings: Oil Operations

    Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

    Day In a Page

    Ed Richards: Parting view of Ofcom chief. . . we hate jokes on the disabled

    Ed Richards: Parting view of Ofcom chief. . . we hate jokes on the disabled

    Bad language once got TV viewers irate, inciting calls to broadcasting switchboards. But now there is a worse offender, says retiring head of the media watchdog
    War with Isis: The West needs more than a White Knight

    The West needs more than a White Knight

    Despite billions spent on weapons, the US has not been able to counter Isis's gruesome tactics, says Patrick Cockburn
    Return to Helmand: Private Davey Graham recalls the day he was shot by the Taliban

    'The day I was shot by the Taliban'

    Private Davey Graham was shot five times during an ambush in 2007 - it was the first, controversial photograph to show the dangers our soldiers faced in Helmand province
    Revealed: the best and worst airlines for delays

    Revealed: the best and worst airlines for delays

    Many flyers are failing to claim compensation to which they are entitled, a new survey has found
    The stories that defined 2014: From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions

    The stories that defined 2014

    From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions
    Stoke-on-Trent becomes first British city to be classified as 'disaster resilient' by the United Nations

    Disaster looming? Now you know where to head...

    Which British city has become the first to be awarded special 'resilience' status by the UN?
    Finally, a diet that works: Californian pastor's wildly popular Daniel Plan has seen his congregation greatly reduced

    Finally, a diet that works

    Californian pastor's wildly popular Daniel Plan has seen his congregation greatly reduced
    Say it with... lyrics: The power of song was never greater, according to our internet searches

    Say it with... lyrics

    The power of song was never greater, according to our internet searches
    Professor Danielle George: On a mission to bring back the art of 'thinkering'

    The joys of 'thinkering'

    Professor Danielle George on why we have to nurture tomorrow's scientists today
    Monique Roffey: The author on father figures, the nation's narcissism and New Year reflections

    Monique Roffey interview

    The author on father figures, the nation's narcissism and New Year reflections
    Introducing my anti-heroes of 2014

    Introducing my anti-heroes of 2014

    Their outrageousness and originality makes the world a bit more interesting, says Ellen E Jones
    DJ Taylor: Good taste? It's all a matter of timing...

    Good taste? It's all a matter of timing...

    It has been hard to form generally accepted cultural standards since the middle of the 19th century – and the disintegration is only going to accelerate, says DJ Taylor
    Olivia Jacobs & Ben Caplan: 'Ben thought the play was called 'Christian Love'. It was 'Christie in Love' - about a necrophiliac serial killer'

    How we met

    Olivia Jacobs and Ben Caplan
    Bill Granger recipes: Our chef's breakfasts will revitalise you in time for the New Year

    Bill Granger's healthy breakfasts

    Our chef's healthy recipes are perfect if you've overindulged during the festive season
    Transfer guide: From Arsenal to West Ham - what does your club need in the January transfer window?

    Who does your club need in the transfer window?

    Most Premier League sides are after a striker, but here's a full run down of the ins and outs that could happen over the next month