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

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 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


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 ( 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.

Finacial products from our partners
Property search
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Accounts Payable

    £12 - £15 per hour: Cameron Kennedy Recruitment: Excellent opportunity to join...

    Technical BA - Banking - Bristol - £400pd

    £400 per hour: Orgtel: Technical Business Analyst - Banking - Bristol - £400pd...

    Account Management Strategy Manager

    £38000 - £42000 per annum + competitive: Real Staffing: Required skills:Previo...

    Business Analyst Consultant (Financial Services)

    £60000 - £75000 per annum: Harrington Starr: Business Analyst Consultant (Fina...

    Day In a Page

    A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

    A History of the First World War in 100 Moments

    Peace without magnanimity - the summit in a railway siding that ended the fighting
    Scottish independence: How the Commonwealth Games could swing the vote

    Scottish independence: How the Commonwealth Games could swing the vote

    In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
    Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

    A writer spends a night on the streets

    Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
    Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

    UK's railways are entering a new golden age

    New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
    Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

    Conchita becomes a 'bride' on Paris catwalk

    Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
    Pétanque World Championship in Marseilles hit by

    Pétanque 'world cup' hit by death threats

    This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
    Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

    Why did we stop eating whelks?

    Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
    10 best women's sunglasses

    In the shade: 10 best women's sunglasses

    From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
    Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

    World Cup final: Messi? Mascherano is key for Argentina...

    No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
    Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

    Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

    18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
    The true Gaza back-story that the Israelis aren’t telling this week

    The true Gaza back-story that the Israelis aren’t telling this week

    A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
    A History of the First World War in 100 Moments: The German people demand an end to the fighting

    A History of the First World War in 100 Moments

    The German people demand an end to the fighting
    New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

    New play reveals what Oscar Wilde said at trials

    For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
    Can scientists save the world's sea life from

    Can scientists save our sea life?

    By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
    Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

    Richard III review

    Martin Freeman’s psychotic monarch is big on mockery but wanting in malice