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.

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

Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvOnly remaining original cast-member to leave crime series
premier leagueManchester City vs Chelsea match report from the Etihad Stadium
Esteban Cambiasso makes it 3-3
premier league
Mario Balotelli celebrates his first Liverpool goal
premier leagueLiverpool striker expressed his opinion about the 5-3 thriller with Leicester - then this happened
people'I hated him during those times'
Britain's shadow chancellor Ed Balls (L) challenges reporter Rob Merrick for the ball during the Labour Party versus the media soccer match,
peopleReporter left bleeding after tackle from shadow Chancellor in annual political football match
Arts and Entertainment
Female fans want more explicit male sex in Game of Thrones, George R R Martin says
tvSpoiler warning: Star of George RR Martin's hit series says viewers have 'not seen the last' of him/her
Dame Vivienne Westwood has been raging pretty much all of her life
peopleFirst memoir extracts show she 'felt pressured' into going out with the Sex Pistols manager
Arts and Entertainment
Lauryn Hill performing at the O2 Brixton Academy last night
musicSinger was more than 90 minutes late
Lewis Hamilton in action during the Singapore Grand Prix
Formula OneNico Rosberg retires after 14 laps
Rumer was diagnosed with bipolarity, attention deficit hyperactivity disorder and post-traumatic stress disorder: 'I was convinced it was a misdiagnosis'
peopleHer debut album caused her post-traumatic stress - how will she cope as she releases her third record?
Arts and Entertainment
tvReview: 'Time Heist' sees a darker side to Peter Capaldi's Doctor
Finacial products from our partners
Property search
Latest stories from i100
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

    Senior BA - Motor and Home Insurance

    £400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

    Market Risk & Control Manager

    Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

    SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

    £320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

    Head of Audit

    To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

    Day In a Page

    Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

    Despite the result, this is the end of the status quo

    Boyd Tonkin on the fall-out from the Scottish referendum
    Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

    Manolo Blahnik: Flats, Englishness, and Mary Beard

    The shoe designer who has been dubbed 'the patron saint of the stiletto'
    The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

    Scrambled eggs and LSD

    Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
    'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

    'Normcore': Blending in is the new standing out

    Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
    Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

    New leading ladies of dance fight back

    How female vocalists are now writing their own hits
    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments
    These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

    Widespread fear of Isis is producing strange bedfellows

    Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
    Topshop goes part Athena poster, part last spring Prada

    Topshop goes part Athena poster, part last spring Prada

    Shoppers don't come to Topshop for the unique
    How to make a Lego masterpiece

    How to make a Lego masterpiece

    Toy breaks out of the nursery and heads for the gallery
    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
    Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

    Ian Paisley’s decision to make peace with his IRA enemies

    His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam