Simon Read: Expect poor service and sneaky tactics from the energy companies

The price war that erupted among the energy companies this week got me thinking about charges. While the price comparison sites and some money experts try to train us into believing that the cheapest is the best, the truth is often far from that. On the principle of "you-get-what-you-pay-for", buying bargains can be a false economy.

With many financial transactions, the headline price sometimes hides a heap of misery. With two surveys naming and shaming Npower this week as the worst energy company for customer service, for instance, it seems obvious that you should think twice before signing up with the firm.

But as soon as it joins the price war, you can bet it will attract a wave of new customers patting themselves on the back for bagging a great deal. They may not feel so pleased with themselves if they are ever in the unfortunate position of having to ring the company's call centre.

The same applies to bank accounts. Earlier this week the Halifax received a good deal of positive publicity after it trumpeted proudly about switching all its current accounts to daily charging from December. Mike Regnier, director of current accounts for Halifax, said: "Customers find the daily overdraft charging structure clear and easy to understand. We believe the introduction of this charging structure is the right thing for our current account customers."

The switch means an estimated five million Halifax or Bank of Scotland current account holders will be charged £1 a day when they use an agreed overdraft from December.

But that actually means that many customers will actually pay more, as David Black of Defaqto points out. "Anyone with an authorised overdraft of less than £2,000 or between £2,500 and £3,999 will lose out," he says.

It turns out that customers who go into the red briefly could end up being charged up to 20 times as much as they're currently paying. Someone going £100 into the red for a day, for instance, is now charged just 5p. Come December they will be charged £1, which works out as a 1,900 per cent increase.

The British Banker's Association says the average overdraft is £900 and any Halifax customer maintaining that as an average balance for a month will end up being charged twice as much.

Everyone's at the sneaky tactics game. On page 60, I report on insurers' excessive charges for people who need to cancel or switch policies. I found the figures astounding as some firms are happy to charge nothing for the service, but others grab £76 from a customer for what is a simple administrative job.

The lesson? Don't buy on the basis of price without first examining the charges and fees that you could be stung with. On top of that it's essential to check out companies' service records to find out whether they are fair with customers or don't care how badly they treat us.

Just stick the name of the company concerned and the word "review" into Google to get an idea of what others think about they way they've been treated. That word-of-mouth advice could be much more valuable than several pounds-worth of savings.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

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