You can get these things for free – so why pay?

Avoid falling for one of these 10 ruses to separate you from your cash, writes Chiara Cavaglieri

As the squeeze on our wallets continues and we search for ways to save rather than spend, cold callers, scam artists and greedy companies are looking for ever more inventive ways to part you from your cash.

A popular approach is to try to sell you something you could get for free or is simply not worth buying at all. Here is our list of 10 things that you should never pay for.

Debt advice

Forking out for debt advice will only aggravate your problems. Instead, get free and confidential help from your local Citizens Advice Bureau, or charities such as StepChange (formerly the Consumer Credit Counselling Service) and National Debtline.

Avoid debt consolidation companies which offer to combine all your debts into one – their aim is to make money out of your misery. A non-profit charity will help you negotiate with creditors and make a sensible, affordable repayment plan.

"People with financial problems should never seek help from debt management companies who charge expensive upfront fees. There are many charities who provide comprehensive, impartial service – free of charge," says Richard Lloyd the executive director of consumer champion Which?.

Reclaiming PPI premiums

The subject of the biggest financial mis-selling scandal of all time, payment protection insurance is designed to cover loan payments when you are unable to work, but many people were sold it unnecessarily, or even unwittingly.

Claims management companies offer to help people reclaim premiums if they think they were mis-sold a policy, taking a 25 per cent cut of any compensation. But, you can do this for free by firstly complaining to your lender and then to the Financial Ombudsman Service (FOS) if you still aren't happy.

ID theft insurance

Identity theft is a big issue, but you don't need to pay to cover yourself against it. You can claim money back from your bank or credit card provider if you are a victim, as long as you haven't been negligent.

You can also take steps to protect yourself (find advice at cifas.org.uk) and check your credit reports for just £2 via one of the three credit reference agencies – Experian, Call Credit and Equifax.

Car rental excess waivers

When you hire a car, insurance is included but the excess levels (the amount you pay towards a claim) can be in the hundreds or even thousands of pounds. The hire firm will ask if you want to take out further insurance to cover this excess, but many people aren't even aware it exists and fewer realise the car hire firm is unlikely to offer the best deal.

"Unfortunately, by the time this is explained to customers it is too late and they have little choice but to take out the hire company's excess cover for peace of mind, unaware they could have bought more comprehensive cover online for considerably less," says Stephen Ebbett, of specialist online insurer Protect Your Bubble.

Extended warranties

Also known as service agreements or support services, these pay out when an appliance needs to be repaired or replaced once the manufacturer's guarantee has expired. You may want the peace of mind, but they are often expensive and you have more protection in place than you might think.

Firstly, the Sale of Goods Act says goods should be of "satisfactory quality" and last a reasonable amount of time, so if something is faulty you may be able to claim against the retailer. Credit card issuers sometimes offer free extended cover and appliances are often covered for accidental damage under home contents insurance.

At the very least, shop around – you may get a better deal from the manufacturer, or via companies such as Warranty Direct.

Store cards

Store cards have a deservedly poor reputation. Shoppers are encouraged to pick one up at the checkout – often lured in with a one-off discount – and start spending immediately. Add in the inflated APR (around 25 per cent) and it's easy to see how they can be a problem. StepChange has revealed that average store card debt for those aged 25 to 40 is £944, while the over-sixties owe around £1,984.

Current accounts

"Never" may be a bit strong, but think twice before paying for a bank account. Packaged accounts come with extras, which are not necessarily worth the fee. Many offer add-ons that have featured in this article such as ID theft insurance, or policies that you cannot claim on. As some accounts cost £20 a month, you can probably save buying any useful benefits separately.

"Customers shouldn't be sold policies that they don't need or can't use. Banks must be transparent about what is and isn't included in a policy when they sell packaged accounts," says Mr Lloyd.

EHIC cards

A European Health Insurance Card is a must when you travel as it entitles you to reduced, or even free, state healthcare in all European Economic Area countries, but you should not pay for one. Bogus sites charge upwards of £10 to process the application. All you need to do is head to the official EHIC website (ehic.org.uk) and apply for free.

Premium phone numbers

Premium numbers are my bugbear, not least because you often need to call companies after they've made a mistake. Even worse, you can be on hold for ages, racking up a huge phone bill. You can fight 0870 numbers, however, by using saynoto0870.com which lists alternative numbers for dozens of major companies.

You can also do your own investigating as companies often supply a number for customers outside the UK to call. Otherwise you may be able to call the sales line, or even head office, and ask to be transferred.

Payday loans

Quick cash until payday for a small fee may seem reasonable, but the annual percentage rates at Wonga and other lenders can be in excess of 4,000 per cent, with steep penalties for late payment to boot.

It is often cheaper to use an authorised overdraft for a few days, and in the capital, London Mutual Credit Union is taking on the payday industry by offering instant cash for loans for up to three months (at cuok.co.uk) charging only 26.8 per cent. Other credit unions commonly offer cheap loans for six months to a year, although you may have to save with them for three months first.

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