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
Sunday 11 November 2012
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.
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.
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 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.
"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.
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.
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.
- 1 Malaysian cyclist could face disciplinary action after 'Save Gaza' gloves protest
- 2 Is Gideon Levy the most hated man in Israel or just the most heroic?
- 3 Fifty Shades of Grey trailer provokes moral outrage from US parenting groups
- 4 McDonald’s removes chicken nuggets from the menu in Hong Kong amid major food scare
- 5 Students offered grants if they tweet pro-Israeli propaganda
Malaysia Airlines MH17 crash: Vladimir Putin is given 'one last chance' to end hostilities in Ukraine
The 'scroungers’ fight back: The welfare claimants battling to alter stereotypes
The truth about conspiracy theories is that some require considering
Arizona execution lasts two hours as killer Joseph Wood left 'snorting and gasping' for air
Malaysia Airlines MH17 crash: Ukrainian military jet was flying close to passenger plane before it was shot down, says Russian officer
Malaysia Airlines MH17 crash: Massive rise in sale of British arms to Russia
iJobs Money & Business
£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...
£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...
£280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...
£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...
Day In a Page
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000
A 17th century four-bedroom house, with open fireplaces, cellar and pool, £600,000
A three-bedroom, coach house with luxury open-plan living space and contemporary breakfast bar