From time to time, we all need some treatment. That jam doughnut, those high heels or a new outfit. It’s easy to chastise ourselves for cutting your spending when money is tight however, how many of us pay out month after month on useless financial products that seemed like a good idea at the time? Read on to see which of these financial products you pay for and why you should cancel that direct debit now.
Extended Warranties
That spotty little teenage salesperson convinced you this was a good idea and he needed the commission, where’s the harm? Any new goods come with a manufacturer’s year guarantee, meaning that an extended warranty is pointless in year one. Most companies offer a 2-5 year warranty during which time they are pretty confident that you are not going to claim, so they are quids in. If your goods were to develop a fault after this time then you have to pay for a repair or a new item on top of the cost of the warranty.
Under the 1979 Sale of Good Act retailers are liable to pay for any repairs or replacements to goods that they have sold that develop faults or don’t work correctly within a short time of purchase. For some products, retailers can be expected to pay out for up to six years.
Extended warranties also come with a list of exclusions so ensure you read the small print. The only way to challenge these companies in the event of a rejected claim is through the courts and that can be costly.
Packaged Current Accounts
In the competitive world of banking, Banks need to come up with new and exciting ways to encourage customers to bank with them. This has lead to packaged current accounts. The cost of these accounts is around £13.00 per month. Each bank has its own package; many consists of health insurance, travel insurance, commission-free items, will writing services, and many others. When you add up the cost of these items year on year, there is little doubt that you are not getting value for money. Many people are attracted by just one part of the package and generally, they can buy that cheaper as a standalone product.
In some circumstances, people do get a better deal by buying the package, for instance, those that travel a lot or those that have had trouble acquiring life or health insurance. However for the most part they cost more than they are worth.
Mobile Phone Insurance
Ask any mobile phone salesman and they’ll tell you that insurance is pretty much essential. Most mobile phone insurance companies only payout if the phone is stolen and they often have a high excess. Look at your home content policy. If it is ‘all risk’ policy it is highly likely you are covered anyway. This will cover your phone against accidental damage, loss, and theft. Your premium may cost you a few pence more each month but it will certainly be less than the insurance on offer from the mobile phone salesman.
Paying For Debt Counselling
Many people in debt are lured by debt management agency adverts. These companies typically charge around £30 to set you up on their systems and then take approximately 17.5% of your monthly debt repayment as their fee. Banks and Building societies do not recommend their services and why should they when you can get the same service free of charge? There are a few recommended by Banks and Building Societies; Consumer Credit Counselling Service, National Debtline, Citizens Advice Bureau, and Advice UK all offer an excellent service and are recognized and respected by all major Banks and Building Societies.
Store Cards
You’ve carried out your retail therapy and cautiously make your way to the till. Your feeling guilty already as you can’t really afford to spend the cash so when the cashier mentions you can save 10% today by signing up for their store card it seems too good an opportunity to miss.
However, most of these cards charge extortionate interest rates after the initial interest-free period. If you choose to pay the minimum monthly installment your initial discount will soon be lost in interest payments. There are many credit cards out there with much lower interest charges that will do exactly the same job. If you have one of these cards with a balance on it you would do well to find a credit card with a zero rate balance transfer and save yourself a few pounds.
In these credit crunch times, we all need to regularly check our outgoings and shop around for the best deals. There are a wealth of websites out there offering to compare products to help you find the best value for money and cashback sites are springing up all over the place enabling you to get cashback for your purchases. Now is the time of The Savvy Shopper.