10 things you should always get for free
1. IDENTITY THEFT INSURANCE
Identity theft has become big news, so there are plenty of firms hoping to cash in with identity theft insurance.
But you don’t need to pay for this. Specialist insurer CPP was fined £10.5 million in November 2012 after being found guilty of mis-selling policies after charging clients £90 a year for ID health checks, access to credit reports and a fraud expert.
Under the Consumer Credit Act and the Banking Code, you can claim back money from your bank or credit card provider if you are the victim of identity theft without paying a penny. And you can easily access your credit report for £2 through the major credit agencies (Experian, Equifax and Call Credit).
SAVING: £90 A YEAR
2. EXTENDED WARRANTIES
Buy an electrical product and most companies will try to push an extended warranty on you. But these policies are costly - typically around 25% of the price of the product. There are also exclusions such as accidental damage to watch out for.
As you are already entitled to a refund if the product is faulty under the Sale of Goods Act 1979, and most products come with a year’s warranty, these policies tend to be a complete waste of money.
SAVING: £39 A YEAR
3. PAID-FOR CURRENT ACCOUNTS
Packaged accounts, which include standard current account facilities and extras such as breakdown cover, mobile phone insurance or travel insurance cost around £15 a month, but they don’t often save you money.
Banks claims these accounts will save you hundreds a year but this is based on mainly unnecessary costs. For instance, you can add your mobile phone to your home contents insurance for a small fee and an annual travel insurance policy costs from £29 with insureandgo.com.
SAVING: £35 A YEAR
4. PAYMENT PROTECTION INSURANCE CLAIMS
Lots of firms cashed in on the payment protection insurance mis-selling scandal by offering to help victims put in their claims in return for a chunk of their compensation. For example, claims firm Gladstone Brookes deducts 25% of any money you receive in return for processing your claim.
With an average compensation payout of £2,750, according to the Financial Ombudsman Service, that means they are pocketing nearly £700 per claim. But the process is very simple and won’t affect the outcome, so make a claim yourself and save a fortune.
5. CHAPS PAYMENTS
CHAPS sterling payments allow you to transfer money instantly between banks within the UK for a charge of around £20. However, the Faster Payment system works almost as quickly and is free.
Sandra Quinn, spokesperson for the Payments Council, says: “All payments will be completed within two hours and the benefit of Faster Payments is it works all day everyday, whereas CHAPS is a business-day-only service.”
SAVING: £20 PER PAYMENT
6. MOBILE PHONE INSURANCE
Losing your mobile phone can be annoying and costly. Mobile phone insurance can safeguard against this but it costs £7 a month on average and only tends to pay out if your phone is stolen or damaged.
It may also be completely unnecessary as your phone may be covered under your home insurance policy. If not, you can add an ‘all risks’ option to your policy for around £15 a year to include valuables taken outside of your home.
SAVING: £69 A YEAR
7. PREMIUM-RATE PHONE NUMBERS
Premium-rate phone numbers are expensive and can leave you with a huge monthly bill. Some landline providers will waive certain calls to these numbers but if you call them from your mobile, you’ll likely be charged even more.
Calls to '09' numbers are the most costly - prices can rocket to £2.04 per minute and minimum call durations usually apply - and lots of companies charge 35p a minute for calling numbers starting with '08'.
The website saynoto0870.com lists alternative local numbers you can use, which will be included in your call allowance. Many company websites also list a separate phone number to be used when calling abroad. These will start with +44 and will only charge you the local telephone rate.
SAVING: £2 PER CALL
8. USING YOUR CREDIT CARD ABROAD
Most companies will charge you if you flex your plastic abroad. The charges vary between providers but a 2.75% commission fee is not unusual. So spend £500 on your Barclaycard while you’re away and you’ll end up handing over around £14 for the privilege.
However, some credit cards waive foreign exchange fees, such as the Halifax Clarity Card or the Post Office Platinum Card.
SAVING: £14 PER TRIP
9. DEBT MANAGEMENT PLANS
The last thing you need when you’re in debt is another bill but some firms charge extortionate amounts to help you sort out your debts. For example, Debt Free Direct charges up to £100 a month to help people create and maintain a debt management plan.
However, this is a complete waste of money because charities such as the Consumer Credit Counselling Service and National Debtline offer the exact same debt management service completely free of charge.
SAVING: £1,200 A YEAR
10. BASIC NHS DENTAL TREATMENT
Dentists are currently being examined by the Office of Fair Trading to see if they offer fair service to patients. The main complaint is that NHS dentists are charging customers too much for basic treatment.
SAVING: £35 PER VISIT
If you’ve have a complaint about a financial service product you have bought but the company you bought it from refuses to resolve your problem after eight weeks, the Ombudsman can help. The Ombudsman will investigate and resolve the matter. The Ombudsman is independent and its service is free to consumers. The Ombudsman may find in the company’s favour but consumers don’t have accept its decision and are always free to go to court instead. But if they do accept an Ombudsman’s decision, it is binding both on them and on the business.
The practice of a dishonest salesperson misrepresenting or misleading an investor about the characteristics of a product or service. For example, selling a person with no dependants a whole-of-life policy. There have been notable mis-selling scandals in the past, including endowment policies tied to mortgages, employees persuaded to leave final salary pensions in favour of money purchase pensions (which paid large commissions to salespeople) and payment protection insurance. There is no legal definition of mis-selling; rather the Financial Services Authority (FSA) issues clarifying guidelines and hopes companies comply with them.
Payment protection insurance is designed to cover you should you fall ill, have an accident or lose your job and can’t make repayments on loans or credit cards. However, research by consumer watchdogs found the cover to be overpriced, filled with exclusions (policies exclude self-employment, contract employees and pre-existing medical conditions) and were often mis-sold because the exclusions were never fully explained. In May 2011, the High Court ruled banks had knowingly mis-sold PPI and ordered them to compensate around two million consumers.
Debt management plan
Not to be confused with a consolidation loan or bankruptcy, a DMP is a service offered by a specialist debt management company that will negotiate with your creditors to change the terms of how they get their money back. The debt company will renegotiate your debt repayment terms and then deal directly with your creditors on your behalf, and you then pay the debt management company, which passes the money to your creditors minus its initial and subsequent monthly fee. This can be as high as 20%, which means you’ll pay down your debts slower than you thought.
A current account that charges a monthly fee in return for a “package” of additional services, such as travel insurance, credit card protection, mobile phone insurance, identity theft insurance, car breakdown cover or a “concierge service” that will book airline and theatre tickets or restaurant tables. However, many consumer experts say the features are overpriced and that more competitive deals exist elsewhere in the market and that very few packaged account holders actually take advantage of the features.
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.
Does exactly what it says on the tin: covers the contents of your home for theft and damage and also may insure certain possessions (jewellery, cycles) outside of the home. Things to watch for include the excess and also the maximum payout on individual items. Another grey area is kitchen fittings, as some contents policies say these are not contents but part of the fabric of the property and covered by buildings insurance and some buildings policies don’t cover them because they regard them as contents.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.
A report containing detailed information on a person’s credit history, a record of an individual’s (or company’s) past borrowing and repaying, including information about late payments and bankruptcy. It also includes all applications a person has made for financial products and whether they were rejected or accepted. Your credit report can be obtained by prospective lenders to determine your creditworthiness.
The Clearing House Automated Payment System processes and settles time-dependent payments through its two payment schemes: CHAPS Sterling and Faster Payments. Faster Payments is similar to BACS but boasts much speedier transaction times (hours rather than days). The system processes in excess of £70trn annually.