It pays to check the small print
TRICIA PHILLIPS LOOKS AT CONTRACT PITFALLS TO BEWARE OF
WHEN Monarch Airlines went bust last month thousands of holidaymakers risked being left out of pocket for flights that no longer existed, just because they used a debit card instead of a credit card to buy their tickets.
Paying for items over £100 on a credit card means you are legally entitled to get your money back if the firm goes bust, under Section 75 of the Consumer Credit Act.
Paying on a debit card doesn’t give the same protection. There is a voluntary chargeback scheme, where your bank will try to get your cash back from the bust firm, but there’s no legal obligation and often very little chance of success.
The financial world is a mass of complex small print that most of us don’t have the time to read, and when we do, it’s difficult to understand it.
Independent financial expert Andrew Hagger of Moneycomms. co.uk, says: “Legal requirements mean that the small print or terms and conditions at the foot of application forms and websites often runs to many paragraphs.
“Unfortunately very few people have the time or inclination to
wade through these finer points – and it doesn’t help that they are riddled with confusing jargon.
“This means that important information and potential pitfalls often get overlooked until it’s too late.”
Here are some other nasties in the small print of financial products, that could catch you out.
CREDIT CARDS 0% deals:
MISSING or being late with a payment on a card with an introductory offer can mean the deal is stopped immediately and you get hit with interest at 18.9% or more.
Late payments:
SET up a direct debit or standing order to ensure payments are never late or missed, as you’ll be charged a £12 late payment fee.
Avoid cash:
DON’T use credit cards to withdraw cash. You’ll be charged interest from the day you take it out.
HOLIDAY SPENDING
HOTELS, meals out and souvenirs could end up costing you a lot more than you expected as your card firm could be charging a commission of up to 2.99% on top of each transaction.
INSURANCE Excesses:
THERE are two types. Compulsory excesses set by insurers are not negotiable, they often cover specific areas such as subsidence or escape of water on home policies. There are also voluntary excesses, which can be high on cheaper policies. But if you agree to them it means you will have to cough up more in the event of a claim. In some circumstances you could even get slapped with a hefty bill that includes both a voluntary and a compulsory excess.
Home insurance – wrong cover:
BLANKET polices offering, say, £50,000 worth of cover can sound very impressive but you could be paying top whack and still find your most precious items aren’t covered. Check the single item limit, often around £1,500 which can be less than an engagement ring or hi-tech kit are worth.
Car insurance – paid in instalments:
THIS helps spread the cost but double check whether your insurer is charging you interest. It can cost you dearly, often 20% APR. You may not notice this as it is included in the monthly repayments you get quoted, without a breakdown.
Car fronting:
MORE than half of parents say they would consider “fronting” – that is where they say they are the main driver of a vehicle when in fact it will
be mainly driven by a younger or higher risk driver. This is a huge gamble. Not only will this invalidate a policy, it is illegal and fraudulent and could land you with a criminal record.
Travel insurance:
IF YOU have an accident or even lose something while drunk or taking drugs on holiday there’s a huge chance your insurer will reject your claim.
This could end up costing tens of thousands if you need urgent medical care or to be airlifted home. There is no help whatsoever if you don’t have valid travel cover.
Travel activities:
SPORTS and beach activities are not included as standard on most policies. Impromptu jet-skiing, zip lines or even banana boating could leave you in deep water.
Medical conditions:
YOU must be honest about existing medical conditions, even if they seem trivial. Don’t be tempted to not declare some conditions to try and save money – it could end up an expensive mistake.
MORTGAGES SUPER-LOW
interest rates are tempting but without knowing the full cost of the loan, including all fees, over the term could mean you pay way over the odds.
The lowest rates often come with £1,500 fees, and over a two-year deal that is high.
Get a mortgage broker to help you do the sums to ensure you really are getting the best deal.
Renting your property out on Airbnb can invalidate home insurance or violate the terms of your mortgage agreement.
MOBILE PHONES
IF YOU can afford to pay upfront for a phone, then do it and take out a SIM-only deal so you won’t get stuck in an expensive 24-month contract. SIM-only deals can start from a month at a time.
Plus you won’t end up paying interest on the handset, a cost that is often hidden in the total monthly contract bill.