Don’t stumble into hidden FEES
They’re the nasty surprises that can sting you repeatedly for cash, so factor them in when choosing financial products
I F you’ve ever had a personal finance product, ranging from an overdraft to your mortgage, chances are you’ve been hit by some unexpected costs. They drive people mad and at Which? we’ve dubbed them ‘sneaky fees and charges.’
They can be quite infuriating when you think how much you have spent over the years being loyal to a company, only to find a hidden charge, cancellation fee, or ‘management fee’ at the end of your arrangement with them.
So what’s sneaky about them? Well, they’re usually almost impossible to avoid. Often not upfront, they can feel like a rip off being much more expensive than the actual cost to the company.
This includes excessive charges just to print out a document, changing a name, or updating basic information in a contract.
We saw one case of someone who incurred a £35 charge for changing his address on his car insurance policy. Shortly afterwards, when the family went down to one car, they were required to cancel the policy and incurred another £55 fee. With the total charges paid equivalent to a quarter of the policy price, he understandably complained to his provider but this was rejected. After escalating the complaint to the Ombudsman, he eventually got a refund. It’s always worth challenging any fees you think are unfair or unreasonable.
But what if you could end up choosing the wrong deal because you haven’t factored in these sneaky fees? With mortgages we’ve found that while headline rates appear to have been tumbling, many fees have been rocketing.
Arrangement fees have doubled in the past five years from an average of £878 in 2009 to £1,588 in 2016. A homeowner borrowing £100,000 over a 25-year term and taking out a two-year fixed-rate mortgage could save £1,503 if they took set-up fees into account.
Equally as sneaky, there are more mortgage fees than there are letters in the alphabet, and lenders even use different names for fees that are actually the same.
For example, a booking fee can also be called a reservation or application fee. There’s a ‘porting fee,’ ‘sealing fee’ and ‘arrears breakdown fee’!
It’s little wonder the majority of us think that companies use these fees and charges to trick us into thinking that the cost is cheaper than it is.
We’ll keep challenging companies to stamp out sneaky fees, and you can too by complaining if you think you’ve been treated unfairly.