Five cash-wasters you should avoid
This year’s Money Week, which started on Monday, is all about saving enough for retirement.
The decisions you make now about where you put your money will affect how comfortable you are when it’s time to put your feet up. The week is a salient reminder to check you’re not wasting money on products that may have little financial benefit.
Here’s Consumer NZ’S list of five financial products you should give the swerve.
1. Funeral insurance
Ads touting funeral insurance prey on fears of being a burden on your family. But your family may prefer you didn’t waste your money in this way.
With most funeral insurance policies, you can end up paying thousands more in premiums than the cover is worth.
If the premiums get too expensive for you to afford and you need to cancel, you’ll wave goodbye to all the money you’ve spent on the policy.
2. Card repayment insurance
This type of insurance is meant to help cover your credit card debt in the event you get sick, lose your job or become disabled. However, the payout can be underwhelming. You may only be covered for 10 to 15 per cent of your card debt.
Payments can also stop after a certain number of months. It’s better to pay off your credit card each month rather than waste money on this type of insurance.
3. Extended warranties
With most extended warranties, you’re buying cover you already have under the Consumer Guarantees Act. The act requires goods to be of acceptable quality.
If they’re not, you’re entitled to ask the retailer to put things right. You don’t have to pay extra for an extended warranty.
If you aren’t confident about using the act to enforce your rights, Consumer NZ has a section on its website that explains how to do it.
4. Education savings schemes
There are education funds promoted to families to help meet the costs of tertiary study. But if your child doesn’t go on to tertiary study, there’s no return on your savings – you’ll get your money back with no interest. If you want to put money aside for your child’s education, choose an option that gives a return regardless of whether your child goes on to further study.
Too many people still get caught out by cold-calling sales reps.
5. Cold-callers offering investments
If someone you don’t know contacts you about an investment opportunity, it’s likely to be a scam. The set-up usually involves transferring funds overseas.
Don’t be tempted by the promises of big returns. It may sound like obvious advice but too many people still get caught out by cold-calling sales reps.
Your best protection: hang up.
Sue Chetwin is the chief executive of Consumer NZ. For thousands of independent test results and research on a range of products and services, go to consumer.org.nz.