Snap! There’s always another gotcha

There’s no end to the surprises that extract money from your wallet

You could find that you’re responsible for your daughter’s ex- husband’s future business debts [ Motor vehicle] policyholders often assume that they don’t pay an excess when the other person caused the accident. They do

otcha. Gotcha. Gotcha. Whenever we open our wallets these days there’s always a gotcha. Sometimes we don’t even realise we’ve been had until later — or forever.

Consumer’s current gift card campaign is a classic case of a gotcha. These cards expire before many people get to use them and Consumer estimates we could be losing $ 10 million annually.

I had an instance when I returned a faulty Christmas gift to Kmart a few years back. The staff member wanted to give me a credit note with a short expiry date on it. Had I not asked the question about how long the voucher was valid for, I would have kissed the $ 110 goodbye. I kicked up a huge fuss and got a proper refund.

The other issue with gift cards is that the money should be held in trust until it’s spent. The Dick Smith receivership is a case in point. Had gift card holders’ money been in trust, they wouldn’t have lost it. Let’s hope Consumer succeeds in killing this gotcha.

Even with the Credit Contracts and Consumer Finance Act, there are plenty of gotchas in hire purchase and related contracts. A reader got caught with FlexiRent from Harvey Norman on her child’s school laptop. She was signed up for a three- year lease, but the direct debits kept coming out because it is an open- ended lease. FlexiRent, which also uses the EasyLease brand name, told me they automatically call people at the end of the period, but my reader didn’t recall this happening.

Another gotcha with HP and other finance contracts relates to the payment protection insurance that is often tacked on. Many finance/ loan companies, says Darryl Evans, chief executive of the Mangere Budgeting Centre, sign up people for income protection insurance when they’re on a benefit. “Totally laughable if it wasn’t so tragic,” he says.

Quite often, self- employed people like me aren’t covered either. But shop staff often don’t ask.

Of course the real gotcha with HP and related sales is the amount you pay. The overall cost of a $ 1999 MacBook Air over 36 months with FlexiRent, including the residual buyout cost, is $ 3778.34 — or more if you don’t cancel at the end.

There are lots of gotchas with rental cars and in particular collision damage waivers. A reader messaged me after a run- in with a rental company. “So our car got hit by another driver and we did not know.” The company told them they would get a copy of the quote for repairs in two working days. “Ten days later no quote but $ 2900 was taken from our credit card.”

The repair quote was $ 1600 plus GST. It took two weeks of calls to have the overpayment refunded. Rental agreements do allow these companies to dip into your credit card for all sorts of things, so the company didn’t do anything it wasn’t allowed to, but it was a gotcha for the client who may not have read every word of the contract. The reader was horrified that more than the actual damage value could be deducted and held. For more information on rental car gotchas, read my 2015 article here: tinyurl. com/ rentalcargotchas

Lawyer Nick Kearney pointed out one gotcha out that many Kiwis are unaware of. “Banks have hidden in their loan terms that they can take money from other accounts you have at the bank to repay any defaults or overdrafts that are current, including credit cards.” That means banks can dip into your savings account to repay your overdraft without your prior authority or approval, he says. Shame if you were about to pay for your child’s school camp with that cash.

A related gotcha that I’ve written about

before, and that the Banking Ombudsman warns about, is going guarantor for a relative or friend. If they default, the bank/ lender can sell your house from under you. Guarantor contracts “cross collateralise” your home ( or car if that’s the security) against all current and future lending of the person/ couple you’re guaranteeing. If you sign a standard agreement without getting your lawyer involved, you could find that you’re responsible for your daughter’s ex- husband’s future business debts. Read more at: tinyurl. com/ goingguarantor

The Banking Ombudsman sees many gotchas. One in particular is banks allowing customers to spend beyond their limits. Personally, I think customers should be given a choice of whether they can exceed their overdraft. Banks argue that allowing them to do so ensures that the customer isn’t embarrassed. But I suspect the rationale is really the “honour” or “unarranged overdraft” charges they slap on in this situation.

Insurance has its fair share of gotchas. One relates to people legally on the property such as your children’s friends. A typical scenario is Mumand Dad go away. The kids hold the mother of all parties and valuables just happen to disappear. The insurance company doesn’t have to pay because the friends were legally on the property.

One example heard by the Insurance & Financial Services Ombudsman happened when a disgruntled flatmate stole a diamond ring, photo frame and dress when she was

evicted. The claim was declined because the thief was someone “renting, living or staying in the house“. In another claim that made it to the ombudsman, jewellery was allegedly stolen by a plasterer who was legally on the property doing work. No claim, sorry, was the message from the insurer.

Another gotcha that financial adviser Jon- Paul Hale of Willowgrove Insurance points out is not- at- fault motor vehicle accidents. Policyholders often assume that they don’t pay an excess when the other person caused the accident. They do. They only get their excess back if their insurance company recovers the excess from the third party or their insurer. Often, this doesn’t happen.

I had a gotcha with my Visa card a few weeks back. I was trying to buy a mobile phone online for a 13- year- old, to whom a day’s delay would be a matter of life and death. The payment wouldn’t go through for unknown reasons and the bank call centre member wanted to remove the “Triple Check” security controls — at my risk — for two days. My fear was that if my card was hacked in that time, I’d be up the proverbial creek without a paddle.

This type of article usually leads to a flurry of “you idiot journalist, you didn’t include my pet topic in your article” emails. I’d love to hear those stories. Send them to:

diana@ wordfusion. com