With costs rising in all aspects of our lives, it’s easy to assume that we just have to accept a world of higher prices.

But did you know that many of the expenses we assume are non-negotiable are actually a big rip-off and you can save a fortune by switching, cutting back or shopping around?

Here’s my guide to some of the main services you’re paying for that are likely to be too expensive – and how to save some cash or escape your contracts.

Insurance

One of the biggest overcharging scandals in the last few decades was the insurance ‘loyalty charge’. This is where insurers increased the premiums of their customers who stayed loyal each year, often leading to vastly inflated costs. The Financial Conduct Authority effectively banned this practice, with the new rules kicking in last year – but only for home and car insurance, on the understanding that loyalty charges would also be phased out in other insurance contracts. However, loads of readers are telling me that their insurance costs are still increasing each year.

But there are ways you can beat this and save a packet. For a start, are you paying for policies you don’t need? When you buy a new phone or upgrade, chances are the business will try to sell you a new mobile phone insurance policy. If you assumed that the old policy would be cancelled, you may be in for a nasty surprise. Though it should be obvious to businesses that you don’t need your old policy any more, they often don’t remind you to cancel. If you’re being charged for old insurance policies you don’t need, not only can you cancel them, you can ask for the money to be refunded too, with interest.

I’d also recommend consolidating all of your insurance policies for your gadgets in to one. You may be paying separate policies for your phone, tablet, laptop, gaming console and smart devices, at £10 to £15 or more a pop. If you get a multi-gadget policy for five items, it could cut your costs for £20-£30 a month down from £150 a month. That’s over £600 a year!

Broadband

It’s estimated by regulator Ofcom that over 7 million people were ‘out of contract’ with their broadband deals. Annoyingly, people who are out of contract are generally paying much more for their broadband package than new customers. Once again, there’s a high price for staying loyal, so if you’ve been out of contract for a few years then you’ll have had annual above inflation price rises stuck on your monthly payments. It’s not unheard of for people to be paying upwards of £100 a month for their broadband and TV packages. You can easily cut your costs in half, or get your payments down as low as £20 if you are happy to go for a basic package. There are also new, super low deals for people in receipt of benefits, though you do have to ask to go on to these.

One of the biggest blockers when it comes to switching broadband providers is the fear of something going wrong and being left without vital communications tools. I recently put my money where my mouth is and switched. Though not everything went smoothly, there was an overlap period of a month where both my old provider and new one was operating, which meant I could alternate while a few teething problems were sorted out.

A word of warning though – remember to ask about price rises in April 2023. Regardless what the business says, their contracts allow them to hike the amount you pay. The current rate of inflation is 10.7%. If you add on 3% and add that to your proposed new monthly payments, you’ll have a clearer picture of what the price rise might be in a few months, though inflation could change quite a bit before April.

You usually get better deals if you sign up for longer periods, but that could be a false economy if you can’t afford the prices rises as exit fees can be unbelievably high if you want to leave a contract early. So have a think about whether it makes more sense to sign up to a more expensive deal that only lasts 12 months, particularly if you think you might move or change jobs in the next few years.

Overdrafts

What’s the most expensive form of borrowing? Well, there are a range of borrowing options to watch out for:

  • High interest, short term loans: Or payday loans, in a new form. These forms of lending operate in the same way as payday loans, just running for longer periods. The interest has come down a little but is still really high.
  • Doorstep lending: this is illegal, but evidence suggests that doorstep lending is increasing once more. Speak to Citizen’s Advice if you are stuck with one of these loans.
  • Credit cards. Credit card interest rates are creeping up at the moment, having crossed the 20% APR boundary a few years ago. However, ‘high risk’ customers can routinely face interest charges of 30% or more, which makes this form of borrowing dangerous for those on limited incomes.

Yet surprisingly, the humble agreed overdraft has become one of the most expensive ways to borrow money with rates starting around 20% and hitting 40% or more.

Overdrafts have proved to be controversial recently after the banks were effectively banned from overcharging people who slipped in to the red. So now, you’ll be charged for using your existing, agreed overdraft.

These new overdraft fees often are added by the day and compound interest can apply, which means debt interest is added to your total debt – then you then pay subsequent interest on the whole sum. So the longer you are in an agreed overdraft, the more you will pay.

The way this is worked out is enormously complicated, so now is the time to get out of your overdraft once and for all if you can. Try reducing it by £50 a month or speak to your bank for their suggestions on reducing costs.

Subscriptions

From magazines to gym memberships, we waste thousands of pounds each year on subscriptions we don’t want or need. So be honest with yourself. What can you ditch? Ditching a gym membership alone can save you £300 or more a year depending on where you go. There’s also loads of cheap gym equipment for the home on resale websites after everyone’s pandemic health kicks faded.

Subscriptions are crafty because they’re often low value, so you might not think too much of a £7.99 debit, but that works out to just under £100 a year. Yet this is where we spend hundreds, if not thousands of pounds each year.

Take streaming services, for example. You might have signed up to watch a film on an extra channel on the service, yet after a seven-day trial, you could be paying an extra fiver a month. These charges are often hidden as they appear only through bills from you main streaming service.

Virtual services are easy to miss because they exist in digital form. We often agree to pay a little extra to store data on ‘the cloud’. Yet because we can sign up to cloud storage when we buy laptops, phones, tablets, anti-virus software, and anything linked to the internet, chances are you’re paying for more than one service – which you don’t need.

The same goes for music streaming. Did you get nudged in to paying for YouTube or Spotify ad free? Was Apple Music the easiest way to listen? Pick one streaming service and settle for adverts.

Over to you

I’d love to hear from readers about the big financial rip-offs you’ve encountered. So get in touch and share your stories.

Featured in Mirror – Martyn James
https://www.mirror.co.uk/money/money-expert-explains-4-things-28948809

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