You could be forgiven for thinking that our impressive keenness to shop around has meant that companies have had to up their game, and offer more competitive products to win our business at a fair price. Unfortunately, while some businesses take this approach that's not how they all work.
There's another breed of company that will make the headline price (or interest rate) more attractive, and then build in a load of charges or expensive twists to the product. It means we're not getting the cheap deal we are expecting, and it makes it devilishly difficult to compare prices. We reveal five of the worst offenders that we all need to be wise to in order to avoid falling prey to these practices.
1. Teaser rates
Shopping around for a savings account in the current environment is not a cheerful business. We count ourselves lucky if we can find an instant access account that pays more than 1%. However, in order to get a table-topping account offering 1.35%, we're more than likely to have to sign up to something that includes a 'bonus rate' for six months or a year. After this time, the rate plummets - and in many cases more than halves, so your competitive 1.35% rate becomes little more than 0.5%.
The goods news is that not all banks work this way, so if you shop around, and you are willing to look slightly below the headline rates, you can get an account without a teaser. At the moment, for example, there are some accounts starting at 1.2% with no teaser.
2. Car insurance fees
Car insurance companies have been under pressure to cut prices in recent years, and a number of insurers have been bolstering their income by adding in a range of fees. There may be charges at the outset, such as a set-up fee, a fee for using a credit card, and sometimes even a policy renewal fee.
Another hidden cost that catches many people out is that while many companies allow you to pay for your insurance on a monthly basis, the majority will charge interest. The rates vary from around 19% to around 30% - so it can be punishing.
If you need to cancel your insurance before the end of the year, you are likely to pay a cancellation fee too - and these have shot up recently. Endsleigh, for example, has trebled its cancellation fee, while Churchill and Privilege have doubled theirs. A number have increased the fee to make changes to a policy - such as moving house - as well.
Before you buy a policy, therefore, you need to check the small print for the fees due, and decide whether it renders your policy uncompetitive.
3. Broadband speed
There are two common practices in the broadband world that get us hot under the collar. The first is the advertised broadband speed. The companies are allowed to advertise their maximum speed, with the word 'up to' - as long as 10% of customers will be able to get that speed. However, this means that nine out of ten people may not get what they were expecting.
A Which? study found that speed was the second most important factor when choosing a provider - and without accurate information on speeds, it makes it impossible to make an informed decision. It has launched a campaign calling for the rules to change, so that at least half of all customers would have to be able to get the speed they are advertising 'up to'.
The good news is that Ofcom has a Code of Practice, which states that customers must have an estimate of their broadband speed before they buy. If your provider has signed up to the code, there will be a postcode checker on the website, so you can see in advance roughly what speed you can expect.
4. Broadband charges
The second irritating issue with broadband is the hidden charges. When you change to a new provider there are a variety of initial fees - including a set-up fee and possibly a charge for the equipment. In some cases the process is so complex that you end up phoning technical support, and this may be at a premium rate.
Then when you leave a provider, there are exit fees - and if you leave before the initial period is complete Citizens Advice has found that those fees could be as much as £625. As companies have tried to compete to push down the headline rate, they have bumped up these fees to close the gap, so it pays to look into these costs at the outset.
Another common rouse is where a provider doesn't include the cost of the landline in the headline rate - and yet makes landline rental compulsory. This particularly irritates those who don't use their landline for calls - but the providers argue that they need to maintain the line if you are using it to access the internet. There's nothing you can do about these charges - except to be aware of them and factor them into your price comparisons.
5. Refusing a refund
If you've bought an item and something goes wrong with it after a very short period of time, then it's only fair that the company that sold it to you should provide a repair, refund, or exchange. This is laid out in the Sale of Goods Act 1979, which states that regardless of any warranty, an item must be of satisfactory quality, as described, fit for purpose and last a reasonable length of time.
When assessing what constitutes 'satisfactory' and 'reasonable' you need to take into account what you paid for the item, and how long you have had it. However, there are some expensive items that should reasonably be expected to last a fair amount of time: whether that's a new sofa or a fridge freezer: neither should need replacing in a couple of years - even if the warranty only lasts a year.
Getting your refund, however, can be anything but straightforward. Retailers can continually try to fob you off. Some will say that the item is out of warranty and therefore they have no responsibility; they may also try to get you to go direct to the manufacturer. However, you bought from them - so you can claim your rights from them.
You'll need all your supporting documents - which may include the original receipt and an expert assessment of the item. You then need to complain to customer services over the phone, and ask to speak to a supervisor - keep a note of everything that is said.
If they do not agree to a repair or exchange, you need to put your complaint in writing, stating the deadline for a response and what you expect then to do by then. If they miss the deadline, you need to write to them saying you will be pursuing legal action unless you hear from them by a specific date.
If they fall short on all these fronts, you may end up in the small claims court. It's worth considering whether this is worth the time and energy, but you shouldn't be put off if you have a strong case and can show that the item fell short either in terms of quality, being fit for purpose, or lasting a reasonable length of time.
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