Money Mensch: Ten tips to being a savvy consumer
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It is what you don't know that is really worrying. Apathy, ignorance and inertia are three of the biggest contributors to bank and utility companies' profits.
They make money by keeping us in the dark. That means the system is often complex, so it pays to learn how it works. And sometimes, you can even turn the tables on them. Here's how:
1. You can agree to a warranty to cut prices, then cancel it
● When you buy electrical goods, sales staff will often try to sell you over-priced and under-performing warranties to protect your purchase. Rather than telling them to get lost, why not use it as a bargaining tool?
Tell them you will agree to buy a warranty provided they reduce the price of what you are buying. Then cancel within the 45-day cooling-off period you get when buying a warranty and receive a full refund. This leaves you with a bargain.
2. Hang up and redial to keep calls free
● These days almost all home phone lines come with so-called 'unlimited calls'. The problem is that these usually only apply when calling landlines and even then there is a limit. It might be that if your 'unlimited' call lasts more than sixty minutes on BT or the Post Office (or more than ninety minutes with Primus), you are charged up to 4.5 pence per minute.
Yet to get round this, simply hang up just before you reach the time limit and then redial the same person to keep the cost free.
3. Do Children and students pay tax?
● This is a common point of confusion and the answer can be a costly one if you are not prepared for it. Everyone in the UK, whatever their age, is allowed to earn up to £6,475 a year before they are requested to pay tax (more for over 65s). The only difference is that most children and students don't earn that much, so they never pay tax, yet they are not excluded from the tax system.
4. Most people with a £1,000 in Premium Bonds this year will win nothing
● Do not be fooled by Premium Bond interest rates.
The current published success rate is 1.5 per cent, so you would assume that anyone putting in £1,000 would get £15 back a year. However, the smallest prize is £25, so for someone to win this, a good few people would have to win nothing.
At the current prize distribution, 61 per cent of people with £1,000 in Premium Bonds will get nothing back, and the majority of the rest will only get £25 - roughly the same as a top savings account. Only four per cent will be lucky enough to earn more.
To check your odds of winning go to www.premiumbondcalculator.com
5. Change your job description for cheaper car insurance
● The job you do impacts the perceived risk for your car insurance quote, so it is worth trying a few acceptable ones to see if you can save.
For example, if you are a PA, secretary or office worker, try each one to see if it makes any difference to the price.
But I am not suggesting you lie. The description you use must be one that other people say is a reasonable description - it is just these days many people have a number of different job titles.
6. use the council's 'secret' MOT centres
● Many councils have their own MOT testing facilities for vehicles they own or regulate.
Legally these must also be available to members of the general public, and because they are not trying to sell you repairs, your car seems more likely to pass the safety check - if it is safe - as the centres have no vested interest in making you do repairs unnecessarily. For a full UK list go to www.moneysavingexpert.com/MOTs
7. Freephone calls are
not free from mobiles
● Calls from mobiles can cost up to 40 pence per minute, yet go to www.0800buster.com, and it will give you a 'normal' phone number so that you can access its system from a mobile, which can be part of your free minutes if you have them. Once connected you can call the 0800 number at no further cost.
8. Don't put a young driver's parent as the main driver to cut insurance costs
● If a young driver has their own car but their parent is put as primary driver to make it cheaper, this is called 'fronting'.
This is very much illegal and can result in prosecution and invalidate your insurance.
However, what is perfectly legitimate is if the young person is the main driver and you add a good second driver to the insurance to see if that lowers the cost, even if that person will hardly ever drive the car. Sometimes it does, sometimes it doesn't. It is a question of trial and error.
For more detailed car insurance tips see www.moneysavingexpert.com/carinsurance
9. You don't pay tax on eBay sales
● If you are simply selling stuff you don't need anymore, such as cast off clothing, old toys or second-hand games consoles, there is absolutely no need to pay tax on it.
However, if you become a trader - someone who makes or sells goods they have bought with the intention of selling them - then you will pay tax, as if it were a job. So you need to be careful about your definitions, but don't worry about paying tax for selling your second hand stuff.
10. You don't have a right to return 'wrong-size' clothes
● Many are surprised to find that if you buy something that is the wrong size or you change you mind, under the law you have absolutely no right to return it. You only have rights if it is faulty.
There are two exceptions to this. The first is items ordered online, on the phone or by mail order. Then, special regulations mean you have a seven-day no fault right to send it back for a full refund of the cost and delivery. The other is if the retailer has a published 'returns policy'.
This forms part of the terms and conditions of the sale, so you can enforce it.
Yet as you have no legal rights, whatever that policy says is right. In other words, if it says "you need a receipt" then you need one (unless goods are faulty, where your statutory rights take over).
See www.moneysavingexpert.com/rights for full info.