Money myths, separate fact from fiction
Did you know that you accidentally swallow eight spiders a year in your sleep? Or that you only use 10 per cent of your brain? Fortunately, these are not true. They are urban myths.
But there are worse myths abound in the money world, which can be dangerous as they lead to bad decision making. So here is my guide to help you pick out the fact from fiction:
● You can get a parking fine in a supermarket car park. Not true.
Shop and hospital car parks can not fine you. Different rules apply to council car parks, but if a private company gives you a ticket, it is not a fine, just an invoice for an alleged breach of contract. If you think it is unfair, write to reject it. They must go to court to enforce it. See www.moneysavingexpert.com/privateparking.
● Miss too many payments and you go on a credit blacklist. Not true.
There is no such thing as a credit blacklist. Each lender scores you differently based on its "perfect-customer wish-list." The tools they use are not universal either - they are a mix of past dealings with the company, application forms and official credit files from the three credit agencies. One rejecting you does not automatically mean others will too, although if you are a "very bad risk", most companies have a similar attitude.
Ways of improving your score include getting on the electoral roll, keeping up payments on financial products and spacing out applications, as lots of searches in a short space of time can damage your score.
● Once you have got a cash ISA, you can't move it. Not true.
You can switch your ISA to boost interest, so check your rate. Providers take advantage of people's confusion dropping rates as low as 0.1 per cent.
You have the right to transfer and keep it tax-free. Yet don't just withdraw the cash; always fill in a form from your new provider. For a full list of top payers, see www.mse.me/cashISAs.
● Dual fuel energy is cheapest. Not true.
It might seem illogical but while getting your gas and electricity from the same company is usually cheapest, it isn't always. Everyone should compare to see if they can save £100s on energy bills. Stand-alone gas and electricity suppliers sometimes win, so check both.
● You only get cheap train deals a long time in advance. Not true.
Everyone knows advance tickets are cheaper, but few realise that you can often buy advance tickets the night before or, possibly, on route to the station. The train firm's official policy is that they are available until 6pm the day before, but some sell them later.
● Third-party car insurance is the cheapest. Not true.
While you would expect lesser third-party cover to be cheaper than fully comprehensive, often it isn't. This peculiarity is because by selecting third-party, some companies assume you are a higher risk so will charge more. If you are looking for the cheapest deal, get both third-party and comprehensive quotes.
● You don't need to get buildings cover equal to your home's value. True
Many people overpay by getting building cover that matches their home's value. Yet actually you only need to cover a home's "rebuild value" - the cost to rebuild if knocked down.
● Regular savings accounts dupe you over the interest. Not true.
Put £3,000 in a 10 per cent year-long regular saver and you won't earn £300. It would be roughly £150, which confuses and annoys many. Yet there is nothing wrong with this, as you only get interest on cash in the account at the time. As you drip-feed money monthly, it is only all in there at the end, so the average balance over the year is about half the final amount. You get about 10 per cent interest on that. The top deal is First Direct's eight per cent regular saver, but you need its current account.
● If it advertises 8 per cent APR, you could be charged 15 per cent. True.
Almost every loan and credit card APR is now a "representative" rate, meaning only 51 per cent of accepted applicants get it, the rest pay more. Worse, the only way to know the rate is usually to apply, which hits your credit score.
Plaudits for Nationwide, as it uniquely tells you the rate before applying and for larger loans at least, it is a best-buy.
● Shops must honour pricing glitches. Not true.
If a £200 Nintendo has a £10 price tag, the shop can refuse to sell it at that price. However once you have paid in-store, it is effectively a done deal (online it is once delivered). If it is an error, you can't make them sell it. If the mis-price is deliberate it is a criminal offence, so report it to Trading Standards.