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Holly Mackay

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Holly Mackay

Content correct as of

17 October 2017


5 ways you're being rinsed by the finance industry

5 big ways we are being rinsed by the finance industry!

These days it’s hard to know who to trust online. And just what to prioritise first.  We’re suspicious but time poor. Here are 5 of the main ways we see millions of Brits flushing head-earned money down the metaphorical loo. Reading this article could save you thousands of pounds!

 

  1. The big bad energy companies.

In the news at the moment as Parliament moves to introduce caps. This is now so bad that Theresa May has stepped in to do something about it. It takes 10 minutes to walk through a comparison site to plug in your details and find a better deal. The average person can save north of £200 by doing this.

  1. Not paying off credit cards in time.

This one’s lethal. The average person has a total of about £6,500 on overdrafts, loans and credit cards. And the average interest rate on a credit card is about 18%. Don’t automatically stick to minimum suggested payments – these guys don’t want you to pay off your debts every month. Prioritise debts and pay off the most expensive one first. And set up a direct debit to repay monthly.

If you can’t pay it off and your credit rating’s OK then look to transfer the debt to a card that charges 0% on balance transfers. 

  1. Leaving insurance to the 11th hour and going with the same guys again

Loyalty does not often pay when it comes to insurance. Stick a note in your diary a month before contracts expire and take 10 minutes to shop around on a few comparison sites to see what other deals are out there. These comparison sites can have sneaky special deals with some insurers so it pays to check more than one. You can save hundreds of pounds by doing your homework about three weeks in advance. Car insurance and home and contents are 2 main ones to diarise.

  1. Sitting in useless expensive funds

DIY Investing is tough. There are thousands and thousands of investment funds to pick from and picking a good one is a very hard gig. If you’re not an expert and you don’t want to monitor your investments, then look for a ‘passive’ or an ‘index’ fund. These funds simply buy a wide selection of investments at a very low cost. They don’t employ expensive and often flawed humans to try and sort the wheat from the chaff. You can buy these investment funds online these days without needing to see a financial adviser. A passive fund will cost about 50p - £2 for every £1,000 you invest each year compared to about £7.50 for an active fund.

  1. Not shopping around for your pension

When you reach retirement age, it’s likely you’ll get a letter from your pension firm. Lots of people just take the annuity that is offered to them by their current provider. But you have a choice! A 2014 survey showed that 8 out of 10 people who stayed with their existing provider lost out by not switching. Visit the independent Government-backed Money Advice Service and check out their annuity calculator to see what you could get elsewhere.

These days you can pretty much choose to do whatever you want with your pension from 55. So don’t just accept the status quo!