Financial products you might not actually need
There are many financial products which might seem good at first glance. It’s only after looking a little closer that they begin to lose their appeal. There are some products that you might be better off avoiding altogether. Unless you are certain that you will reap the benefits, then here are the products you do not necessarily need.
At most till points at big-name retailers; employees are likely to invite you to take out a store card. These are essentially credit cards for specific stores, tempting customers with incentives such as discounts, freebies and exclusive offers.
The same as any credit card, as long as you don’t overspend and pay off your bill off in full on time, you shouldn’t have a problem. If you don’t make your payments you at risk of being on the receiving end of some very high interest rates if you don’t clear your balance each month.
Extended warranties can help you cover repair costs, after the retailer’s guarantee ends. They usually last for a time frame of around one to five years. This often depends on the purchase price on the item being protected. Extended warranties are usually an expensive financial product.
A five-year extended warranty may cost a large amount of the original retail price of the item. It is important to take into consideration that if an item is faulty, you have rights to protect you.
The 1979 Sale of Goods Act states the goods must be sold to a satisfactory quality, fit for their purpose and last for a reasonable time. If they do not need these requirements, you can return them and ask for refund or replacement.
ID theft insurance
For £10 per year, you can purchase ID theft insurance. As this is only a small sum of money to pay, most people feel comforted by this kind of insurance.
What most people do not know is that they are already covered for any financial loss is your identity is used fraudulently by your bank or credit card provider. A claim can only be rejected by your provider if they can prove you were grossly negligent or committed fraud.
If you do not have a history of losing your phone, or your phone is relatively cheap, then phone insurance could be an unnecessary expense. Phone insurance can be incredibly expensive, costing between £16 and £300 a year.
If you do own an expensive phone or are locked into a long-term contract, then phone insurance may be worthwhile. If you wouldn’t be able to replace your phone without insuring it, then consider starting to save to replace it.
Many phones are already included on home insurance policy. There is no point doubling up on insurance. Compare the excesses of both phone and home insurance policy. Home insurers are usually slower to replace items as well.
Packaged bank accounts
For a packaged bank account you probably pay around £15 a month, which offers a wide range of extra features. These usually include free travel insurance, mobile phone cover or better exchange rates.
If you don’t need or use these benefits, it is an expensive option. Some of these extras may be cheaper to buy separately.
You must always check the terms and conditions for exclusions and excesses. This is where you might be caught when it comes to the extra features. Many phones are already included on home insurance policy. There is no point doubling up on insurance, so compare the excesses of both phone and home insurance policy. Home insurers are usually slower to replace items as well.