Opinion: 7 money rip-offs that need to end

They offer little benefit but can cost a fortune. Here are seven money rip-offs we’d like to see the back of.

All cold calling

After months of delays, cold calling in relation to pensions looks certain to be banned in early 2019. Pension scammers, who have cost their victims their life savings, will join nuisance claims companies, who were banned from making cold calls back in September.

We don’t think that’s enough, however: it’s time to ban cold-calling for any purpose.

Although criminals won’t care about a ban, they’ll struggle to find victims if everyone knew that cold-calling was illegal.

With internet access now so widespread, genuine companies shouldn’t need cold calling to reach out to customers. Vulnerable individuals without internet access can get trustworthy advice from Citizens Advice or the Money Advice Service: what they don’t need is a phone salesperson pushing them into a course of action.

Take action now: register your number with the free Telephone Preference Service, which stops companies and charities from calling you. It won’t stop criminals so stay vigilant.

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‘Fee-free’ travel bank accounts and cards

As we’ve become savvier about exchange rates and fees for using our debit and credit cards abroad, banks have jumped on the bandwagon.

We’ve increasingly seen ‘travel’ credit cards or bank account offers with ‘no foreign spending or purchase fees’.

That’s great, but you could still end up paying a fee of up to 3% for withdrawing cash abroad.

Cash is still overwhelmingly king in many foreign countries, particularly those outside the EU. Even in Japan, renowned for its futuristic technology, 70% of transactions are in cash.

Advertising should be restricted so only products that are fee-free for both spending AND cash withdrawals get to advertise themselves as suitable for travel or holidays.

Take action now: there are several bank accounts and credit cards that won’t charge you for spending or using ATMs. Click on the links to find out more.

Misleading interest rates

Credit card and loan companies love to promote their low interest-rates.

But did you know that just 51% of applicants have to get that advertised rate?

The remaining 49% could be offered a far higher rate, and to add insult to injury, you’ll only find out after you’ve gone through a ‘hard’ credit check. Therefore, if you say ‘no’, the application will still be on your credit file, making it harder to apply for other products.

This is the financial equivalent to a shop charging you a different price by the time you get to the checkout.

Let’s keep it simple: if a lender is willing to lend to you, they should be required to give you the advertised interest rate.

Take action now: Experian’s comparison site can tell you the actual rate you’ll get on a credit card, whilst Real Rates does the same for loans. Note that neither cover the whole of market.

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Early repayment charges

Early repayment charges (ERCs) are baffling.

They essentially penalise you for paying back a loan early and are commonly included as a term in most fixed, capped, or discounted rate mortgage contracts as well as some other types of loans.

The charges vary depending on your lender as well as the type and length of deal you have. Generally, the earlier you repay the loan the higher the charge.

ERCs are meant to account for the loss of interest the lender incurs from you ending your contract before the end of the term.

But we still think it’s odd that you can be penalised for paying back a debt in good time and would love to see the back of these charges.

Not all mortgages and loans have ERCs, so if you think you will want to repay your debt early you can compare deals using the loveMONEY comparison centre that don’t come with these crazy fees.

Take action now: read the small print before taking out the loan, so you don’t get a nasty surprise like loveMONEY’s editor.

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Extended warranties

If you buy electronics from any major store, there’s a good chance you’ll be offered an extended warranty along with it.

There are a number of reasons why you should politely decline:

• You’re covered by the manufacturers’ warranty for at least one, possibly even two years.
• They’re extortionately expensive, costing hundreds of pounds
• As they’re primarily sold on electronic goods, the item you’re insuring is rapidly losing value.

Basically, it’s an expensive policy that’s far more likely to benefit the seller than you.

Take action now: there’s no need to buy extended warranties. If you’re concerned about high value goods, check your home insurance as these may be covered.

ATM charges

As contactless cards soar in popularity, ATMs are disappearing at a rate of 300 per month, according to Which? 

Unfortunately, ATMs that charge are typically in rural areas where access to physical cash is more difficult and bank branches are closing their doors, forcing residents to go further and further afield to find their nearest bank.   

There are still plenty of places that don't accept card payments like community classes, food stalls and local events, whilst older and vulnerable people are often dependent on cash.

You shouldn't be charged for withdrawing your own money.

Take action now: almost all banks now allow you to withdraw money for free at the counter of your local Post Office: you’ll just need your debit card and PIN.

Remortgage using loveMONEY's comparison site and you could save thousands

Companies that charge for free services

As we’ve written about before, many "copycat" websites are charging people a fee to apply for things like a passport, EHIC or compensation, which can be claimed for free, or much less.

In some cases, they even appear as the first link in a Google search.

Some particularly nasty sites don’t just charge a one-off fee, but sign you up to a subscription service where you just keep paying – for something that’s supposed to be free!

Ban these rip-off sites today.

Take action today: look for official websites with the relevant department or Government logo and ‘.gov.uk’ in the URL.

What do you think? Are there any other rip-offs you'd like to see the back of? Share your thoughts in the comments section below.