The top ten financial products not on your Christmas list this year...
It’s Christmas time. There’s no need to be afraid of financial products, at least that’s what Which! would have you believe. Still, all I want for Christmas is (a) useful list of financial things that I don’t need- leaving you free to be rocking around the Christmas tree with your new iPod* and your mistletoe and wine.
Helpfully, Which! have come up with a top ten list of things you really don’t need to spend your money on- which leaves you more money for presents and your Christmas wrapping. After all, it is beginning to look a lot like Christmas now, what with all the panic buying, traffic, and jammed supermarkets. And it’s Christmas Eve this time next week.
The top ten shapes up like this:
1. Extended warranties – many electrical products are already covered by a manufacturer’s warranty, the Sale of Goods Act, or home insurance. A previous Which? investigation found that staff made exaggerated claims about what was covered. Which is putting it politely.
2. Charity credit cards – not the most efficient way to donate to a cause, you would need to spend £129,600 on a typical charity credit card in just a year in order to donate the average given by UK donors (£27 a month). You’d be able to give more by taking out the best cashback credit card and donating the cashback. The same goes for Pampers nappies. Instead of letting international massive conglomerate Proctor and Gamble give a fraction of a penny per pack to Unicef, just buy one pack of supermarket nappies and give Unicef £4. If you like.
3. Gift cards or vouchers – if the company goes bust there’s no guarantee consumers will still be able to use them, so cash or cheque maybe a safer bet. And can more easily be spent on wine/women/song (delete as appropriate)
4. Healthcare cash plans –someone with fairly low level health needs could end up paying more in premiums than you get in benefits and in our scenario would be on average £1,023 down over five years. Which! think it may be better to self-insure after checking figures with the top 5 providers (Simplyhealth, Westfield, BHSF, Healthshield, HSF Health Plan)
5. ID fraud-protection policies – the benefits are often not worth paying for as consumers are covered by their banks for losses due to fraud. People can also check for any unusual activity on their £2 statutory credit report. This is a product that has been mis-sold in the past.
6. Expensive tracker funds – some funds charge three times more than the cheapest to manage investors’ money which can have a big impact on returns. Consumers should switch providers if they’re paying over the odds. Which don’t specifiy what the odds are. But presumably they are worse than evens.
7. Structured deposit schemes – these are sometimes sold without proper advice and charges are not made clear. Some schemes don’t achieve the returns that they advertise and aren’t likely to. Which! want the Financial Conduct Authority to ban misleading adverts and to stop banks getting commission for recommending them. We’re not even sure what they are, but just don’t buy them anyway.
8. Over-50s insurance plans – plans often pay out less than you could save over the same period. A 60-year old non-smoker, paying premiums of £15 a month, would qualify for an average pay out of £3,334 after 30 years, but it would only take around 15 years to beat this by investing in a cash ISA with 3% interest on average.
9. Paid-for debt management – debt charities such as StepChange offer good-quality and impartial advice for free, so there’s no need to pay for this.
10. Card protection – people are already protected against being a victim of fraud, and the extra benefits such as key cover can often be found more cheaply elsewhere. Another product that was mis-sold. Surprising.
From inside a red suit and white beard, Father Whichmas Richard Lloyd chuckled: “There are still far too many financial products on the market that are risky or offer poor value for money and some that are being mis-sold to consumers. We want the financial regulator to take tough action and crackdown where it finds evidence of poor practice.”
“Ho, ho ho, ” he finished.
* other music playing devices are available.