all love the sales. We think we are getting fabulous bargains. But we probably aren’t. The retailers think of sales as just a way to get you into their shops so they can flog you more overpriced rubbish than they can at non-sale times: there are so many loopholes in the laws covering the sales that whatever they say in their windows they can get away with not producing much in the way of discounts inside. For example, by law any goods marked with a reduction must have been for sale at the full price displayed for 28 days at some point in the previous six months. However, the stores are also allowed to put up a disclaimer in little letters somewhere in the premises saying that hasn’t actually been the case (that it has only been for sale at that price for one day, for instance) so you can never be sure whether you are paying a properly discounted price or not. Shops are also guilty of occasionally putting things out at stupidly high prices for 28 days so they can slash them to an OK price but call it 80% off a few days later.
But that’s just the beginning of the tricks they’ll use to draw you in to the shops and get your wallet open. Rails of substandard items are often brought in just before the sales so they can be marked at very cheap prices near the door. Retailers will also put up signs all over their windows saying ‘up to 70% off’ when in fact almost nothing inside is that cheap. The law says 10% of goods on sale should be at the maximum stated discount but who checks? No one. The fact is that sales are a great time for shops to shift their old, substandard, out-of-fashion or obsolete stock. So before you succumb to bargain fever check whether the frock you are feverishly fingering is really a bargain (and a bargain that you need) or simply another con. Never forget that just because something is cheaper than it was doesn’t mean it offers any value to you: some things are expensive at £100 and still expensive at £10. Before you pay the sale price always ask yourself if you would have paid that price for it if you weren’t at a sale and as you do so remind yourself that over two-thirds of women admit to buying things in the sales that they have never worn.
If you do end up buying rubbish in the sales remember you have the same consumer rights as you do if you buy that rubbish before the sales. Many stores will tell you that you are not entitled to a refund if you buy something at a reduced price. This is not true. If you have simply changed your mind about wanting something you are not entitled to your money back (although many stores will let you exchange things out of goodwill), but if something is broken or faulty (this includes everything from TVs that break to shirts that lose their buttons after only one wearing) you are entitled to a refund or a replacement even if you have lost your receipt. Don’t let the retailer fob you off by telling you that you have to complain to the manufacturer not to them. That’s not true either. You have three rights under the Sale of Goods Act 1979 as well: the goods you buy must be as described; they must be of satisfactory quality (which suggests that they must last for a reasonable time); and must be fit for a particular purpose. On top of this you have the right to claim against them for ‘consequential loss’, so if your discounted freezer breaks and food gets damaged you can ask to be reimbursed for the food as well as the useless freezer.
I am endlessly determined to get value from retailers: when I recently found that a bit of fish I had got from grocery delivery firm Ocado was off I insisted on being reimbursed by them for not just the fish but the leeks and mushrooms I had started cooking it with too. It sounds petty, I know, but why should I be out of pocket because Ocado delivered substandard goods to me? (Ocado, by the way, reimbursed me immediately and have done so every time I have complained to them about any of the products they have delivered).
My current account is now with First Direct. If you are as lazy as I was for 20 years and are still with the same high street bank where your mother opened your first savings account, it might be time for you to think about cutting your expenses by making a change too: to find the account that will pay you the most interest when you are in credit, charge you the least when you are not and won’t charge you any annual or monthly fees, see www.moneysupermarket.com or www.uswitch.com. You will probably find that the Internet accounts offer the best deals. If you do decide to switch it shouldn’t be hard: once you have made the request your old bank has three days to provide all your details to your new one which should then set everything up. When I switched from Lloyds to First Direct this all appeared to work perfectly.
Beyond current accounts we’ll look at the many ways that banks work to remove your money from you in the next few chapters, but for now it’s worth remembering that when it comes to bank charges of any kind you need to be endlessly vigilant: Which? claims that the major banks effectively overcharge customers by £400 a year each thanks to their range of rotten savings and loans products and their high fee structures, while www.moneysupermarket.com claims that bank small print contains a staggering 110 fees and charges for basic financial transactions.
Insurance: mostly it’s overpriced rubbish you
don’t need
Reading the personal finance sections of the newspapers can be a terrifying business. Every week they are packed full of stories about terrible things that have happened to people or that could happen to people. There are stories of people breaking their legs in seven places on skiing holidays and having to be airlifted back to Britain; stories of families having to spend their whole holidays in the same clothes because their suitcases have been lost; stories of wretched cat owners who can’t afford the bills for pet surgery after a car accident; stories of brides spilling red ink all over their £3,000 dresses; stories of people mugged in the street and losing £400 worth of items from their handbags and so on and so on. It’s miserable stuff. But there is a common thread in all these tales of woe: the people in question have apparently not had enough insurance to ‘protect’ them financially from calamity. Had they had the correct travel insurance, pet insurance, wedding insurance or contents insurance, we are told, things would have been so much better. All these stories, as you will probably have guessed, are placed in the press by insurance companies with one aim – to scare you into thinking you need to buy more and more insurance. If they had their way we wouldn’t leave the house without being insured against everything from the front door shutting on our fingers and dropping our lipsticks down the drain at pedestrian crossings to being abducted by aliens outside Tesco on a Saturday morning.
Bad banks
Banks are businesses. Their job is to make money out of you. That’s fine except for when they do it unfairly. Which they do. They market products in a deliberately confusing way so that you open accounts without realizing that you will be penalized for withdrawals or without understanding that their special bonus interest rates last for only six months. They charge you very little when you are in credit but then go bananas charging you for every tiny slip they can when you are not in credit: going 10p overdrawn can cost you £25, as can paying a credit card bill a day late – the high street banks are said to generate about £1 billion of their annual profits from penalty charges alone. They hide behind technology, stating that they need up to five working days to transfer your money for you when in reality it takes about two seconds (this works for them because they then don’t have to pay you interest on the money during the five days they categorize it as in transit). They try to scam you into thinking you have to foot the bill when your bank account is used fraudulently when you don’t: you only have to pay the first £50 unless they can actually prove that you were negligent with your details. And of course when you complain they think that if they ignore you you will go away. You probably can’t change much of this (though you should keep complaining wherever appropriate – when pushed, banks often refund penalty charges for example) but you can take away a few lessons from it: first, always read the small print, and second, never ever trust a bank.
Insurance should be a simple business. Basically it works by offering you cover against injury or loss in pretty much any situation, in return for an annual or monthly payment (the premium). The insurer works out your premium
