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FOOL'S EYE VIEW
There are tens of thousands of financial products in the UK. So many, in fact, that I wouldn't like to hazard a guess just how many exist. Let's just acknowledge that it's a huge figure and move on! However, almost by definition, Best Buy tables are very short. For example, independent researcher Moneyfacts lists just six products in each Best Buy table. Hence, the vast majority of financial products and services – 99% or more – don't match up to their table-topping rivals. Even so, nearly all of us don't purchase Best Buys, and millions of us end up buying Worst Buys! Here are six areas where it's easy to pick a wrong 'un: 1. Dud savings accounts I used an online database to find out how many no-notice or instant-access savings accounts accept a £1,000 deposit. The answer was 385. My next step was to see how many of these accounts pay an annual interest rate of over 5% AER. The answer was... nineteen. In other words, only one in twenty of these savings accounts (5%) cleared my benchmark of 5% AER. So, this suggests that, all other things being equal, most of us are getting a right raw deal on our savings! And this is a big issue, because we have a total of £528 billion on deposit, according to the latest figures from the Bank of England. Earning an extra, say, 2% a year on this sum would mean another £10.6 billion in our pockets, instead of in banks' profits. We have accounts paying more than 5% AER in our Savings centre. 2. The first mortgage you took out Having sold my house and started to rent a property, I no longer have a mortgage. However, having had one of these millstones around my neck for 12½ years, I know just how heavy this burden can be! Still, one thing that I find absolutely, gob-smackingly unbelievable is that millions of people never switch their mortgage. In other words, they stick with the same home loan for, say, 25 years, paying over the odds for all but the first year or two. This is a phenomenal waste of money. A little over two out of five homeowners (41%) say that they will never switch mortgage, which comes to about 4.8 million households. Frankly, these people are bonkers, because they are losing tens of thousands of pounds over the life of their home loans. For instance, paying your lender's standard variable rate of, typically, 6.75% a year, instead of a discounted rate of, say, 4.75% equates to a 2% a year supplement. On a £100,000 interest-only mortgage over, say, 23 years, this means shelling out an extra £46,000 in extra interest. Strewth! So, don't sit back and watch your mortgage stagnate – put it out to tender every couple of years or so. With over 8,000 mortgages to choose from, you're sure to find a cracking deal! Check out the great home loans in our Mortgage centre. 3. High-street personal loans If you need a personal loan to pay for a car, holiday, home improvements, wedding (or divorce) or to roll up existing debts, the worst place to look would be on the high street. In fact, choose the wrong lender and you could end up paying thousands of pounds too much! For example, let's say that you pop into your local branch of Barclays, looking for a loan of £5,000 over three years. Your shiny new Barclayloan will charge an interest rate of 14.9% APR, with a total interest bill of a little over £1,160. However, with a table-topping Best Buy loan from Northern Rock, you'd pay 5.7% APR (typical), which means an interest bill of under £443. So, forget about that trip to your local branch, because going online would save you a tasty £717 in this case! We have the UK's cheapest loan in our Personal Loans centre! 4. Grim bank accounts I'm sorry to tell you this, but the chances are that you've got a ropey bank account, too! Roughly eight out of ten adults with a current account has a traditional account with one of the Big Four (Barclays, HSBC, Lloyds TSB and NatWest). Stick with one of these stinkers and you'll be hit by this triple whammy: But it doesn't have to be this way, because a new generation of bank accounts is wiping the floor with these dinosaur-like products. We have several Best Buy current accounts in our Online Banking centre. 5. Cruel credit and store cards It's the same old story again: most of us stick with our tried and trusted plastic, rather than seeking out its modern – and vastly superior - equivalent. Store cards are particularly nasty, with only three store cards (from IKEA, John Lewis and Marks & Spencer) charging annual interest rates below 25.9% APR. That's an utter con, when you consider that the Bank of England's base rate is currently 4.75% a year! But tens of millions of credit card customers are also getting a raw deal. Worst hit are those borrowers who are paying interest when they don't need to – all it takes is a 0% credit card and a few balance transfers. I explain how to slash interest rates to zero in From 30% To 0% In Sixty Seconds! Be cunning with your cards – get a 0% credit card today! 6. Payment protection insurance (PPI) In my view, and speaking as someone who worked in this industry for over eleven years, payment protection insurance is one of the most grotesque financial rip-offs ever. It's an optional insurance policy that meets repayments on a loan, card or mortgage if the borrower is unable to work because of accident, sickness or unemployment. Cover for cards and loans also includes life insurance to pay off the loan if the borrow dies. I could explain how these policies are riddled with small print, exclusions, get-out clauses, limitations and so on. Instead, I'll show you how expensive they are, which will blow your mind! Last year, I reckon that lenders and insurers sold PPI policies worth at least £5 billion. However, I'm willing to bet both kidneys that the industry paid out less than a billion to claimants. In other words, the lenders and insurers trousered over £4 billion of almost risk-free income, with the lion's share going to the lenders. With any luck, when borrowers finally realise that PPI is five times as expensive as it could be, this huge con will end. Read on to discover why I would never buy personal loan protection, credit card repayment protection, or mortgage payment protection insurance. You'll find competitively priced mortgage payment protection from Helpupay in our Insurance centre. There are dozens more rip-offs where these came from, which I'll reveal in future articles. Until then, be on your guard! More: Better savings accounts, mortgages, personal loans, bank accounts, credit cards and insurance.