If you’re forking out a fortune for the likes of mobile phone insurance or extended warranties it could be time for a financial MOT. Money Editor James Daley won’t be buying these pointless products.
Speaking to my bank has become one of my least favourite activities over the last few years. In fact, I try to avoid it at all costs.
It’s not that the staff aren’t friendly. It’s just that they can’t resist the temptation to try to sell me something I don’t need when I only phoned up to make a simple transfer or to sort out the delivery of my new card.
How banks pitch
“While you’re on the phone sir, I wondered if you’d be interested in buying our new identity theft insurance.”
“Before you go, sir, I wondered if you’d be interested in upgrading to our new premium account for just £10 a month.”
It’s not the sales pitch that annoys me. I think I get pretty good value from my bank, and I’m happy for them to try to sell me products which might be useful. But products such as ID theft insurance and packaged accounts are rarely any use to anyone – they’re money spinners for the banks.
If you’re a victim of fraud, banks are obliged to pay you back any money you lose anyway – so why take out ID theft insurance? And there’s no point in paying £10 a month for a current account, just to be given a whole load of useless insurance policies that you don’t need and won’t use.
Our list of largely useless financial products is sadly quite a long one.
- Mobile phone insurance: generally overpriced, and a lot of people are already covered on their home insurance policy anyway.
- Extended warranties: again, they’re overpriced in the shops, and much of what they cover may be protected by your home insurance policy anyway.
- Payment protection insurance: can be very expensive, and very hard to actually make a claim on. If you’re worried about not being able to pay your debts because you’re out of work, then you’d be much better off paying a bit more for a good income protection policy.
- Store cards: extortionate APRs. A good credit card will be a much more efficient way to borrow.
The list goes on.
If you’re in the habit of phoning up your bank, or going into a branch, my advice is to be on your guard. As useless as these products may be, sales staff can be incredibly persuasive – you only need to look at how many billions of pounds worth of useless insurance is sold every year.
For my part, I’m sticking with internet banking.