More things they don't want you to know
Last week our eyes were agog as our Money Saving Expert revealed six secrets firms don’t want you to know. And many of you have made large savings on the back of it. So this week Martin Lewis is back with six more tips to turn the tables on the tricks that make us pay.
Included last week were ‘how to get 16 years of free downloads’, ‘when a 3.9% loan is 20%’, ‘how to slash the cost of buying at Zara’ and more – see What they don’t want you to know part 1 for more of those. Here are this week’s tips...
1. Car insurers charge new customers less than renewing customers.
Auto-renewing insurance is often a fine for apathy and inertia. Nothing shows that more than the fact that many who do bother to try and find the cheapest new price, discover their own insurer is offering them the same insurance but at a massively lower price.
Just last week Kate tweeted me, "My auto-renewal price was over £400 more than a new quote from their very own website! They had no explanation for it.” John also emailed me saying: “I had a renewal quote from my insurer for £644. Using several comparison sites I now have full comprehensive insurance with the SAME COMPANY for £286!”
While occasionally your auto-renewal can be cheapest, never assume it. Always check the market by combining comparison sites, then checking firms including Direct Line and Aviva that comparison sites miss. For full help see Martin’s car insurance cost cutting guide.
2. Cut school holiday flight costs by booking the wrong date on Easyjet.
Easyjet’s 'flexifares' let you switch dates by a few weeks without paying more. So bag flights in the last week of cheap term-time, then swap for your chosen school holiday dates. One of my colleagues saved over £400 doing this switch.
Yet be aware it is a bit of a gamble, crucially you can only switch your ticket to a flight that still has availability – so I’d check at least 20 seats are available on your chosen flight before booking - then you have to wait 24 hours after booking before you change your flights. You just have to hope they haven’t gone in that time.
3. Borrowing more can be cheaper.
If you’re getting a personal loan, up to a certain level, the more you borrow the lower the interest rate is. This means if you’re borrowing just under a threshold when it changes - usually £3,000, £5,000 or £7,500 - then something peculiar happens – it can actually be cheaper to borrow more. And currently there’s also an example of this working if you’re borrowing just under £2,500.
For example borrow £2,499 and the cheapest loan on the market is 14.9% APR, which over three years in total you’d repay £3,114. Yet borrow £2,500 and the cheapest loan is now 8%, so in total it’d cost you £2,820 – £320 less. In fact at these rates, if you’re borrowing anything above £2,300, you’d be better off just borrowing £2,500. Use a loan calculator to work it out before you borrow.
The only snag here is all rates are ‘representative APR’ meaning only 51% of accepted applicants need get the applied for rate – but there’s no way to found out what this is.
4. Calling freephones from your mobile costs more than making normal calls.
Call an 0800, 0808, or 0500 number from a landline and it's free. Call from a mobile, though, and you could pay up to 20p/min. What's more, calls to these numbers are very rarely included in inclusive minutes. Yet if you use the 0800Buster it’ll then assign an 01 or an 02 number to dial in its place, routing your call via a landline. Alternatively the 0800 Wizard app and online site will provide you with a landline number to dial instead of the 08 number (so part of your inclusive minutes or at a local rate).
However from 1 July this year Ofcom rules coming into force mean calls to freephone 0800, 0808 and 116 numbers, will become free from mobile phones too.
5. Play the codeshare trick - where two airlines sell the same flight.
Airlines don't shout that their partners often sell their flights too, sometimes for less.If you're going on popular long-haul routes this can be a way to save. Eg, one day a return Delta flight from Heathrow to New York over Easter cost £631 - but the same flight booked as 'Virgin Atlantic' was £549. So if you know the flight you’re going on, find its codeshare partners and then do a comparison to see if any of them are flying at the same time, and if they’re cheaper – it’s likely to be the same flight.
6. Getting a mobile handset on contract can secretly cost you 44% APR.
Many say "I'd never get a loan for a mobile" but then happily get their handset via a network contract. Yet get a contract and they credit check you, put defaults on your credit file if you miss repayments and often charge far more than buying the handset straight and getting a Sim-only deal.
So if it looks like a loan, and it smells like a loan, let's call it a loan. In some cases the extra cost of buying a phone on contract, compared to buying it straight and getting a Sim-only deal, is equivalent to the cost of buying the handset straight and getting a 44% APR two-year loan (typical contract length) to pay for it.
Of course I’m not suggesting you do that – it's far better to save up than do that, but if you're going for a contract anyway, check if it's cheaper to put it on Clydesdale's or Halifax's 20 month 0% cards - totally free if you repay within the 20 months (and never miss a minimum repayment), though after that they jump to 18.9% rep APR.