Ditch These Pointless Financial Products

Achieving financial freedom is impossible without a plan. That’s what i have taught people for years and it is truer these days than ever before. If you don’t make a plan, there are others out there making plans on how to make money off you – unless you are vigilant and avoid wastage in every form.

People could be wasting thousands of pounds on financial products they simply don’t need, says Which? magazine that released a list of 10 most useless financial products to help cash-strapped Britons avoid falling into expensive traps.

Do you know if you are throwing money at any of them? See the list of the top ten money products that are usually useless and in some cases, can leave you out of pocket or stuck with a poor credit rating below:

1. Mobile phone insurance topped the list. Insuring your phone can cost up to £100 a year even though it is usually covered by home insurance.
2. Extended warranties which can cost up to half of the price of the actual product.
3. Structured products:These can be confusing, complex and costly – just put your money into an ISA. The cost can be significant – around 6,000 people with a ‘structured product’ were left with nothing when Lehman Brothers collapsed in 2008
4. Identity Fraud cover – Usually around £70 a year even though most losses will be met by your bank.
5. Payment protection insurance (PPI) – If you add PPI to a £7,500 five-year loan could cost you an additional £2,000 – £3,000. Choose income protection instead, and avoid over-priced PPI
6. Secured loans: Very risky. You could lose your home if you are unable to repay the loan. If you must borrow,  only take out unsecured loans at least you’ll have a roof over your head
7. Store cards – The interest rates are astronomically high even ordinary credit card are better! Maintaining an average balance of £1,000 on a store card at 29.9% would cost you nearly £300 in interest over a year.
8. Debt management plans – Ditch this expensive product – the fees add up to thousands in the long run. Get free debt advice from CCCS, the National Debt Line or your local Citizens Advice Bureau
9. With profits – These can incur high charges, so invest your money in stocks and shares ISAs. If you’d invested £500 a year in a full-cost with-profits endowment over the past 10 years, you could have actually lost money, ending up with as little as £4,892.
10. Packaged accounts – Often not worth the money. Why pay up to £300 a year- a needless cost if you don’t use the extras and benefits of the accounts?

James Daley, editor-in-chief, Which? Money Quarterly says: “Our research found that there’s a bunch of financial products on the market that most people really don’t need – but this doesn’t stop companies from trying to sell them.”

If financial institutions will offer you the above products regardless of their worth, you should in turn learn and practice saying “No” to product you don’t need, don’t understand or that will not help you reach your goal of financial freedom.

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