LOST AND POUND ; Cut Costs By Using Only Money Products That You Really Need

By ALEX MORGAN

THERE are some financial products you can't afford to ditch, but there are others you would be better off without.

Cancel them and you could be hundreds of pounds a year richer.

It is against the law to drive a car without insurance, and you'd be a fool not to protect your home - if you own it - or its contents.

If you have borrowing in the form of a mortgage, other loans or credit cards, you will normally pay for the privilege in the form of interest.

But there are plenty of other products - ranging from packaged current accounts to mobile phone cover - where the costs far outweigh the benefits. LIFE AND DEATH If you don't have dependants whose financial future you need to secure after your death, andthere isn't anyone you want to leave a legacy to, there is no point wasting cash on life insurance.

If you do need cover, cut the cost by shopping around on comparison sites such as Moneysupermarket.com or using an online broker like Lifesearch.co.uk. DEBT PROTECTION You probably thought you were doing the sensible thing if you signed up for your loanor card provider's payment protection cover.

After all, it is designed to make the repayments if you no longer can.

However, this type of insurance is notoriously expensive and extremely difficult to claim on because of the wide range of exclusions in the small print.

Even if your claim succeeds, these policies pay out for a maximum of 12 months, and in the case of cards, this will be just the monthly minimum. After that, the debt becomes your responsibility again.

If you want this kind of cover, it is usually far cheaper from an independent provider such as Britishinsurance.co.uk or Paymentcare.co.uk.

EXPENSE ACCOUNTS There are more than 50 packaged current accounts on the market, according to financial research firm Defaqto.

Holders pay a monthly fee in exchange for perks such as free mobile phone or travel cover and discounts on other forms of insurance, borrowing and entertainment.

Andrew Hagger, of comparison site Moneynet.co.uk, warns: "Consumers should not be swayed by the long list of wishy- washbenefits that they will probably never use.

"These'added value' accounts typically cost around pounds 150 a year, but no matter what the providers claim, very few people actually get value for money.

"The insurance is either not worth having or available cheaper elsewhere, and the other sweeteners don't save you enough to make the cost worthwhile.

"It makes far more sense to stick with a free account and find the cover and credit you really need using sites such as Moneysupermarket.com, Confused.com or Comparethemarket.com. WARRANTY WASTE Extended warranties are another waste of money - the onlypeople who benefit are the shop staff who earn commission by selling them.

Most electrical goods that break down before the end of their expected lifespan do so within the first year, when they are still under the manufacturer's warranty.

Even if they fail after that, provided you haven't abused them, EU rules say you have up to two years to demand a repair, replacement or refund, and the Sale of Goods Act allows up to six.

For more information, see Consumerdirect.gov.uk or Which.co.uk/ advice/yourrights.

BOOK A CHECK-UP

IF YOU haven't checked your current account recently, you could be wasting hundreds of pounds a year. Gym memberships, magazine subscriptions, and regular payments for other products and services can seem like a good idea at the time but if you don'tmake enough use of them, you might as well burn the money. Check your account to see that every automatic payment you are making is still good value. If you spot any that aren't, cancel them immediately. You should also review what you are paying forutilities such as electricity, gas, phones, TV and broadband.

INSURE YOU MAKE THE CORRECT COVER CHOICES

YOU can get insurance for almost everything nowadays.

Some forms, such as those providing private medical and dental care, are beyond the pockets of most people. But others - say, to cover your income or your pets' health - could save you a considerable amount of money, provided you choose the policycarefully and check the small print before you sign up.

There is little point insuring mobile phones, your identity or your boiler and other household appliances though.

Your mobile should already be protected under your home contents policy, while identity theft cover doesn't provide any help that isn't available free from your bank and other lenders.

Boiler and other appliance cover is riddled with exclusions and very expensive.

If you want this type of protection, open the bestpaying savings account you can find and deposit the money you would have spent on premiums every month.

If anything goes wrong, use it to pay for repairs or replacements - and if it doesn't, you can spend the cash on anything you like.

CASE STUDY

HELEN GILBERT admits she hasn't always made the most sensible financial decisions.

The 25-year-old nurse, from Stirlingshire, says: "I've got a Royalties Gold account, which I opened because I was promised free travel insurance, cheap contents cover and a load of other stuff - but I haven't used any of it."

Meanwhile, she pays pounds 12.95 a month to maintain the Royal Bank current account.

She confesses: "I know I'm not getting value for money and should do something about it. I used to have a free account with Abbey and I'm thinking of going back."

Helen also has a gym membership she hardly uses.

She says: "It costs me almost pounds 400 a year and, because of the hours I work, I'm lucky if I get there once or twice a month.

"My boyfriend is a runner and keeps telling me I should cancel it and take up running because it's free. He's probably right."'It makes more sense to stick with a free account'

(c) 2009 Daily Record; Glasgow (UK). Provided by ProQuest LLC. All rights Reserved.

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