The seven sneakiest secret financial tricks

Make sure you don't get caught out by these seven sneaky financial tricks...

No matter how financial savvy we think we are, we can still get caught out by the odd sneaky trick here and there. So in this article, I’m going to run through some of the sneakiest financial tricks to keep your eyes open for.

1. Minimum monthly repayments

Minimum monthly repayments on credit cards are usually set at very low levels – in fact, they can be as low as 2% of your total card debt. So if you’re only making the minimum monthly repayment on your debt, it’s going to take you a long time to pay off your balance in full and you’re going to end up forking out a lot in interest.

To avoid this, it’s a good idea to set up a direct debit and pay a fixed amount on top of the minimum payment you are required to pay each month. Find out more in This dangerous mistake could cost you £10,000.

2. Withdrawal restrictions

Watch out for savings accounts that claim they’re easy access and yet restrict the number of withdrawals you can make.

For example, the Halifax Web Saver Extra, which pays an interest rate of 2.50% (2.70% if you’re a current account holder), only allows you to make one penalty-free withdrawal per year. Make more than that and you’ll lose out on 30 days’ interest on the amount you withdraw.

Similarly, the Nationwide MySave Online Plus Account, which pays an interest rate of 2.78%, also only permits one free withdrawal per year. If you make more than this, a rate of 0.10% will apply and no bonus will be paid in the month of withdrawal (the account includes a bonus of 1.25%).

Hardly easy access accounts then, are they?

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3. Variable bonus rates

Bonus rates on savings accounts can be troublesome enough – after all, they typically only last a year and once the 12 months is up, the interest rate on your savings account usually drops dramatically. As a result, you will need to move your savings elsewhere.

On the plus side, bonus rates do provide a guarantee that the interest rate won’t drop below a certain level – and in these uncertain times, that can provide some much-needed reassurance.

However, this only applies if the bonus rate is fixed. In some cases, the bonus rate is variable - which, in my opinion, is pretty pointless. Because that means the entire interest rate could change at any moment (not just the non-bonus part) – so there’s no guarantee at all.

For example, the Santander eSaver pays a variable interest rate of 2.90% with a variable bonus of 2.40% for the first year. Because the bonus rate is variable, it could decrease, so it's utterly meaningless to say it is a bonus that applies for a year. It doesn't even apply for a day, it's just a bog standard variable rate savings account.

So, if you’re choosing a savings account with a bonus, make sure you choose one that has a fixed bonus rate such as the Post Office Online Saver which pays 2.90% including a fixed 1.25% bonus for 12 months. Take that, Santander!

4. Recurring payments

A recurring payment (also known as a ‘continuous payment authority) is an automatic regular payment which is set up using your debit or credit card. So, for example, you might use one to pay for a magazine subscription.

However, unlike a direct debit, recurring payments can only be cancelled by the company you’ve set it up with. So you have absolutely no control over it. If you do want to stop one, you’ll have to hope the company in question agrees to accept your instructions – and often you’ll have to jump through hoops to do this.

What’s more, even if you do cancel the payment, you may find you’re still being charged, as we explained in Avoid this devious credit card sting. So watch out for this and set up direct debits on your bank account instead if you want to make regular payments.

5. Penalty charges

Banks are keen to charge you whenever they can. So make sure you keep on top of your finances.

If you miss a payment on your credit card, not only are you likely to be charged a fee of around £12, but your card provider may withdraw any promotional deals you have – such as your 0% interest rate. Missing payments could also negatively impact your credit record.

So as I said earlier, set up a direct debit to make sure you don’t miss any payments.

Of course, you will need to ensure you have sufficient funds in your bank account – if you don’t, and a direct debit goes out, banks can charge you around £15 to £35 per item. The price can vary depending on whether the bank decides to pay the direct debit for you. So make sure you keep a close eye on all your transactions – you can easily do this using our free spend tracking tool, Tracker. 

6. Foreign currency charges

Using your debit or credit card to pay for goods abroad is an easy way to get stung. That’s because the majority of cards charge a foreign transaction fee (around 2.75%) and many also charge a fee for withdrawing money from an overseas ATM (around €1.25 or $1.50).

Fortunately, a handful of cards allow you to side-step these fees. For example, with the Halifax Clarity Card and Reward Clarity Card, there are no foreign exchange fees and no cash withdrawal fees (however, you will be charged interest from the day you withdraw the money at a rate of 12.9%, so watch out).

Similarly, the Santander Zero Card has no foreign exchange fees and no withdrawal fees (again, though, you will be charged 27.9% interest). Bear in mind you will already need to be a Santander customer to qualify for the card.

And there are also no foreign exchange fees or withdrawal fees with the Sainsbury’s Gold Credit Card. What’s more, you’ll also avoid being charged interest on the amount withdrawn, providing you pay off the balance in full by the end of the month. However, you will have to pay £5 a month for the card – find out more in A new credit card to use abroad.

Alternatively, you could consider a pre-paid card instead. These cards allow you to load up your funds before you jet off and you'll avoid many of the fees used by standard cards. Take a look at The best cards for spending abroad for more information. 

7. Renewal quotes

Finally, watch out for sneaky renewal quotes. When your home insurance or car insurance policy is about to expire, you’ll be sent a renewal quote by your insurer. However, there’s a good chance this quote won’t be competitive. In fact, if you were to apply as a new customer to the same insurer, you’d probably find you’d be offered a much better deal.

You should also be wary of companies that say they will beat your renewal quote – because they are simply stating they will beat the inflated renewal quote you've just been offered by your current provider. And chances are, you can get a much better deal elsewhere.

So never simply accept the renewal quote and always make sure you shop around first to ensure you’re definitely getting a good deal.

More: Get a cracking credit card | Three ways to avoid paying interest | Get the lowest loan rate now