The 10 best rip-offs in the world!

Harvey Jones rounds up 10 of the most impressive rip-offs, and how you can avoid them.

Sometimes you have to admire the banks. All that talent, all that money and all that energy devoted to finding sneaky new ways to squeeze cash from their customers. Just think what they could do if they played fair.

Banks aren't the only ones, energy companies, debt advisory agencies and even the Government apply their genius to dark ends. Here are 10 of the most impressive rip-offs, and how you can avoid them.

Credit cards

The banks perpetrate so many credit card rip-offs, they merit their own investigation. And that's exactly what they've got. There are so many shady practices, I don't know where to start. Negative payment hierarchies, low minimum monthly repayments, late payment penalty charges... Luckily, the Government seems to be taking note and consulting the public on how to get rid of them. Take part and have your say here.

Debt advisory services

The best rip-offs don't just require talent, but heartlessness. And you have to be a truly heartless con to target people who are already in financial trouble. Unscrupulous debt advisory services charge desperate people fat sums to set up IVAs or manage their debt repayments, even though you can get the same service free elsewhere. Ignore them, and try Citizens Advice, Consumer Credit Counselling Service (0800 138 1111) or Payplan (0800 716 239) instead.

Sale-and-rent-back

Sale-and-rent-back companies also specialise in targeting people in trouble. Hard-pressed homeowners sell their home to a specialist company, and use the cash to clear their mortgage and other debts. They don't have to move, but can rent their old property.

For a tiny number of people, it may be the only way out of a tight corner. But not if they choose a company that buys their home for 60% of its value then boots them out after six months, as notoriously happens. Or if the scheme was mis-sold as another form of equity release.

The FSA introduced interim regulation in July to drive out rogue operators, with a full regime to follow next year, but homeless charity Shelter reports that crooked companies are still operating. And we agree - watch this video to find out more.

ID fraud insurance

Everybody is rightly worried about identify theft, but ID fraud insurance isn't the way to beat it. You would think it reimburses any financial losses you suffer during a fraud, but it doesn't. It merely covers you for the expenses incurred in restoring your credit status.

Some policies also offer up to £1,000 emergency cash if you can't access your account to withdraw your money, but you have to pay this back. And it can cost up to £7 a month, or nearly £100 a year. In its way, it's another kind of fraud. As Jane Baker explains in detail here, you would be much better spending the money on a shredder.

Loyalty punished

When it comes to financial services, loyalty is for losers. Leave your money in the same savings account for several years, and watch the interest rate plummet. Stick with your motor or household insurer, and see your premiums soar. Meanwhile new customers get all the best rates. It shouldn't be this way, but it is. At least you can now fight back, through sites like lovemoney.com, which allow you to compare products across the market with one click of a button.

Base rates crash, interest rates soar

Base rates may be at an all-time low of 0.5%, but you would never have guessed it if you're on Cheshire building society's standard variable rate (SVR). It charges 6.45%. Newcastle, Nottingham and Stroud & Swindon building societies all charge 5.99%. Most people know they are being fleeced, but can't do anything about it, because they haven't got enough spare equity in their property to remortgage. The banks know this too.

The 10% savings plan you can't get

Do you earn 10% on your savings? Don't be silly. Everybody knows that's impossible, except the Government. Under current rules, pensioners who have diligently assembled more than £10,000 in savings are rewarded by seeing their pension credit cut. To calculate how much credit pensioners should lose, the Government assumes pensioners are earning an insane 10.4% on their savings.

That's 100 times more than most pensioners are getting. This rate was set in 1987 when the base rate was 20 times higher than today. And guess who suffers? Prudent pensioners on low incomes who set a little aside for their retirement. Here's a real account of someone suffering from this rule.

Train fares

A few days ago, I was moaning about the beer prices in Norway, the world's most expensive country, but at least my train fare was cheaper than in Blighty, which has the most expensive fares in Europe. Ticket prices are up to four times higher than on the continent, according to watchdog Passenger Focus. The tube isn't any better. I travelled one measly stop last week and paid £3.20. What a rip-off!

Lloyds TSB's Advance MasterCard

This one is sheer genius, because it has sneakily broken a law everybody assumed was inviolate. Almost every credit card grants you around 55 interest free days on purchases - Lloyds TSB's Advance MasterCard is a notable exception. Users get zero interest-free days. Not that you would know from looking at the Lloyds website. Under the table heading "interest-free days", it simply says N/A, when it really should say zero, nil, zip, not a sausage, gotcha! (Followed by evil laughter.)

'Premier' bank accounts

If you really thought that paying your bank up to £300 a year for extra banking services such as breakdown cover and commission-free foreign currency was great value, then there's no hope for you.

Consumer group Which? reports that 10% of customers don't use any of the extras on their premier bank accounts, and those that did could probably get a better deal elsewhere. Plus the "preferential" savings rates could easily be bettered by a quick glance at the best buy tables. Most people know it's a rip off, but that doesn't deter the banks. Which? found that 22% of people with packaged accounts hadn't even asked for them. Here at lovemoney.com, we think they are a total rip-off!

Ten rip-offs later... and I haven't even mentioned rip-offs like payment protection insurance (PPI), ATM fees, mobile phone roaming costs, bank charges, extended warranties, hospital parking charges, car showroom finance, travel agency insurance policies, foreign currency charges, directory enquiries charges, and utility companies that refuse to pass on cuts in wholesale energy costs - many of which are mentioned in the biggest financial rip-offs ever!

But that's all I've got space for, unfortuantely. How about you? What are your most hated rip-offs? Please let us know using the comments box below. Alternatively, if you're worried something specific you've come across is a rip-off, why not ask a question on Q&A and get advice from other lovemoney.com readers?

More: The biggest financial rip-offs ever