Belfast Telegraph

Ignoring the small print can cost £1,400 every year

By Simon Read

Do you understand financial terms and conditions or do you even bother to read them? Because failing to do so could be costing you a packet.

A typical consumer could be losing £428 a year, according to a Money Advice Service survey of 3,000 people.

Those of us forced to resort to payday loans are hardest hit by failing to get to grips with the financial small print.

This group estimated that the average annual cost they had incurred by not reading or understanding the terms and conditions properly was £1,405.

Among those who had taken out a payday loan, two-thirds could not say what APR meant, and almost a fifth believed that when taking out a loan, there was no obligation to pay it back.

Nearly half of those surveyed did not know the meaning of compound interest, while a similar amount did not understand the term annuity.

Jane Symonds of the Money Advice Service said that reading the small print was vital.

"Reading and understanding the terms and conditions of a financial product can seem long and unnecessary, but if you don't, you may end up incurring unexpected penalties and possibly even impacting on your credit score," she added.

"There are many ways in which you can lose money by not properly understanding the terms and conditions.

"Early repayment charges on loans and mortgages are a common financial headache, and many people fall foul of penalties for taking savings money out early, or incur late repayment charges on credit cards.

"Our financial decisions can be life-changing, and if you misunderstand what you're signing up to, it could haunt you for many years to come."

The findings come ahead of financial education being placed on the national curriculum in secondary schools throughout England this week.

It is hoped the move will lead to a generation with a better understanding of finance and one that is better equipped to avoid the debt disasters that hit millions of people every year.

Belfast Telegraph