Budget woes can sneak up on you in an instant. Hidden costs are more common than you think, and it’s easy to go along keeping a casual eye on your finances and suddenly find yourself in the red when you were sure that you ought to be in the clear. Here are some of the worst culprits to watch out for.
PPI and financial products
Your financial products could be hurting your finances, oddly enough. Watch out for hidden costs when it comes to bank accounts. Reading the small print can help when you first set up a new account or product, but it’s easy to forget all the ways that additional fees can be triggered. Financial institutions can also change terms of service over time. They have to inform you, but it’s easy to overlook updates or click “accept” without checking the details.
Some accounts waive fees if you maintain a minimum balance, or if you stay under a certain number of transactions per month, or offer various benefits in return for a recurring fee. These accounts may even have been a good deal for you when you signed up, but as your situation changes over time, their terms may be less so.
It can be a challenge to operate without any financial products at all. Instead, make a point of reading and understanding all the terms when you first acquire a product. Try to avoid the temptation to sign up for products that you don’t need and stick with basic accounts instead. If you do go through a life change that affects your financial situation, then set aside some time to go through your accounts to make sure that they still suit your needs. Always review account statements for unexpected charges.
Financial institutions and retailers also make mistakes and can be vulnerable to malicious intrusion. Reviewing your account statements regularly against actual expenses can reveal some mistaken charges and fraud. Other mistakes may be less noticeable. Many institutions overcharged payment protection insurance (PPI) services and can be approached for refunds. If you think that this might have happened to you, then you can do a free PPI check online to see if you’re eligible for a PPI claim.
One common hidden cost is parts and supplies. Whenever you buy a new product, consider what it requires to be operated to understand its true costs. In some cases, industries have driven down prices by shifting their emphasis to pricy replacements of consumable components. This can apply to things such as filters and vacuum bags or ink cartridges for printers.
A variation on this theme is purchases that require or are likely to prompt additional purchases in the form of add-ons, peripherals, charging and connection cables, cases, accessories and other gear. If you’re on a tight budget, then the initial cost may be manageable, but these additional hidden costs could drag you into the red before you know it.
Researching products prior to purchasing, reading reviews, and leaving some room in your budget can help guard against these vulnerabilities.
Interest payments and purchase plans
Another challenge when it comes to expenses applies to those larger purchases. A loan, a mortgage, a lease or other payment plan generally comes with interest charges, and may also include other fees. Make cash, lump-sum payments as much as possible, and avoid purchasing on credit – you end up paying much more than the actual price tag.
It’s fair to argue that interest is not a hidden cost, because you are always informed of the interest rate and repayment window. However, many neglect to consider the full price that they’ll pay, and particularly fail to anticipate or seriously review the additional charges if they miss payments or have to extend the repayment window.
Some interest charges are more easily missed than others. Many credit cards charge interest on cash withdrawals and balances carried past a cut-off date. Bank cards may charge interest if the account is overdrawn. You can find yourself unexpectedly in a situation of mounting interest if you’re not careful. Keep an eye on accounts, always make payments promptly, and avoid going into your overdraft as much as possible.
Hidden costs that cause debt can sneak up on you at any time. Be vigilant by regularly reviewing all accounts, repaying debts in full and at the earliest possible time, and leaving room in your budget for unexpected expenses. Keep an eye out for opportunities to contest falsely applied fees – mistakes do happen, and you don’t want to mistake a hidden cost for a false one.