Hidden ways you can lose money
You might think that interest free credit means you don’t pay the interest. If you face reality, no one else pays it; it is added to the price you pay. When we buy anything, a product or a service in the UK, there are added costs. There can be interest added for ‘interest free credit’. There is nearly always VAT added. If you are having a drink in a bar or pub, they add the cost of your luxurious surroundings. The same applies to a meal out and a service charge might be added on too. Added to the cost of many items might be business rates too and so buying from a market stall where overheads are lower can be a good idea.
There are also so called high end products where the price is higher because the manufacturer is trying to recover some of the cost of developing the new product. Therefore, you can often save money by avoiding the latest trend or fashion. Products that are being replaced with a newer model are often sold at a substantial discount.
Value added tax is applied at every level of the supply chain and so getting closer to the source of the product might save you money. Some wholesalers are a source of bargains if you have a small business, they will often give you a trade card.
The biggest ‘hidden cost’ is often interest. If you pay your credit card off in full, you have a short interest free period to pay it off in; but be careful or you can overrun that. Buying a new car might be nice, but the price will be loaded for a new car and with interest on finance it can be expensive. A older car with low mileage and a full service history will do the same thing in practice and will cost a fraction of the amount.
Some products are extensively advertised and that cost is added to the price. If a product or service is advertised a lot, be suspicious and compare the cost with other suppliers. Credit cards tend to be quite extensively advertised and the extra cost might be added by a small increase in the interest rates they charge.
Travel can have hidden charges too, airlines add all kinds of charges for extra baggage and sometimes with budget airlines, things you might expect to be free, might carry a charge. Be aware even when you’re driving that you can be charged extra when the retailer has a virtual monopoly. You will be charged extra for fuel at motorway services and food is expensive, because there is no competition. You can avoid such charges by filling up before you get onto the motorway and eat before you set out. You can take food with you and stop along the way for a in-car picnic.
Supermarkets often mark prices up with the intention of putting the product on ‘special offer in the near future. This can give the impression that the product is worth more and when the product is reduced, customers think they are getting a bargain.
Just being aware of how prices are set can help you save money. There are other blogs on the home page. Do you have something to say? A question? Please use the comment box.