Be the one that got away
So you've decided to switch your mortgage, dump your broadband provider and ditch your gym membership?Three relatively easy ways to cut your monthly outgoings - or so you would have thought. But no.
Once you start trying to extract yourself from financial arrangements there always seems to be a catch: the get-out clause. It might not have been written in large type when you signed on the dotted line some months ago, but now those words, buried in the small print, will make it difficult for you to move on - and cost you money.
Take mortgages, for instance. Making monthly overpayments or paying off your mortgage early could save you thousands in interest. But according to consumer champion Which?, most fixed, capped and cashback deals come with charges if you repay all or part of your loan early or if you switch to another deal.
And those charges can run into thousands. Mortgage Exit Administration Fees (MEAFs) - paid by borrowers to exit their mortgage contract at the end of a fixed interest rate period or when the mortgage is paid off - are meant to cover the cost of things such as releasing the deeds to your house.
The fees should be proportionate to the real administrative costs. But, according to the Financial Services Authority (FSA), some lenders have been increasing exit fees on existing mortgages.
This means you may be charged more when you exit the mortgage than it showed in the contract when you signed it. Last year, the FSA said mortgage lenders should charge customers either no fee, or the original fee in the contract. If they want to charge more, they need to justify it.
If you've paid a fee in the past six years that was higher than the original in your mortgage contract, Which? urges you to challenge your mortgage lender. See www.which.co.uk for examples of letters to send. Or contact the financial ombuds-man at www.financial-ombudsman.org.uk or call 0845 080 1800.
With your broadband provider, check the details of your contract before trying to switch to a cheaper one. If the term of your contract hasn't ended, you are liable to a cancellation fee, which can amount to your monthly subscription for the remainder of the contract.
And don't forget that, when it comes to broadband, often the best deals are with your current provider. If they sense you really do want to switch, you may find they manage to pluck out a good offer.
You would think closing down your gym membership would be relatively simple. Not once they have got their claws into you.
Most gyms demand a one to three- month notice period if you want to quit.
When you were determined to tone up that post-Christmas flab in January, your mind wasn't on the small print and the gyms are well aware of that.
The average monthly cost of gym membership is currently pound;41.95, according to the Fitness Industry Association. Which is fine if you actually go.
But if, six months after joining, you realise that two swims and a pilates class cost you pound;251 and that it's going to cost you another pound;120 before you can quit, it's not such a bargain.
The moral of the story, of course, is to always read the small print.
Whether it's book clubs, store cards or the big financial commitments such as mortgages, insurance and cars, always check the terms and conditions of a contract very carefully.
And above all, when you are considering signing up for something, make sure a question about get-out clauses is the first thing on your list - not last For more information, visit the FSA website www.fsa.gov.uk See also www.which.co.uk
Exit fees for gyms
David Lloyd: 3 months
Esporta: 3 months
Cannons: 1 month
Virgin Active: 1 month
Fitness First: 1 month subject to contract minimum length
LA Fitness: 1 month