Smart Consumer: How to make savings on your monthly bills
Most of us have contracts for phone, TV, energy, insurance and financial products and even the gym. But do you always stay with the same company? If so, you could be making a costly mistake.
Instead, start to 'switch and save'. In this month of resolutions it's a mantra worth repeating; it could help with a transformation in the amount of money you have in your pocket.
But before you switch, you have to make sure that when you pull out of the contract, you're not penalised. There are several traps that you could fall into, but knowing what they are will ensure you don't.
If you've signed up to a 24-month mobile phone contract or a 12-month electricity deal, you'll have to wait until the contract is up for renewal before you leave, unless you want to pay to quit.
And that doesn't mean waiting until the very last day of the contract. For example, for mobile phone contracts and subscription TV services you need to give approximately 30 days' notice to quit, for gym subscriptions it can be longer.
If the notice period is a month make sure you give it more than one month before your contract is up. If you give it on the last day, you'll have to pay the extra month -- in other words you'll pay for that notice period.
Of course, you can leave mid-contract if you want but be ready to be penalised.
Let's say you are in a 24-month contract with a mobile phone provider on a package of €40 a month. After 12 months you decide you can do better elsewhere so sign up to the cheaper provider and cancel your existing contract. Bad move.
For leaving mid-contract you'll have to pay the monthly recurring charge for those remaining 12 months you signed up for. In this case at €40 a month, that would amount to €480. So much for switching to save.
It's a mistake that many make with their mobile contracts so you should always contact your provider first to check where you are in the contract.
Your new provider can transfer you without you having to do anything. But they won't know if you still have 12 months to go on your contract so can't tell you that you'll soon be receiving a letter (after you've switched), telling you that you owe the other crowd a small fortune.
When it comes to energy contracts, not all are time-specific but some lock you in to a 12 or even 24-month deal. On Airtricity's 12-month contract, for example, you have to pay €25 if you leave early.
The other thing to remember about those energy contracts is that when the time period is up you'll be automatically switched to the standard tariff. This will be dearer, so keep note of when the contract is up and then take the time to go energy-provider shopping again.
It's easier to switch health insurance policies; that is, if you're with Aviva or Quinn who allow you to switch any time without charge -- for VHI customers, there are penalties.
If you cancel and haven't made any claims, you pay the health insurance levy (€285 for adults and €95 for kids) on a pro-rata basis plus a €50 admin fee. If a claim has been paid, then you'll have to pay the premiums owed up to the date the contract was due to end.
Don't forget, if you are switching, do think twice before signing up for a long time period; if a better deal comes along, you'll be stuck where you are.
Switching to save -- no one said it was a walk in the park, but if you know what you're at, it will work for you.