Financial Products are a dime a dozen. There are so many of them out there that you almost feel obliged to take advantage of their perceived benefits. No matter where you turn, there always seems to be a knowledgeable sales rep ready to help you with the offer of a bunch of financial products you just can’t do without. If you aren’t careful you can be drawn into a contract that does not meet your needs and can leave you with a financial obligation for a while to come. The world of financial products is a minefield. Hopefully what follows will show you some things to avoid because here are 8 financial products that are a waste of money.
1. Extended Warranties
The extended warranty is one of the most useless financial products there could be. Don’t let yourself be persuaded by pushy sales people insisting that you need one. The point is that modern products are generally pretty reliable and it is unlikely that your new car or piece of electronic equipment will break down before your extended warranty expires. And if it does, your claim might be limited or disqualified by the terms in the small print. Your best protection is to buy a reliable product from a reputable dealer, if possible using a credit card that extends the warranty. Follow the manufacturer’s instructions and you should have little trouble. Plus, think about the cost of the warranty. If you put the equivalent of the premium away in a bank account you’d probably have more than enough to buy a replacement anyway.
2. Cell Phone Insurance
Cell phone insurance may not save you anything if you have to replace your phone through loss or damage. Even if the insurers do replace your phone (check the fine print), you may get a refurbished phone or a different model. It’s far better to check your household or vehicle insurance. Your cell phone may well be covered already.
3. Cancer Insurance
Cancer insurance seems important but it's one of those financial products that turns out to be a waste because it may duplicate or negate coverage you have under your basic health insurance. Some policies even exclude certain types of cancer, or may only pay put in the event of hospitalization. Check your current health policy first. You may already be covered or you may be able to buy a supplemental policy.
4. Load Funds
As a financial product, load funds are an expensive choice. Typically they take a percentage of your investment as commission fees and yet are often out-performed by no-load funds. It is well worth shopping around.
5. Identity Theft Protection
In the computer age with so much access to personal information, many of us are fearful of falling prey to identity theft. But paying for identity theft protection is an expense you can do without, making this one of the most wasteful financial products. It is not worth the outlay as no one can guarantee full protection. You can protect yourself by taking simple safeguards when using your computer or looking after your personal property.
6. Collision Coverage on Older Vehicles
Typically, if you have an accident, collision coverage will cover you only up to the value of your car. As your car ages, there may come a stage where the premiums you pay exceed the maximum your policy will pay in the event of a collision. So, this is a type of coverage to think about twice before buying.
7. Credit Card Insurance
Credit card insurance is also known as payment protection and credit safeguard. It promises that if you are unexpectedly unemployed, injured or suffer disability or death, the minimum payment on your credit card will be met for a given period or the account will be settled in full. Other policies you hold may already give you this protection. It's one of the most wasteful financial products because you often have the same thing, so you end up paying for something you don't need.
8. Fee Based Checking Accounts
Fee based checking accounts are a financial product to avoid. Why pay to let the banks use your money when plenty of non-fee paying accounts are available? It just doesn't make sense.
It is not difficult to see that you can save a lot of money by avoiding financial products that benefit the provider rather than you. These are just a few examples where you can save money by checking the small print carefully and looking at what you already have. There are many more out there but if you make a start with these 8 financial products that are a waste of money, you are already on the way to making you money work better. Have you been ripped off by financial products that promised much and delivered nothing?
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