Fine print is always a long, dull read and may seem to not be super important – but that couldn’t be further from the truth. To help you avoid losing money, money expert Melissa Leong shared some important information about reading the fine print – including terms and conditions – when making purchases. Check out her advice below, and be sure to watch the video above for even more!
DOES ANYONE DO IT?
According to a report, only one in a 1,000 people read the terms and conditions before checking the box to agree to them. This is a contract between the consumer and the business or the service being used, thus extremely important to read, but the language is full of jargon and extremely dull. Unfortunately there is no incentive, so it’s not as fun but is still extremely necessary. There was an insurance company that promised to reward the first person who emailed them after reading the fine print on a travel insurance policy. A high school teacher from Georgia ended up winning the reward of $10,000.
FINE PRINT WHEN SHOPPING
Shopping is an example of how easy it is for fine print to show up in our daily lives. It’s important to understand the return policy when purchasing something from the store. Though the ad may say there will be a full refund on a product, the fine print may reveal a number of hidden fees. There are a number of stores and online companies that have restocking fees- which means the buyer must pay a fee to return an item to a company. It could be a percentage of the item, such as 10 per cent to 25 per cent or a flat fee. Some stores can negotiate to waive the restocking fee but not all stores will do this.
BIG TICKET ITEM WARRANTY
With the holiday season almost here, a lot electronics or big ticket items come with an offer of a warranty, but not all are equal. It’s important to be on a lookout before agreeing to one. People will always throw around the word, ‘warranty’, which is a guarantee in which a bought item can be replaced or repaired within a certain time window. Be cautious with phrases like, ‘lifetime warranty.’ The question that comes to mind is whose lifetime? Is it the buyer’s, the product’s or the company’s lifetime? There are a number of questions to ask when it comes to warranty- ask the salesperson where to send the product for service. Who is guaranteeing the product- the manufacturer or seller? Does the warranty need to be registered? Does it cost anything for shipping and handling? These are all things that may affect the decision to buy something or not.
NO PAYMENT PROMOTIONS
Furniture can be another big item for people. A number of companies promote, not paying anything for a month. There are some deals that are too good to be true. When it comes to, buy now and pay later promotions, the fine print can point to administrative processing fees. For example, a $1,000 couch can have a $100 administrative fee. It can also say that it’s free for 12 or 18 months, but what happens after that? Does the money need to be paid all at once? Another question to ask, is the interest waived or differed? If it’s waived, then one day after the deadline $1,000 is owed right away and then interest going forward. If it’s deferred, then one day after the deadline, $1,000 is owed plus 12 months of interest at a possibly very high interest rate-higher than 20% is owed. The interest is charged retroactively. The better promotion statement should be buy now, pay over time. It’s important to divide the purchase price by 12 to make sure that it can be paid off over the year. Set a calendar reminder a month before the deadline so the payment is paid on time.
CASH ADVANCE FINE PRINT
When it comes to cash advances or credit cards, it’s important to look at the extra fees. The credit card agreement outlines all of the extra fees that one can face. For example, if the credit limit is gone over, there could be a fee of $29. If the balance is paid off with a cheque and the cheque bounces, there could be a dishonoured payment fee of $45.00. If another copy of the credit card statement is ordered, it’s $5.00. Credit card companies can change interest rate at any time with written notice; same goes for perks. Cash advances are another thing to be aware of. When cheques associated with a credit card are sent out in the mail or when an ATM gives out a cash advance from a credit card, that’s a loan. Interest on cash advances start immediately. There’s also a transaction fee and no grace period. Finally, balance transfers are also popular. When a balance from one credit card is transferred to another credit card because one is offering a low interest rate, the low interest rate may only apply for a short period of, say, six months and it may not apply to any new purchases.
When it comes to online transactions or things like e-transfers, there are some terms and conditions that should be taken into consideration. First is the security guarantee. The bank promises to reimburse any unauthorized transactions made if there’s fraud, for example. However, this promise may not be honoured if the PIN is shared with a third party, if it is easily guessed or if the bank isn’t notified within a reasonable time.
For example, if $3,000 is e-transferred to pay a contractor and the security question is: “What colour is the sky?” and a fraudster hacks into the contractors email account and intercepts the e-transfer, the bank will say, $3,000 is out because the security question was too easy.
It’s also important to take note in the fine print that banks and credit unions charge fees when accounts have remained inactive. A Toronto man was shocked to find his credit union drained $700 in so-called dormancy fees ($40 per month for a year and a half).
Insurance can be very overwhelming, and specifically, travel insurance with just coverage on a credit card while abroad. With travel insurance, it’s important to read the fine print and see exactly what is covered, under what conditions and the limits. The coverage can be very basic – for example, sometimes the basic travel insurance will only cover approved hospitals under their policy. There’s a case in which a Saskatchewan woman gave birth prematurely to her daughter while on vacation. She faced a $950,000.00 hospital bill because her travel insurance provider said she had a pre-existing condition. It’s important to be fully aware of a travel insurance policy if travelling while pregnant.
When it comes to pet insurance policies, not all are created equal. When looking to purchase pet insurance, it’s important to decide if it’s worth it by looking at what it covers, if there’s an annual cap of
$5,000 or unlimited lifetime coverage. Policies may not cover pre-existing medical conditions. If a pet is a certain breed with common medical issues like breathing, an insurance provider could say that the pet is uninsurable. Having a conversation with a vet is a good idea before opting for insurance.