Tuesday 21st March 2006
Britons could be paying more than they realise for their car and home insurance by choosing to pay by direct debit (DD).
According to research conducted by Money Expert, 49 per cent of home contents and 83 per cent of motor policies charge for the DD service, totalling an extra £2.7 billion spent each year.
DD charges add on roughly 20 per cent to the cost of the policy.
Although it may seem appealing to spread the cost of insurance throughout the year, paying it off in one lump sum may be more financially beneficial, advised Tim Berry, a director of Money Expert.
"Opting to pay by direct debit seems a good way of spreading the cost of your annual insurance premium," he said.
"However, people should bear in mind that some insurers believe they are making a loan to customers when they let them pay by this method."
Mr Berry added that consumers should shop around for their home and vehicle insurance as well as considering using a low interest credit card or loan to pay the cost of the policy in one lump sum.
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