euro photoMost people use banks for a variety of services and products for convenience. In many cases, people assume that their bank is giving them the most suitable products for the best value but is that really the case? Quite often, a bank is limited in the range of options it has to offer but won’t necessarily tell you this because they want you to buy their products and make them more profit. Some of the most common areas where we see this being the case, include mortgage protection, life & serious illness cover, home insurance, personal loans and current accounts.

When people apply for mortgages (usually the biggest financial obligation you will probably have in your life) the associated products required can seem secondary in comparison and quite often, the bank arranges to put these other products in place for you. In many cases the bank is tied to just one company’s offering, for example with mortgage protection, so they are not in a position to offer you alternative mortgage protection that could be much cheaper. You are under no obligation to take out any such products with the bank that provides your mortgage. Even if you did so some years back, you can still compare today and if you can get mortgage protection that is sufficient to cover your remaining balance and term and it is cheaper than what you are paying, you are quite entitled to replace it. This is usually more noticeable with personal life or serious illness cover, as the premium will usually be higher, leading to a larger saving. The same is often the case with home insurance where we see people who have their home insurance premium deducted with their mortgage payment so just leave it as it is, when in fact, they can be paying close to double what they could be insuring their home by shopping around each year.

With competition in banking meaning that options constantly change, it is well worth researching alternatives to make sure you are getting the best value. The charges on current accounts can be quite excessive when closely examined and it may be that your particular pattern of use with your current account would incur much lower charges elsewhere. The same can be said when applying for personal loans or car loans. Check the interest rate and the repayments. Are there any additional fees with the application? Is the interest rate fixed or variable? Are there penalties for early repayment? Does your credit union have a better option?

Yes, there is a little bit of extra work involved but the savings can make it very worthwhile. A €20 per month saving on a mortgage protection plan with 20 years remaining, is €4,800 in total! People will often take the time to compare products in a supermarket to see if one option is a few cents cheaper than another but yet not take the time to compare things that are deducted by direct debit despite the potential of much larger savings. It really is worth taking a little time to make sure you are getting the best value for your hard-earned money. It’s far better in your pocket!

Dave Kavanagh QFA has been a Financial Advisor for over 20 years (and a Gym Instructor/Nutrition Advisor before that!) He has done advice slots on RTE 2FM and on TV3 and does the “Ask the Expert” Financial Advice section on Mumstown.ie  For more information on this topic, just send an email  and remember, with Financial Companion, there is no cost and no obligation to arrange a review. Contact us to find out how simple it is.

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