personal finance

Be wary of the big tease that lures millions


The big tease happens when companies offer an attractive online rate, but only on a limited number of deals or for limited periods. This can dramatically bump up the cost of train tickets, flights, credit cards and personal loans, so it pays to work out all the costs before signing up.

Extra costs

Yesterday budget carrier easyJet was offering eye-catching “Discover Malta” deals for just £34.99, although the small print showed this only covered the cost of a one-way ticket, with two people travelling.

A search then showed ticket prices ranging from £46.90 to £165.07 in September.

Similarly, Trainline.com was promoting one-way tickets from Manchester Piccadilly to London Euston from £23, but choose the wrong day or time and you could pay £95 or £133.

Nationwide Building Society offered a personal loan with a market-leading headline annual percentage rate of just 3 per cent, but like most APRs what you pay depends on your credit record.

After completing an online application for a £10,000 loan over 24 months for someone with past credit problems, the site offered an APR of 8.5 per cent.

MoneyComms.co.uk personal finance expert Andrew Hagger said life and travel insurance companies also confuse with teaser rates: “They may offer cover for, say, £1 a day, but this will apply only to younger people in perfect health and with low-risk lifestyles.”

Complicated 

Seven out of 10 online shoppers have been left out-of-pocket by misleading teaser pricing, according to new research from challenger bank Shawbrook.

Product and markets director Paul Went said trust in online companies was being eroded and more than half of us would not recommend a product that used this technique.

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Teaser pricing on personal loans is getting worse, he added: “The gap between interest rates advertised and the rates paid by customers is widening, causing confusion and frustration.”

The practice has also made booking holidays, flights, hotels, train tickets, hire cars and tickets for gigs and sporting events difficult and complicated.

“Getting the product or service you want can feel like a battle and that is not the relationship we would want to foster with customers,” Went added.

TravelSupermarket.com senior manager Emma Grimster said always work out the total price before booking travel online: “Think through exactly what you need and whether items such as seat selection, in-flight meals, baggage allowance, transfers and hotel wifi are included.”

Transparent 

An easy Jet spokesperson said it has transparent prices and advertised deals are always available on a select number of seats: “As with all airlines, our pricing is demand-led, which means as more seats are booked the price will rise. Our fares start low and increase the closer it is to the departure date, so we recommend customers book early to secure the lowest fares.”

A Trainline spokesperson said that fares promoted on its site will always be available for some departures: “Ticket prices are set by the rail firms and often increase the closer you book to the day of travel so, on occasion, the fare you search for may already have sold out. We always recommend you book tickets in advance to make the biggest savings.”

Nationwide said advertising the representative APR is a regulatory requirement to allow borrowers to compare lenders quickly, with at least 51 per cent of successful applicants receiving it: “We only offer personal loans to existing members with rates based on their personal circumstances and credit history.”

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The society says it operates transparent pricing and allows members to get a quote without affecting their credit score through its eligibility checker.



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