When it comes to finance, there’s no end of myths and old wives’ tales with no truth behind them- yet we all seem to accept them! Assuming that something is true without checking it out yourself can have some negative consequences, especially when it comes to money. That’s why we’ve picked 10 common myths and investigated them for you. Read on to become a savvy saver!
1. There’s such thing as a debt ‘black list’
No such list that exists that would stop you from getting credit. No lenders keep a list of people that they have decided they will never lend to again, no matter what the circumstance. Each individual bank or loan provider will look into your credit report and will base their decision on this information. Remember, creditors are required to make sure they are lending responsibly, so they will want to be certain you can afford your repayments.
2. You need to retire to get your pension
Unbelievably, you can actually access your pension without stopping work once you turn 55. This can allow you greater flexibility, but requires careful consideration. You cannot access your state pension until you reach the set state pension age.
3. If you’re burgled, you can’t claim unless you have receipts
A lot of people incorrectly assume that when it comes to valuables that have been stolen, the only proof of ownership accepted is receipts. Thankfully, this is false! Insurers should also accept photographs of the items, but they must be good enough quality to show the item in question.
4. If a firm dies, so does your debt to them
Unfortunately, this isn’t true. Usually, if a lender goes bust, your loan is sold to another institution, or an administrator will take control. You still have an obligation to meet your payments on time. If you don’t, it could result in a collection firm calling you with a very large bill, plus interest! If you’re not sure, always contact the administrator or company helpline, who should be able to assist you.
5. You have ‘unlimited’ contents insurance cover
The wording of many contents insurance policies can lead you to believe you are covered for ‘anything’, but what unlimited actually means in this circumstance is that there is no limit to the sum insured.
6. If you miss your flight home, you can claim on your holiday insurance
Yes and no. Most standard, cheap travel insurance policies will not cover a missed flight, but some may accept a claim depending on the reason. You’re unlikely to be able to claim if you missed the flight because you overslept! Always read your travel insurance documents carefully to understand what you have cover for. For example, if you are forced to stay in your destination due to a flight cancellation, many assume that travel insurance will cover extra costs such as food, but additional accommodation is often the only thing covered.
7. Payday loans can be good for your credit score
This is a tough one. Repaying the payday loan on time and in full could actually have a positive effect on your credit score. However, each potential lender can interpret your credit report differently, and some providers may assume that people who take on payday loans cannot manage their finances very well. If you do take out a payday loan, just concentrate on paying it back on time and in full to avoid any problems with requesting credit in the future.
8. All pension advisers are FCA regulated
This is not the case and can lead to consumers receiving bad advice, which the financial ombudsman can’t help with. Always check if a business or adviser is authorised by the Financial Conduct Authority by looking them up on their easy-to-use register.
9. If something is stolen from your car, you can put a claim in to replace it
Valuables that are stolen from locked cars are not usually covered by car insurance policies. If your policy does cover stolen goods, make sure you understand whether claiming would affect your no claims bonus. In some circumstances, it may be possible to claim on your home contents insurance. Of course, this is all provided that you didn’t leave the items in plain sight, and you locked your vehicle properly!
10. You can get out of paying your debts by using this law/ loop hole
Basically, if it sounds too good to be true, that’s because it is. Whilst there is something known as statute barred debt (if a creditor hasn’t chased you for an unpaid debt within the last 6 years, they can’t take you to court to get it back), you should never trust any online tips that tell you there’s a law, a new system or any other way to get out of your financial commitments. You should always do your research, and make all your payments in full and on time.
And there you have it- ten finance myths busted for you- we hope you found the information helpful. Got another finance myth you want investigated? Let us know in the comment section below and we’ll do the rest!