Don’t Fall for the Rollover Trap
01st June 2021
It seems like basically everything’s on some kind of subscription these days, from gym memberships and streaming media services through to insurance policies. For sure, there’s a lot of convenience in taking a hands-free approach to certain kinds of everyday costs. Standing orders and direct debits make it simple to keep the services we need rolling. The trouble is, we’re not always great at keeping track of them – and quite a few companies are basically counting on that.
Sky TV Legal Case
Just to pick an example, let’s take the recent legal fuss over Sky TV. The rules for subscription-based TV companies say that they have to tell you when your contract is set to come to an end. By law, they’re also supposed to make sure you understand what the best deals you can get are.
All of this has to be done in plenty of time for you to change your subscription package – or even cancel it altogether. The point is to stop businesses from hiking up prices on loyal customers after their initial contracts end – which is exactly what Sky is being investigated for by Ofcom right now.
Car Insurance Companies
The problem doesn’t end with TV services, either. While car insurance companies might not be breaking any rules by ramping up prices when their customers’ policies auto-renew, it’s certainly an uncomfortable situation to be in when they do it to you.
Basically, far too many people are letting their policies roll over with the same insurer, and they’re being punished for that loyalty. The longer you stay with your insurance provider, generally speaking, the more they’re going to hike your prices. These gradual, year-on-year increases might not seem like a big deal as they happen, but sticking with the same firm over time can end up costing you a lot of money for no benefit whatsoever.
It’s such a problem that new regulations from the Financial Conduct Authority (FCA) are coming into force in January to stop it. Under the new rules, this kind of “price walking” will be banned to make sure loyal customers end up paying no more than new ones.
Speaking of a lack of benefits, every so often, spare a little thought for the unused subscriptions you’re paying for each month. How many times did you use that gym membership over the last couple of years? Have you been paying right through the pandemic for things you couldn’t even use in lockdown? Have you doubled up on subscriptions that are providing basically the same thing? Is there so little to watch on Disney+ that you can’t live without Netflix and Amazon Prime as well?
Remember, whether a business is breaking any laws or not, it’s still easy to get caught up in expensive and unnecessary rollover contracts. Even simple errors can lead to potentially years’ worth of unnecessary payments.
Student Loan Overpayments
It's not just subscriptions with companies you need to be aware of. Take the Student Loan scheme, for example. According to an investigation from MoneySavingExpert.com, the 2019/20 tax year alone saw graduates forking over £100 million in overpaid Student Loan repayments. Some had started paying too early or been accidentally recorded as being on the wrong scheme. Meanwhile, others were being charged before they hit the earnings threshold - or had actually paid off their loans altogether but the payments were still being taken!
With a keen eye and a little forethought, the rollover trap isn’t hard to avoid – or to get out of if you’ve already fallen in. Student Loan errors can be caught and corrected. Rolling subscriptions can be cancelled or renegotiated and insurance policies can be transferred. You’ve really got to be aware of these never-ending drains on your finances, though. Even small leaks can sink you if you never get them fixed.
If you’re worried about your Student Loan repayments or have other tax trouble, talk to RIFT. We’re the UK’s leading tax specialists, and a yearly refund from HMRC could be exactly what you need to right your ship.