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Five things never to buy from a bank

Banks and building societies offer dozens of different products – some better than others. Here we name five to avoid.

‘Tied Isas’
Banks used to sell investment Isas to all and sundry. But following a crackdown on hidden fees and a series of mis-selling scandals, most of the major high street names have taken their teams of salesmen off the road.

Travel money
Banks often advertise “zero commission” travel money. Beware – this is a marketing ploy that typically hides a terrible exchange rate.

Packaged accounts
An estimated 11 million bank customers have been persuaded to open packaged current accounts. These deals bundle together a range of perks, such as travel insurance and car breakdown cover, and cost up to £350 a year.
But there are fears that many were sold aggressively to customers who did not want or need the benefits. Paid-for current accounts are extremely profitable for banks, particularly when the benefits go unused.

Investment funds
More than £24bn sits in investment funds that are managed by banks. These funds are no longer heavily promoted, with banks pulling back from offering financial advice. But savers can still make regular contributions as the funds are still open for new investment. The funds can be purchased directly at the bank or through brokers such as Bestinvest or Hargreaves Lansdown.

Structured products
Among the most toxic investments sold by banks. These stock-market-linked bonds were marketed to cautious savers as a way to obtain higher returns than on cash accounts, without the risks usually associated with shares. The bonds were complex. Returns typically depended on a series of stock-market targets being met. Some promised as much as 60pc over five years, but merely returned savers’ original capital.

Source The Telegraph

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