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I think we have all been in this situation at least once; you decide to purchase, for example, a computer or a home entertainment system from one of those well known electrical retail outfits. You have either decided yourself, or been persuaded to, finance the purchase using a finance package and pay off the item in instalments. Very often a good idea, especially if you wish to establish a credit history.

Next thing that happens is almost certainly the sales person will start trying to sell you a PPI - payment protection insurance which is mean’t to cover your repayments in the event of your not being able to work for a period of time due to illness, accident or even unemployment. Most of us have agreed to take out the policy and simply signed on the dotted line without realising that we probably will never qualify to claim on it should the need ever arise. It just appears to be a good idea to take it at the time. You walk away happy and so does the sales person - he/she has just earned themselves a nice bit of commission because you took the PPI.

I signed up for one of these a few years back and found it to be totally useless. Most people do not realise that in the event of any of the unfortunate situations occuring they will get a nasty surprise when they try to make a claim. Result is that you have paid for an insurance policy that you will never be able to use. Now such organisations doing this are the subject to legal action.  The HFC Bank has been fined for misselling these policies. The insurance has been widely criticised for being too expensive and difficult to claim on. Sellers of PPI make massive profits on the product and pay incentives to staff for them to sell it.

PPI is also sold alongside mortgages, loans, credit cards and other finance deals - my advice is not to bother. Institutions are not allowed to refuse your credit application based solely on the grounds of your refusing the insurance. Just like with those useless ‘extended warranties’ that sales staff almost beg you to accept when you buy an iPod for instance. The warranty often costs more that the actual replacement value of the item you are buying so why bother!

Just say no and say it firmly.

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When you sign up with PayPal and opt for just the basic account at the start there is one thing you have to bear in mind and that is that there is a set limit as to how much money your account will process. Two limits actually - a monthly limit and an over-all yearly limit.

I have just recently hit the buffers myself on the monthly limit without realising it - when you have a nice little earner on the side and the payments are clocking up you tend to forget about the fact that your account has that set limit. Net effect is that once you hit the buffers your account gets blocked. Depending on the volume of incoming payments you will get a warning from PayPal and then a series of steps have to be taken. Bear in mind this all has to do with security…they just want to make sure that your payments are coming from legitimate sources and you aren’t a drug dealer or something like that.

They will want you to confirm your address and your bank account. They will phone you or post you some info just to ensure your address is correct and that you actually live there. If you’ve given them some duff details such as regarding where you live you will have to verify other details and they will not give you access to your money until they have been satisfied that all is on the level.

After they are happy with everything chances are that they will advise you to upgrade your PayPal account - this increases your withdrawal limits, but bear in mind this will carry a percentage charge fee by PayPal.

Popularity: 6% [?]