How Reading The Fine Print and Terms of Service Can Save Money

Updated on May 18th, 2022
Saving and Spending Differences

As consumers, we often ignore reading the terms and conditions. From booking airline tickets, taking out insurance, or even a simple purchase from your favorite clothing store; reading the fine print is not something we tend to spend a lot of time on.

Yet, we live in this hyper-digital world, where all our information and data is shared online. Thus, we want to ensure that companies take extra precautions to ensure the safeguarding of our valuable personal information.

But even something as simple as agreeing to the Terms of Service (TOS) when updating a mobile app, or software program on your computer without actually spending some time reading it can come at a cost.

A survey conducted by Deloitte found that around 91% of U.S. consumers accept legal terms and conditions without actually reading them. With younger consumers aged 18 to 34, this number is even higher, with 97% agreeing before actually reading. So why even hassle with reading the TOS or fine print when it can be up to 33 pages long? A 2019 news article from The Washington Post reported that one lucky teacher in Georgia was able to receive $10,000 for simply reading the fine print on her travel insurance policy.

Now not all companies are that generous to simply give away thousands of dollars for actually reading what the terms and conditions are. However, it’s time that you start taking advantage of how you can save money by doing it.

What is the “Fine Print”?

The “Fine Print” or Terms and Conditions is a legally binding agreement between you and a company or business. When purchasing a product, or service from a company, they tend to send you terms and conditions agreement that outlines your rights as a consumer. In many ways, it’s said that the terms of service also exist to protect the company against any liability or legal proceedings if a product is faulty, or a service is not as you’d expected it to be.

You can think of the fine print as a legal contract between you and the company, as it states what your rights are in the event of a dispute, and how the company and legal proceedings will be delegated.

Consider how thoroughly you read your last employment contract, or perhaps your loan agreement with your bank? You ensured that whatever was stated in those pages was aligned with your rights as an employee or client of the bank, so why ignore the fine print on other important purchases or services?

5 Ways You Can Save Money By Reading The Fine Print

Reading the fine print, albeit an extremely tedious process can help you save money on purchases, subscription services, or insurance plans. Even taking the time to skim over the Returns Policy of a retail outlet can do you a great deal when you’re looking to return or exchange a product.

Here’s a look at some of the simplest ways you can save a few extra dollars by reading through the terms and conditions before hitting “accept.”

Fees and Interest Rates on Loans

When we’re faced with having to take out a loan, for whatever reason it may, a lot of the time our loan agreement contract with the bank or financial institution is a lengthy and complex document that contains hard-to-understand words or terms.

Yet, this might be common practice all over, but if you’re an attentive reader, or find the time to read through it, you’ll be able to come across some points that might have not been covered during the loan application process.

Hidden Fees

Banks and lenders tend to have hidden fees on nearly everything these days, and while these can range from a small percentages to larger sums of money, having to pay extra on top of your loan can quickly become a financial burden.

Look out for fees such as:
  • Late Payment fees
  • Transfer fees
  • Annual or quarterly fees
  • Overage fees

One thing a lot of consumers don’t know is that some banks have a prepayment penalty fee. This means that if you repay a large portion or the entirety of your loan earlier than stipulated, you may be penalized and will need to pay a hidden fee.

Interest Rates

So many people tend to take interest rates for granted, and while it’s not something we follow up on every single month or year, it’s good to be aware of how lenders interest the cash you’ve borrowed. Interest rates tend to change as inflation does, and depending on the overall health or stability of the national economy, interest rates can either go down or increase.

Annual Inflation Increases

Inflation might be something we come across in the direct-to-consumer sector such as food, gas, electricity, or other consumer goods – but did you know that your car or home insurance can also be subjected to inflation.

Yes, some insurance brokers tend to adjust your annual premium, or a monthly payment based on the way inflation increases year over year.

This is sometimes referred to as “adjusted for inflation” or “inflation-adjusted rates” which will indicate the percentage your monthly premium will increase the following year.

Although inflation is not something you can control, it’s good to always make sure that you’re aware of this and not be surprised the following year when your premium goes up and you’re not sure why.

Restocking Fees

eCommerce and online shopping have almost redefined the consumer environment completely in the last few years, making it easier and more convenient to find your favorite products online and get them delivered to your home within a few days.

On average, as of 2020, the average American consumer spends roughly $1,434,00 per year on apparel and other services according to recent statistics provided by Statista.

Spending money on goods, especially clothing, shoes, and other items, you tend to miss that some companies and online retailers could charge you a restocking fee in case you’re looking to return your newly purchased goods.

Yes, retail companies can charge you, the buyer, a fee for returning an item for whichever reason. The restocking fee, which is sometimes included in the Returns Policy of the retailer, can range from 10% to 25% of the item cost, or a perhaps flat fee.

It’s not only retailers that can include these clauses, in the State of Washington, but local regulations also amend these claws to be freely included.

Additionally, a restocking fee can also be included on a variety of items, and are still subject to tax. That means you will be paying tax on the item you’re returning, plus the initial restocking fee.

While the rules and regulations can vary between states and retailers, the restocking fee can cost you quite a lot of money if you don’t read the returns policy either beforehand or after you’ve made your purchase.

Buy Now Pay Later Promotional Deals

A deal that sounds too good to be true is just that.

Ever noticed that some businesses, especially clothing retailers and furniture outlets tend to have a Buy Now Pay Later promotional deal? Yes, these ads offer us a short-term solution if you’re looking to purchase a big household appliance right now, but don’t have the free flow cash to do it.

A Buy Now Pay Later or BNPL promotion allows you to purchase an item on “credit” and not have to pay anything for a certain amount of months. The amount of time can range anything from 3 up to 12 months, and depending on the purchase amount, you will need to repay it when the period ends.

Let’s say, for example, you purchased a TV for $1,599. First off, there can be an administrative fee on that purchase, which can either be a flat fee or a percentage of the purchase.

After 12 months, you’re expected to repay the full $1,599 one day after the 12 months, plus interest on the 12 months. Some companies can charge you the $1,599 and require you to repay the interest in installments, this is known as waived interest.

Another option would be that companies charge you the full $1,599 plus 12 months’ worth of interest the day after your 12 month period ends – this is referred to as deferred interest.

Here’s a quick math breakdown:

$1,599 sticker price, against 20% interest for 12 months.

  1. $1,599 x 20% interest/100 = $319,80 interest
  2. $319,80 + %1,599 = $1,918,80 total repayment amount.

Instead of paying $1,599 once-off for your television, you can now end up having to repay $1,918.80 on day one after the 12 months. And don’t forget about the administration fee you paid alongside it. There might also be a penalty fee if you’re unable to make the repayment immediately.

So whether you’re thinking of buying that TV or couch on a Buy Now Pay Later promotion, you should read the terms and conditions first, because it can cost you a lot more than what you would’ve initially had to pay per item.

Purchase Protection

Have you ever purchased an item with a credit or debit card, only for that item to be faulty, broken, or stolen right after being purchased. Well, some credit card companies offer what’s known as “Purchase Protection” allowing you to claim back the amount spent on items that were either lost, stolen or damaged.

One such company is Mastercard, and their Purchase Protection regulations in the United States allow consumers to claim purchases made on their Mastercard credit cards.

To be exact, their current regulations state that: 
  • Purchases are covered for 60 days from the date of purchase as indicated on your receipt.
  • Purchases can receive a full refund from Mastercard if you are unsatisfied with your purchase and stores deny returns or refunds.
  • Gifts purchased with your card are also covered.

What this means for consumers, is that in the event a store or retailer does not want to offer you a refund, or your item is lost or stolen, you can claim that purchase amount within 60 days of the initial purchase date.

It is good to mention that Mastercard does not offer any coverage for rates, fees, taxes, or delivery charges, but only the exact amount on the item.

Although it’s not something that will save you money daily, it remains a clause within the agreement with Mastercard that you can utilize if you find yourself in such a scenario.

Mastercard is one of many such companies, and other well-known banking institutions can also offer similar Purchase Protection options and coverage, all you need to do is read the fine print.

Travel Insurance

Yes, traveling is not what it used to be pre-COVID, but we’re still happy to be back in the air, and ready to explore again.

A lot of the time airline carriers may offer you travel insurance as an added extra on your ticket, this might be charged as a small fee or if you’re lucky enough included within your purchase. Credit card companies can do the same if you paid for your holiday with your credit card.

Unfortunately, there’s only a limited amount of things that can or are already covered under that seemingly cheap or free travel insurance policy.

That’s right, in some instances, you might not even be covered in case your flight gets canceled, or if you miss your flight completely. Lost luggage at the airport? Not covered. Missing your passport or were your personal items stolen? Not covered. Need to visit the emergency room? Not covered. Pre-existing medical conditions? Not covered.

Travel insurance is one of the many places people tend to lose out because they don’t take an extra few minutes to simply read the terms and conditions – and companies know this.

Whether you’re only taking a trip from Los Angeles to New York for three days, or backpacking in Europe this summer, travel insurance does have its perks, but you can also shoot yourself in the foot if you set out to pay an exorbitant amount, simply to not even claim your lost baggage.

Yet again, it pays to read the fine print, even when you’re busy packing and ready to travel.

Honorable Mention

Flight Delays from American Airlines

As travel opens back up, we thought it good to include this tip shared by U.S. lawyer and founder of Plug and Law, Erika Kullberg.

Erika currently has a Tiktok page, with more than 11 million followers, and shares various tips and tricks on how reading the fine print can save you a lot of time and money.

In one of her most popular videos, Erika shared that American Airlines will cover the cost of a hotel for the night if you are unable to board your American Airlines flight by 11:59 pm if it’s delayed due to issues such as mechanical problems.

This specific clause is found in the Condition of Carriage Terms and is included in all tickets purchased with American Airlines.

So why are we only realizing this now? Well, unlike Erika who spends time reading the TOS or fine print, we’ve been missing out on certain savings and deals for most of our lives.

The Bottom Line

There’s no better way to put it, but you need to start reading the fine print before signing or accepting any terms or conditions.

Reading the fine print itself won’t save you money, but it will give you a better idea of what you are getting yourself into, and what you are signing up for.

Yes, there are ways you can save money, or receive a reimbursement for purchases, all you need to do is read what the terms and conditions are.

Pierre Raymond

Pierre Raymond

Pierre Raymond is a 25-year veteran of the Financial Services industry. Driven by his passion for financial technology he has transitioned from being a quantitative stock picker, to an award-winning hedge fund manager, credit risk manager to currently a RISK IT Business Consultant. Pierre is the cofounder of Global Equity Analytics & Research Services LLC (GEARS) and a current partner at OTOS Inc.

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