Hidden profits

All South Africans know there are hidden costs everywhere. Look closely at your bank statement and add up the charges, and then ask why these seem to exceed the package you are on.

When financing a car, we all know - or should - that there are initiation costs the bank can charge for the hassle of doing the paperwork.

But, not too many people know that the car dealers often charge a grand or two to allow purchasers the privilege of receiving a clean car, with a full tank, that has been through roadworthy and licensed.

Add it up - it will cost you a fraction of the price to do it yourself, and you certainly don't have to fall into this trap.

Then there is the Internet service provider upgrade trick. When prices come down, they don't automatically bump you up to the next package that now costs the same. Nope, you have to be provocative and call them to ask for this to be done.

But, what we all didn't know until a little while ago, was that if you don't bother to renew your contract with the cellular operator - and receive a new handset and a Nintendo Wii or whatever - you will carry on paying for the old handset.

How much? Who knows? The operators don't itemise the bill to that extent. Oh sure, they show you what having an itemised bill costs, your calls and SMSes. But, they don't say that - for example - a quarter of the monthly subscription is the cellphone.

Let us, for argument's sake, say it is a quarter. And let's say you spend R500 a month on the contract, and get 200 allegedly free minutes a month to go with that.

The “free” minutes should cost R540, if they were all used during peak times. But, let's also say half are off peak to other networks - R125 - and the other half are peak to other networks - that's a total of R395 a month on calls.

If the banks applied the same principle, we could pay off our houses, and continue paying.

Nicola Mawson, group financial editor, ITWeb

But that's a bit of an exaggeration, as some of those calls would be on-net, and as a result, cheaper. Even assuming a bill of R400, that still leaves R100 a month for the handset.

Sure, the phones that come with these packages are often worth more than R2 400. But, who knows how much discount the cellular companies get from the mobile manufacturers, especially as they are buying more than one unit at a time.

So, for every month that the old contract runs - either because we've forgotten it ended or because the new phone we want is not available - we pay about R100 extra, for example.

Sure, not even worth a night out on the town. But, we are in a recession and - frankly - every cent counts.

If the banks applied the same principle, we could pay off our houses, and continue paying. And a car loan would be indefinite until another car was purchased.

Those are the silliest examples I can think of - but they prove the point. Once something is paid for, it's paid for. Finished.

Otherwise, it's a bit like buying groceries and - because you didn't leave the store quickly enough - having the rice, soap and meat rung up again.

The lesson, clearly, is to read all the fine print. Don't let the person behind the counter bully you into just signing. Know what you are getting into.

At least until the Independent Communications Authority of SA gets its act together and brings an end to the hidden cost of the handset. Even then, read the freakin' invoice!