THERE are scores of small-print traps hidden in bank and utility contracts. We explain them.

The 0% credit-card con

Credit-card firms are jostling to compete for business, offering customers longer 0% balance transfer and purchase periods. However, with most providers, including Virgin Money and Abbey, the 0% balance transfer and 0% purchase periods are not the same. Virgin offers 15 months on balance transfer but will charge 0% on purchases for only three months.

The problem for the consumer begins when the 0% purchase period expires. If the balance is more than the cost of the items bought - as it usually is - the card company will start charging interest on the items bought during the purchase period, unless you can pay off the entire balance first.

Last week, Capital One bucked the trend among card companies with an offer of 0% on balance transfers and purchases for 15 months, reverting to a rate of 12.9%.

Moneysupermarket, the comparison site, estimates that the average customer who has a balance of £2,000 and buys just £500 worth of goods before the 0% purchase period expires will pay £250 more in interest than someone with a Capital One card. Halifax also offers 10 months at 0% for balance transfers and purchases, reverting to a rate of 15.9%.

Mortgage exit fees

Lenders have come under pressure from the Financial Services Authority over mortgage exit fees, also known as “deed-release fees”, which are paid when the loan is repaid, or if the borrower switches. Some have cut their charges while others have simply renamed the fee. Alliance & Leicester still charges the most at £295.

Abbey charges a £225 “mortgage-account fee”. HSBC, however, does not charge any exit fee while Nationwide charges a nominal £90.

Homeowners can reclaim mortgage-exit fees if they increase after the deal is signed.

Two-year deals that aren’t

Brokers say borrowers should always check the end date on the term as some “two-year” deals have a set end date, while others last for two years from completion.

For example, Abbey’s two-year fix at 6.14% expires at the end of September 2, 2010. Borrowers booking ahead, or who simply take longer to complete, may not get the benefit of the full two years if their loan is finalised after September 2.

Paying for insurance monthly

You could pay nearly £70 more for your car insurance if you pay monthly rather than in one lump sum. The AA charges the highest premium for paying monthly. A male insuring an Audi A4 who has held a driving licence for 13 years will pay £553 over a year or £621 if making monthly payments - a £68 increase.

Paying by cheque

Telephone and broadband firms are charging ever-higher premiums for paying bills by cash or cheque as part of a push to encourage users to sign up to direct debits.

BT now adds £18 a year, while Vodafone charges £42 a year - but Virgin Media is the most expensive at £60. However, Virgin offers a £2 discount if you dispense with paper bills and sign up to the provider’s e-billing service.

MORTGAGE COVER RIP-OFF

Provider Monthly cost | Total cost over two years*

Halifax £103 | £2,472
Lloyds TSB £100 | £2,400
Iprotect £29.77 | £714.48
Hitachi Capital £28.41 | £681.84

*For a £200,000 loan at 6.14% where monthly payments are £1,309.