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Poor charged £1,300 a year more by firms
by James Lyons, Daily Mirror 11/01/2011
POOR families are being charged almost £1,300 a year more for basic goods and services, a report reveals today.
Power bills are nearly 30% higher because the less well-off tend to use prepayment meters instead of direct debit.
They pay up to three times the real price for items such as cookers by getting them on hire purchase. And insurance is also dearer as they live in high-crime areas, Save the Child*ren found.
Financial expert Martin Lewis, who helped compile the study, said: "It is ridiculous but true it costs more to be poor."
He runs the website but said needy people often lacked the access to the web, bank accounts and credit facilities to take proper advantage of his financial tips.
Save The Children's Sally Copley said households on less than £12,700 a year were having their health jeopardised by being charged more for essentials such as heating.
She said: "There is a clear link between living in cold, damp conditions for long periods and children's health being put at risk.
"We believe the poverty premium is totally unfair and is ripping off low-income families already struggling to make ends meet." The charity's report, The UK Poverty Rip-Off, revealed that almost 700,000 low-income households do not have bank accounts.
It means they can pay a £12 fee to cash a £200 cheque with a specialist high street firm which Save The Children estimates they do around three times a year.
Hard-up homes are often forced into debt because benefits are too low, the charity claims. It says two parents and two children need £402 a week but receive only £235. However, extortionate rates charged by doorstep lenders mean a £500 loan can cost up to £750.
The average low-income household will pay £99 a year for home insurance, 48% higher than for other income groups. Their car insurance premiums are typically around £598 almost double the £310 for the typical motorist.
And paying up-front for electricity and gas means typical annual bills of £1,134, compared with £881 for others.
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