Budget airlines cheaper - this and other money-saving myths debunked

Many travellers put up with the steep restrictions and bare bones service offered by budget airlines in order to save a few quid.

But a new study released today suggests the average UK family could end up paying £87 more than if they had simply opted for one of the larger, more traditional airlines.

According to comparison site idealo.co.uk, the initial price might look lower, but the endless stream of surcharges and fees levied by the discount airlines makes it more expensive overall.

Now, we're not saying these findings are definitive, as there are surely flights where budget airlines are indeed cheaper, but what it does highlight is the danger of simply assuming that budget airlines are budget friendly.

Here are a bunch of other common money-saving myths we've come across. If you've got some more to share with readers, why not add them in the comments section below.

Big companies offer the cheapest deals
You know that doing your monthly shop at Tesco, Asda or any of the supermarket giants will be cheaper than at your local off-licence - the economies of scale mean the biggest companies are generally the cheapest.

But, for some reason, the same concept doesn't apply to the world of personal finance. Data from finance information group Moneyfacts shows that, while the UK's biggest mortgage lenders own 75% of the market, they offer less than a third of the most competitive deals. And a similar trend can be found in other financial products as well.

You're no doubt already familiar with the mantra of shopping around before buying, but what the above highlights is the importance of including even the smallest players in your search.

• How to pay less tax

Diesel cars save you money
In recent years there has been a sharp rise in the number of motorists buying diesel cars in an attempt to drive down motoring costs.

But research from Glass's Guide, a car valuation company, suggests that these drivers will actually be wasting money unless they travel more than 10,000 miles a year.

This is because diesel vehicles tend to be more expensive, so you need to do a fair amount of driving each year for the lower motoring costs to cancel out that increased initial layout.

You should always save money
Putting money in a savings account is never going to be a bad idea, but it's not always the best way to utilise your spare cash.

Want an example of when this might be the case? Well, let's assume you're one of the millions of people who own only a small percentage of their home, say 15% or less. For most in this situation, your mortgage interest rate is likely to be anywhere between 5% and 6.5%, depending on your individual circumstances.

By contrast, the best savings accounts these days only pay around 4.65% - and even then only if you lock it away for up to five years. Add to this the fact that most of us will have to pay at least the basic rate of tax on any interest earned (unless you're using an ISA) and it's clear your money could be doing far more for you if you put it towards overpaying on your mortgage.

And of course the faster you chip away at that mammoth mortgage debt the less interest you will pay on it over the life of your mortgage. Helpfully, most lenders allow you to overpay up to 10% of your loan per year, but make sure you read the fine print of your specific deal as you obviously don't want to end up being fined for your frugal endeavours.

I should stress that it's always a good idea to have a savings buffer equivalent to at least a couple of months of your salary in place. The above would only apply to any additional funds you might have.

• How to cut costs and boost your budget

Cheaper premiums are always better
Insurance costs are rising across the board. Car insurance premiums soared by more than 15% in 2001 - and by almost 40% in 2010 - according to the AA, while buildings and contents insurance jumped by 10.2% and 8.3% respectively.

With this in mind, it's perhaps understandable why some people are willing to consider more drastic options to keep a handle on these spiralling premiums. This can include opting for less cover than they actually need or, more worryingly, falsifying information in order to secure a lower premium.

In the case of the latter, as the policy could well be deemed invalid, you are spending money on what is essentially a worthless document, making it a massive waste of cash. Similarly, if you don't have sufficient cover, you'll still end up having to shell out a significant sum from your own pocket should you need to claim.

So while they might save you money in the short term, those savings are actually a misnomer.

Buy bulk and save
When we're in the supermarket, it's only natural to assume that buying a larger, or multipack, version of any product will work out cheaper than buying an equal number individually.

But this is no longer the case. Supermarkets are purposefully bulking up the price on select multipacks in response to the consumer trend, meaning buying individually can actually work out cheaper.

Last year, consumer magazine Which? conducted an in-depth study of supermarkets and found more than 600 such instances where this was the case.

So if you really want to be guaranteed to save money, you'll have to take the time to compare all of the deals on offer. It's time-consuming and frustrating, but it seems the supermarkets have no interest in making cost-cutting easy for us.

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Buying in the sales saves you money
You may have saved money by buying that flat-screen TV or pair of shoes in the sales, but if you didn't really need them or couldn't afford them in the first place, then you've wasted money.

The same applies to cashback or loyalty cards. Yes it's great to receive up to 5% cashback on purchases, but if that incentive tempts you into spending 10-15% more than you really needed to, you're losing out in the overall.

Do you have any other money-saving myths to debunk? Use the comments section below to share the knowledge.