When it comes to bills, loyalty doesn’t pay

Being complacent about your bills can be costly. Shop around to ensure you’re getting the best deal.

Loyalty is a wonderful quality in a labrador or a best friend, but as a consumer you’ll be far better off if you are more flighty. Very few firms value and reward loyal customers – if you flit around from company to company always on the hunt for a better deal, you’ll save yourself money.

Just last week, the Financial Conduct Authority, the City regulator, warned insurance companies to start abiding by the new rules it brought in last year. These require companies to print last year’s premiums next to the new quote when telling existing customers what they’ll pay if they auto-renew. Yet many firms are ignoring the rules, hiding the old premium or fudging the figures in an effort to avoid showing customers how much they are being ripped off for being loyal.

I got my own auto-renewal quote from my car insurer last month. My new quote was £65 more than the previous year, despite there being absolutely no change in my circumstances. A quick check on a comparison website showed that ten other firms wanted my business enough to charge me £150 less. I called my existing insurer, and five minutes later they were covering my car for £165 less than the initial auto-renewal quote. People who stay loyal to their car insurer pay an average £54 more than someone who shops around, according to Confused.com. (If you’re overpaying it might be worth trying to negotiate with your current provider first to save yourself the hassle of switching.)

But it isn’t just insurance where disloyalty pays. Energy firms have also been criticised for charging the most to the people who have been with them the longest. The average household paid an extra £852.75 over the five years to August 2017, if they stuck with one of the Big Six energy firms rather than shopping around, according to research from energy regulator Ofgem. With energy contracts, make a note of when fixed tariffs end, and keep in mind that you might save more by switching, even where you have to pay an exit fee. This approach can also be applied to bank accounts – keep an eye on the accounts that initially pay an impressive interest rate, only to drop it to next to nothing.    

The lesson here is that being loyal to your insurance company or energy provider tends to help them more than you. Don’t just assume that your loyalty will be rewarded with the best deal.
If you think you could get a better deal, ask for one, or switch providers entirely.

The best deals are online

Millions of people who don’t bank online are missing out on the best interest rates, which are increasingly reserved for online-only accounts, says Laura Shannon in the Daily Mail.

Most best-buy savings accounts on the market – from easy-access ones to fixed-rate bonds – are unavailable to people who want to open one face-to-face. The average rate for an online-only easy-access account is 0.76%, compared with 0.4% for an account that allows you to operate it over the phone, by post or in branch. On a £45,000 balance, that is a £162 annual difference in interest.

The other problem for people who aren’t internet-savvy is that, without using a comparison site, they may not be able to find the best deals. Your choices are limited to scouring the best-buy tables in the financial press – which are often dominated by online-only accounts – or visiting all your local bank branches, or sticking with your own bank, which is likely to leave you seriously worse off than someone scouring the comparison websites for the best deal. This problem may only get worse with the rise of challenger banks, which sometimes only do business online or via an app.


Pocket money… tough new MOT rules for motorists

Motorists face £2,500 fines from next month under tough new MOT rules if their vehicle fails a test before their current certificate expires and they continue to drive it. The new rules will mean defect types are included in the test, with problems recorded as “dangerous”, “major” and “minor”. Any vehicle with a dangerous or major fault will automatically fail the MOT.

Diesel cars will face even stricter rules. For example, a diesel car “can automatically fail should any smoke emit from their exhaust”, says Alexander Robertson in the Daily Mail. If your car does fail, it will be recorded on a database. If you are caught still driving a car that has failed, you face a fine of up to £2,500, points on your driving licence and even a driving ban.

Londoners are being ripped off when it comes to health insurance, says Ruth Emery in The Sunday Times. People in the capital are typically charged almost twice as much as people in Newcastle for exactly the same healthcare policy, says Emery. For example, a 50-year-old non-smoker living in London would typically pay £128 a month for health insurance, compared to an identical person in Newcastle who would pay £69 a month, or someone in Bristol who would pay £82.

The price difference is primarily due to the “varying cost of treatment across the country”, but some insurers do use postcode data to determine claim patterns, meaning if you live somewhere where your neighbours have made a lot of claims, you’ll pay a higher premium.

Holidaymakers will benefit from greater protection when booking online this summer thanks to new EU rules, says Rebecca Smithers in The Guardian. Updated package travel regulations will mean that online retailers will be “as responsible for consumer protection as traditional travel agents” from 1 July.

“Flight-plus” travel arrangements where flights and accommodation are booked at the same time, but not as part of a package holiday, will be classed as a “linked travel arrangement”. This means that people booking these holidays will be compensated in the same way as someone on a package trip if something were to go wrong.