Last month I asked whether loyalty pays when it comes to buying key services, like insurance. We’ve now crunched the numbers to find out whether loyalty really does pay or not…
Rather than being rewarded for sticking with a company, it can often seem like new customers get a much better deal.
It seems that many of you feel like this. For example, Anthony Howe told us:
‘No loyalty does not pay. I cannot think of any example over my life where being a customer for a prolonged period has resulted in a cheaper service than a new customer gets.’
Cheaper home insurance with a different company
We’ve heard from lots of other people disgruntled about the fact that being loyal to a company doesn’t seem to count for much.
Which? members, Paul and Melanie Fisher, were loyal Direct Line customers for 16 years but when they received their renewal letter this year their premium was going to increase by £225 to nearly £1,400.
And when Paul checked on a comparison site he found home insurance quotes starting at just £196. In the end they opted for a policy, offering a similar level of cover, which cost just £287 – a saving of £1,112.
Direct Line told us the premium was a fair reflection of the level of risk for insuring the Fisher’s property. But Paul still described it as unbelievable that they quoted him a price that was so expensive compared to what other insurers would have charged.
Loyalty can cost money on other services
It’s not just insurance – we also looked at lost interest in savings accounts. We found that someone who’d put £10,000 in a top-paying instant access savings account in July 2010 would have lost out on £648 compared to someone who switched to the top-paying account each year. That works out at lost interest of £162 a year.
For energy we looked at someone in the Midlands with medium energy usage (according to Ofgem figures) on a standard variable dual-fuel tariff with an online account and paying by direct debit. Sticking with the dearest of the big six energy suppliers since July 2010 would have cost them £852 more than if they’d switched to the cheapest one-year fixed-rate tariff each year. That works out at £213 a year.
So, there are the numbers. Do you think you’ve been overpaying by sticking with the same provider?
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