Frances Cook on the simple calls and questions that could lead to a much needed cash injection.
Being a good customer is surprisingly expensive. Loyalty, unfortunately, is not rewarded.
New customers get the deals. Loyal ones get the price creep.
It happens with your power company, your insurer, your bank.
Stay longer and you’ll likely pay more. Leave, or just threaten to, and suddenly there’s a better offer on the table.
It’s a loyalty tax, and most of us are paying it without realising. Here’s how to put a stop to it.
Get a better power bill
Power companies often compete hard for new customers, while existing customers absorb annual increases.
Powerswitch estimates the average New Zealand household can save around $450 a year by switching to a cheaper plan, without changing anything else on their usage.
It’s quick to check, using powerswitch.org.nz, which is run by Consumer NZ.
Billy.co.nz also launched in March this year. It’s run by the Electricity Authority, and lets you upload a recent bill in order to geta personalised comparison.
They claim the average user found savings of $60 a month, or $720 a year.
Not bad!
Shopping around on power is more important than ever, with power prices having gone up 12% last year, and predicted to go up again this year.
Put a reminder in your phone, so that you remember to price compare once a year.
Insurance premiums are going up
Insurers often price their products to attract new customers while relying on inertia to keep existing customers paying more.
Insurance comparison site Quashed has put out research showing premiums for some New Zealanders are up 35% in three years.
Meanwhile Consumer NZ found the gap between the highest and lowest car insurance premiums for the same family can be as much as $1680 per year.
Same coverage, but a very different price. And it’s just down to shopping around, and comparing quotes.
Once again, a yearly price comparison can be very useful here.
Don’t just compare premiums, but check out the excess, cover limits, and any exclusions.
And while there aren’t many tax hacks for salary earners, here’s one to think about.
Certain types of income protection insurance can be claimed back. So at a time of both rising unemployment and rising insurance costs, that’s one that’s worth talking about to your accountant.
Bank fees are negotiable
Most major NZ banks have moved to fee-free everyday accounts these days.
But there are still plenty of other types of accounts that can incur big fees, or people still sitting in older account types with monthly fees, transaction charges, or low-balance penalties, without realising.
So if you’ve had your bank account since your university days, and haven’t checked the terms recently, it’s worth logging in and looking at what fees are coming out each month.
Switching banks is easier than you might remember, especially as open banking comes into force in New Zealand.
Even direct debits and automatic payments can be switched to your new bank number for you. So shopping around for a good deal doesn’t have to mean a painful moving process, like it did in the past.
Your new bank can often handle most of the process for you, and that’s after they’ve put forward a competitive offer to win your business.
Why not?
Your mortgage rate is only fixed for so long
Banks have a carded rate on their website. Then they have what they’re often willing to offer, if you just ask for a better rate.
The most popular mortgage term in New Zealand is 12-18 months, which means most of us have the opportunity to renegotiate about once a year.
On a $650,000 home loan, just a 0.2% difference in mortgage rate can be a savings of $1300 a year.
So don’t just hit renew when your bank emails to tell you your fixed term is ending.
Call them, or use a mortgage broker, to ask what the best rate is that they’ll offer you.
Don’t be afraid to have quotes from other banks on hand, to make sure they know you mean business.
Don’t just let the internet contract roll over
Many broadband contracts roll over to month-by-month at the end of the fixed term, but that can mean you end up paying more than you need to.
New customer deals often include a few months of free service, speed upgrades, or discounts.
So if you’ve been with the same provider for more than two years without checking what else is out there, you’re almost certainly not on their best offer.
Ring them, or use a comparison website like broadbandcompare.co.nz
Streaming services are counting on you to forget
Subscriptions of any kind are a sneaky one, because they don’t even need to raise the price to get you.
They just need you to stop noticing that you’re paying, whether or not you’re using it.
Go through your bank statement and find every recurring subscription. Then ask yourself, did I use this in the last month?
If no, cancel it. If you find yourself missing it, you can always re-subscribe.
This applies to gym memberships, app subscriptions, cloud storage plans, and any free trial you signed up for and forgot about.
Loyalty cards don’t beat the loyalty tax
This one might be surprising, but loyalty programmes such as supermarket loyalty cards don’t always pay off.
It stops you from shopping around, which can mean you pay more overall, even after their perks.
Consumer NZ put this to the test in 2023 when they found three-quarters of loyalty-discounted products were available elsewhere at a cheaper price than even the discounted version.
The card breeds loyalty to the store, which sometimes pays off.
But it’s worth double checking, especially using an app such as Grocer when you’re buying food.
Asking almost always pays
So much of this just comes down to one thing – five minutes of a google search, or being willing to ask.
Many of us don’t want to ask because it feels awkward, or we assume the answer will be no.
But you can use a simple script to guide you through. You call your provider. Say you’ve been a customer for X years, you’ve been looking at what else is available, and you want to check if they have a better offer before you make the switch.
That’s it. Perfectly friendly conversation, where they have the opportunity to keep your business.
The companies relying on the loyalty tax are counting on you to stay comfortable and not pay attention. Prove them wrong. Once a year, run the check.
The people getting the best deals are often far from the most loyal customers. They’re simply the ones who asked.
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