Despite our natural instincts to be loyal to our friends and family, when it comes to your finances, loyalty is not rewarded. In fact, by staying loyal to a particular company, service, or product, you’ll probably be worse off. Companies know that, and you can bet they use that knowledge to their advantage.

Think about the last time you got sucked into a honeymoon-bonus interest rate for new customers only, or a special sign-up deal at your local gym. They only offer these deals to new customers and rarely honour existing clients with any special treatment. Companies love to lure you in with special deals and better rates; however, once you’ve been on their books for a while, they move onto the next potential client, and no more special deals for you.

One of the best ways to stay on top of the hidden costs of loyalty is by making sure you know in advance when your contracts are due for renewal or when special offers are about to expire, so you can negotiate a better deal or find a new provider.

What are the hidden costs of loyalty that Aussies face?

Australians are being hit with a loyalty tax as companies try to entice new customers with competitive deals — which is why it is so important to know when your contracts for household services are coming to an end. These include mobile phone contracts, home insurance, health insurance, gym memberships, NBN, gas and electricity contracts. People are overpaying as much as $3,000 a year on their total household services, which is why you need to be reminded about what is coming up for renewal.

A great example of this is mortgage rates. Mortgage lenders will often offer a much better interest rate to new clients, which they usually won’t provide to existing clients unless they call up and threaten to leave. Staying loyal to your current provider could cost you thousands over the course of your mortgage, which you could save by jumping across to a different provider. It definitely doesn’t pay to be loyal!

What are some of the big things that you should be disloyal to when it comes to your finances?

  • Home loans (get lower interest rates by calling up and asking or switching providers).
  • Savings accounts (look for higher interest rates and no fees).
  • Superannuation (look for higher long-term performance records and lower fees).
  • Investments (look for lower fees).
  • Household bills (seek lower costs and bonus deals).
  • Insurances (look for lower fees and better inclusions — make sure you talk to a professional when changing to ensure you don’t lose coverage).
  • Gym memberships (renegotiate a better rate and switch gyms for bonus sign-up deals).

Now that’s certainly not an exhaustive list, but that’s already a lot to stay on top of. One solution is to create a recurring event in your calendar to check these things each year and make sure you’re getting a good deal. I suggest spreading these items out and reviewing one each month. Another solution is to use the GetReminded app to prompt you to pay that bill before it’s due and renegotiate your mortgage.

How can GetReminded help Aussies stay on top of renewals and due dates?

GetReminded keeps you on top of all household contracts including mobile phone plans, insurance, loans, rental lease, term deposits, loans, car registration, passport, frequent flyer points, gas and electricity, subscriptions, health and pets. GetReminded is a free service you can use to store the expiry date of a contract, plan, policy or document that you will need to renew. GetReminded will send emails or in-app notifications before the expiry date, including relevant advertisers’ offers that may save you money when you renew, so that you can avoid a financial penalty for not renewing on time.

Download the GetReminded app to your phone from the Apple or Google Play stores.

Don’t forget, when it comes to money, loyalty doesn’t pay!

Kate

Want to learn more about money and personal finance? Check out our article archive, the How To Money Podcast and the Australian Finance Podcast. Catch us on Twitter @HowToMoneyAUS and Instagram on @HowToMoneyAUS.

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