Consumers are paying a ‘£782 loyalty tax’ for sticking with phone and Big Six energy providers
Many providers increase prices every year for people who let contracts roll over but saving cash can be easy
CONSUMERS pay fortunes in “loyalty tax” for staying with the same broadband, phone, car breakdown and energy providers.
Extra costs can add up to £782 a year after initial offer periods expire.
Often providers increase prices every year for people who let contracts roll over. But in many cases, you can save simply by phoning and asking why the charges are so high.
Our probe comes after regulator Ofcom yesterday said it is considering forcing broadband providers to tell families if they can switch to an even better deal.
Staying with one broadband provider costs families the most, according to data from 100,000 people analysed by .
It found BT had the most overcharged loyal customers, with three in four paying £273 more than the cheapest price for the same service.
'I SAVED £40 HAGGLING'
ALASTAIR Gough saved nearly £40 a month by bartering with Virgin Media. The marketing executive and wife Natalia’s old bill was £119.21.
It has now fallen to £82.25 – a monthly saving of £36.96 and an annual one of £443.52.
Alastair, who lives in Wimbledon, tested his Virgin Bill on comparison site IsMyBillFair. He saw that he was paying well above the average price for his package and rang up Virgin Media to negotiate a reduced price for the same service.
Alastair, 32, said: “Like many people, moving to new suppliers every 12 months isn’t always something I’ve got time to do.
“It is great to get help from a service like this to get a better deal. It is a pain to spend ages on the phone.”
The worst provider for hitting loyal customers was SSE, where 69 per cent of customers could save an average of £221 per year by switching to a lower tariff, and British Gas, where 64 per cent of customers pay an average £205 more than they need to for energy.
Mobile users on SIM-only contracts also risk paying a loyalty tax if they don’t switch. Nearly half EE SIM-only customers are paying £124 a year more than they need to, on average, while two thirds of O2 SIM-only customers overpay by an average of £111 a year.
Citizens Advice has complained to the Competitions and Markets Authority (CMA) about the costs of staying loyal and Ismybillfair.com has also submitted its findings to the CMA investigation.
CEO Alex Perrin said: “It’s not right that companies are charging more to their existing customers — or even to those who just haven’t had the time to call up and challenge their bill.”
'I ALWAYS GET A DEAL'
A FIVE-minute phone call was all it took to save David Wilkins £120 a year on his broadband bill.
The university lecturer from Cardiff calls his provider Sky twice a year to check he is getting the best deal – and is always prepared to negotiate.
He was paying £111.49 a month for his package but called up and managed to reduce it to £101.49, saving £10 a month.
This has reduced his annual bill from £1,337.88 to £1,217.88.
David, who lives with his wife and three children, said: “I try to go back to my broadband provider at least twice a year and I always manage to get money off, even if it’s just for a six-month period.
“This time, I used Ismybillfair, which made it easier.
“Being able to say ‘I know how much I should be paying, what can you do to match it?’ gave me greater confidence.”
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