Companies and banks like loyal customers, but smart consumers shop around and move their money and custom around to take advantage of the best deals. By failing to be on the ball and being apathetic over finances UK consumers are losing billions in unnecessary payments and interest charges each year.
Figures released by ‘UK Money Supermarket’ show that nearly half of all credit card holders fail to pay their balances in full each month. This results in interest charges being added to the balances which amount to £2.3 billion annually. Amazingly two thirds of credit card holders have never used a balance transfer card despite the plethora of 0 per cent offers around, and a significant 24 per cent of consumers said they couldn’t be bothered to switch cards.
This financial apathy regarding credit card interest extends to other areas of personal finance too, incorporating savings accounts, insurance policies, mortgages, ISA’s, current accounts and utility providers.
In June 2010 ‘this is money’ calculated that apathy over savings cost savers £3000 a year, as savings were left in accounts with poor interest rates. This clearly demonstrates that loyalty does not pay and the savvy thing to do is stay on top of current savings rates and transfer to the best available rates. ‘Every investor’ also highlighted that consumer failure to move around between utility providers and take advantage of best rates cost UK consumers £263 annually in wasted charges.
It is one thing for consumers to be reluctant to change banks and providers if financial issues are irrelevant and it would not pay to spend the time seeking out better rates. However credit card debt could clearly be tackled and reduced by the simple measure of transferring to a zero percent offer on a balance transfer card.
Those who work hard to establish savings are wasting their time if they don’t invest in the highest paying ISA’s or seek out the best interest rates available on easy access savings accounts.
Whilst it may be incredibly difficult for many to refinance mortgages for a better deal in a tight lending market it is still wise to be prepared refinance if lending eases. This is best prepared for by paying down debt and improving ones credit score which could be facilitated by concentrating on eliminating unnecessary interest charges and ensuring that savings receive the highest interest payments.
Remaining loyal to a provider simply does not pay unless a loyalty bonus is paid. Consumers should shake off their financial apathy and wise up to the amount of money they are wasting which could in turn result in a higher amount of disposable income each year.