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Chapter 1: What is the main topic discussed in this episode?
Hey team, being a good customer is surprisingly expensive. Loyalty, unfortunately, is not rewarded. New customers get the deals. Loyal ones get the price creep. And it happens with your power company, your insurer, your bank. Stay longer and you'll probably pay more.
Chapter 2: What is the loyalty tax and how does it affect customers?
Leave or even 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. So, I had a chat to the TVNZ Breakfast team about how we can put a stop to it in our own lives and also tot it up some of the ways it's costing you. It's a lot. They were nice enough to say I could also share that chat here with you. So, enjoy. Enjoy.
We all want to be loyal customers, but is our loyalty getting us anywhere? Some would say no, with many companies creeping in a loyalty tax. So what does this mean and how can it be affecting you? To tell us more is independent financial journalist Frances Cook. Good morning, Frances. What is a loyalty tax?
Basically, you've stuck around, you haven't done anything, you've maybe been there for years and everyone else is getting a better price than you are.
Where are we getting hit by these? What sort of services?
Basically everywhere, but if you're thinking about any of your core bills, anything that sort of sticks around, refreshes regularly, that is where you are most likely to get a loyalty tax. So your power bill is shocking for it, bank fees, insurance, and it's often these areas of life where we are really struggling with the costs of it. So it really, really adds up. Power. Absolute classic one.
And power prices have gone up 12% just last year, 20% over the last two years. So we're really struggling with them. And then, you know, the classic thing is if you just go and have a little look at powerswitch.org.nz, super easy way to compare. The average person there saves $450 just by price comparing.
That's considerable.
Right? And we've also got billy.co.nz. You can upload your power bill. They'll give you a personalized comparison. The average person there apparently saves $700 a year. Wow. It's massive.
So there was consumer research out this morning too, showing that more than a million households are likely paying too much for power. So what did they say? Half of the nation's households have stayed loyal to their power provider for at least five years.
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Chapter 3: Where are customers most likely to encounter loyalty taxes?
Because that's the thing, isn't it? It's the admin of moving companies and the thought of being on hold with a call for ages, talking to someone in a call center somewhere else. That's probably the thing that's putting people off, isn't it?
Exactly. And you mentioned loyalty cards earlier. I mean, that is a really classic one. They want to keep you in the same place. They want to encourage that inertia. They want to keep you shopping with them. And that's why loyalty cards often mean that you can get the exact same thing even after the loyalty discount has been applied, the exact same thing for cheaper elsewhere.
But if you take advantage of the fact that they want to keep you there, you can often say, hey, I found this good deal. Will you match it? And nine times out of 10, they will. So it's really worth doing. And I will say with banks, a lot of people are worried about those fees and things that they add up, but they say, oh, I don't want to move all my direct debits. It's a real pain.
Get more prestuous. Yes, that too. But open banking means that they can move all that stuff for you. All of your direct debits will come across with you automatically, even if you change banks.
Always good advice, Frances Cook. Thank you so much for joining us as always.
this podcast can only give you general information about how things work in most situations it's not individual financial advice if you're after that a financial advisor is always the best bet
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