• Ellie

When loyalty doesn't count

It’s one of the most highly valued qualities we look for in a relationship or friendship, so it’s not uncommon to believe that loyalty is something to be honoured and rewarded in all aspects of your life. When it comes to personal relationships, I’m all here for it, but if we’re talking about personal finance then it’s a whole other ball game. Let me explain.


We are taught from an early age that loyalty is rewarded with loyalty, but welcome to the world of money where the loyalty penalty exists. Rather than reward customers who stick with the same providers for months, years, even decades - many national brands continue to penalise those who remain most loyal with extortionate charges. The new customers? They get all of the best buy offers and bargain rates. This is a world where loyalty = losing out.


There are five core markets where the loyalty penalty is felt the most:


  • Cash savings

  • Mortgages

  • Household insurance

  • Mobile phone contracts

  • Broadband


In a 2018 ‘super complaint’ about the loyalty penalty to the UK’s competition authority, Citizens Advice found that the loyalty penalty was costing loyal customers approximately £4 billion a year in these markets alone. Common terms such as hefty exit fees, failure to remind customers of renewal and slowly creeping rates are all contributors to the problem, along with the fact that many consumers aren’t actually aware of the fact they are being exploited by big businesses.


The practices of the markets who fuel the loyalty penalty are being investigated by regulators however you don’t have to wait to start making changes. One minimal effort way to ensure you don’t fall victim to the loyalty penalty is becoming queen of the diary - every time you take out a new contract or policy, set a calendar reminder for the month before renewal so you know it’s time to shop around. For more tips, check out this post which gives some simple, quick ways to save more with less effort.