Remember loyalty doesn't pay

Published by on 17 June 2010.
Last updated on 24 August 2011

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Steve Sweeney, head of car insurance at, says: "The amount of money that Brits are missing out on by staying loyal to their car insurer is unbelievable.

"The average saving you could make by shopping around is £224 – when multiplied by the 22% of motorists who automatically renew with their insurer, this comes to a total missed saving of £1.6 billion."

Even greater levels of apathy can be seen with home insurance. Only 16% of us bothered to switch last year, despite the fact that the average saving was £132.

And it's not only your insurance where you could be wasting money by not shopping around. Kevin Mountford, head of banking at, says that without a regular review your savings could also be losing you money.

"Given the low number of products that offer a return above inflation, savers need to keep a close eye on the interest rate, especially on fixed-term accounts where the rate can come crashing down after the term ends," he says.

For example, while the Halifax Web Saver pays 0.25%, the best rate you can get is 5% with providers – including ICICI Bank UK and Coventry Building Society.

On a balance of £1,000, over a year, this would equate to a difference of £38 in interest for a basic-rate taxpayer.

It also pays to keep an eye on your credit card. The average saving by taking out a better credit card deal is £218, according to, but you could save much, much more if you've got a balance racking up interest.

Your utility bill could also be super-charged. The average potential savings by switching to a new provider is around £270. "Check your deal regularly," advises Scott Byrom, head of energy at

"Online products continue to lead the way in terms of value, with monthly direct debit payments offering the highest level of customer discounts."

To be sure that you get the best value from your financial products, a regular review is essential. How often you need to do this will vary between products.

For savings accounts (other than penalties on fixed deals), there's nothing, apart from the time involved, to stop you switching as much as you like.

This means it's sensible to check rates every few months, or when your fixed-rate deal is coming to an end.

Your credit card can also benefit from a regular review. If you regularly clear your balance, it's likely to be less important because you won't be paying any interest.

However, if you leave a balance on your card, shop around for 0% deals, and keep a note in your diary to find another at the end of the term if you're unlikely to have cleared it by then.

If you're a mortgage holder you should also keep a note in your diary of the date a term is due to finish, so you don't end up on the standard variable rate. It takes two to three months to remortgage, so it's wise to start looking round early.

When it comes to insurance, however, there can be penalties for cancelling a policy, so Sweeney recommends checking costs every year when the policy is up for renewal.

"Even if you think your renewal quote can't be beaten, spend a few minutes on a comparison website making sure you really do have the best value policy to suit your needs," he says.

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