How much does loyalty cost? Nothing? Well, if you have a savings account, credit card or insurance policy it could actually be costing you more than you think.
Everyone's heard of introductory offers and the concept isn't new, but despite this there are still hundreds if not thousands of consumers sticking with their existing setup because they feel a sense of loyalty to the provider.
This loyalty is being thrown back in faces as banks and other financial institutions routinely offer the best deals and interest rates to new customers only, while the faithful patrons who've been with the bank for years are getting the raw end of the deal; measly interest rates of less than 1%.
Providers have always advertised competitive rates in order to attract new customers, promising great-sounding introductory rates for 6 months or longer. The rates will then revert to the 'go to' rate, which is higher (or lower, in the case of accounts which pay interest rather than charge it).
In some cases this can be quite a substantial difference; credit cards which have a starting rate of 0% APR on purchases can quite easily go to over 22% once the initial rate expires, leaving the customer struggling to manage.
Fortunately with credit cards it's relatively easy to work around this by paying off the full balance each month before interest is added. If you can't manage this then try moving the balance onto a balance transfer card with a 0% intro rate. You can do this as often as you like, as long as your credit file remains good.
Savings account customers don't fare as well, there's no real workaround to being paid a pittance in interest. What started out as a lucrative account paying 3.5% AER suddenly turns on you, leaving you with a paltry 0.5%.
When this happens your best option is to switch to a new savings account. You'll be a new customer again and will be eligible for the best deals once more. You don't have to stay with the same bank; in fact most accounts won't allow you to transfer money in from another account within the same institution. Shop around and see what's available, and use price comparison sites like MoneySupermarket to see everything side by side and make an informed choice.
To avoid the possibility of getting caught by introductory rates running out, set yourself reminders on your phone or email. Have them come up about a month before the rate is due to expire to give yourself time to find a new home for your money.