YES: Does loyalty pay? Usually, the resounding answer is "definitely not" when it comes to financial products - but this is not the case in all scenarios.
Some banks and financial providers offer consistently attractive products and savings rates and make a concerted effort to retain customers and, of course, there are the various loyalty schemes on offer from supermarkets and other retailers. They know it makes sense to do all in their power to keep customers coming back – and banks are learning this lesson fast following the financial crisis.
The most obvious benefit to being loyal is the retailer schemes on offer, from the Boots Advantage card to Sainsbury’s popular Nectar loyalty scheme. With the Sainsbury’s scheme, shoppers earn two Nectar points for every pound spent, or at partnering stores including BP, TalkTalk and now Homebase, which is the first DIY retailer to be included in the scheme.
You can either use these points to get back money-off vouchers on your shopping, or you can use the Nectar.com website to search for treats you can get with your points. Most of us have at least one ‘loyalty’ card in our wallets, and reap the benefits by returning to the same retailers time and again.
Turning to financial products, banks have often been known to preserve their best savings account offers, rates and mortgage deals for new customers, but this could be changing. After all, why would they focus on attracting new customers through the door when you have millions of existing ones to keep hold of?
And as an existing customer, you already hold a strong position when it comes to negotiating the deal you need. Some mortgage and savings providers work at offer existing customers competitive deals – and even if yours doesn’t, it’s worth pushing that you’ve been a loyal customer for many years before jumping ship.
NO:
Debt is usually not a wise idea – particularly during a time of rising unemployment. Credit cards may seem to provide a simple solution to increasing costs or financial obligations, but often the result is increasing debt in an unpredictable financial environment.
Surely it’s clear that it pays to compare rates and premiums, rather than remain loyal to one institution? After all, would you accept the first tradesman’s quote for some building work, or would you get several quotes in order to compare charges? Gone are the days of settling for the first offer, with rising numbers of comparison sites to make picking the best deal for you a simple task – whether you need a savings account or new car.
It’s all too common to find a better rate of interest on a savings account, for instance, that stipulates that the money must be new to the institution. So you wouldn’t be able to switch your existing savings to get the new rate; you’d be forced to transfer money from elsewhere.
However, not all accounts require you to do this so you are best to check the position before applying.
