How one phone call saved me $1k – twice

YOU would be hard pressed to find an Aussie household that is not feeling some form of financial pain from the surging cost of living.

Food, fuel, mortgages, rents and utility bills are all rising sharply. Mortgage repayments alone are up more than 35 per cent this year for borrowers with variable-rate loans, while consumers were warned last week to brace for 30 per centplus rises in energy bills in 2023.

It’s almost impossible to combat such steep price rises with money-saving strategies, but one of the biggest areas of immediate financial relief can come from taking a closer look at your insurance bills.

Twice in the past two years I’ve saved about $1000 on insurance policies simply by checking my current premiums.

First it was car insurance, where I discovered I could save more than $900 on two comprehensive policies simply by switching to a new insurance company that offered the same level of cover for much less. It took one phone call to discover this.

Next it was a home insurance policy, with a shocking rise in annual premiums prompting another phone call to a competitor who could deliver savings of more than $1000.

I followed this up with more than $500 of savings by switching another insurance policy last month. That’s about $2500 in savings since 2021, and helps deflect at least some of the cost-of-living crunch.

Financial experts say consumers often pay a “loyalty tax” by sticking with the same providers when there are cheaper options available for essentially the same product or service. Our set-and-forget mentality, particularly with insurance premiums that automatically renew annually, can cause us to miss when a company increases its prices significantly.

If you think you’re paying too much, contact your bill provider and ask for an explanation.

First check online to see what their competitors are offering, highlight this to them, and if they really want to keep your business they may match or beat them. But not always. I gave my previous expensive insurer a chance to lower the premium, but all they could suggest was increasing the excess payable to shave off a few bucks, so I walked – and couldn’t be happier.

A loyalty tax also applies to mortgages. Existing home loan customers often pay a higher rate than what banks offer their new customers.

Online mortgage broker Finspo has found this loyalty tax is at its highest level in at least three years.

It says existing borrowers are paying 0.48 percentage points more than new borrowers, largely caused by lenders increasing their discounts to attract new customers.

Check your current mortgage rate to see how it compares with other home loans on the market.

Contact your lender and ask if they can at least match some of the better deals. And if they can’t, be prepared to switch.

Remember to compare all fees and charges before switching, and don’t be afraid to look beyond the big four banks. Some of the cheapest mortgage providers are online businesses that you may not have heard about before, but that shouldn’t mean you ignore their desire to give you a home loan.

Big savings may only be one phone call away.