Statistics show we’re more likely to hang on to a bad relationship with a bank than a bad marriage.
The average divorcing couple stays together 12.5 years before they split, whereas we’ll stick with our bank for around 17 years.
Staying faithful in a relationship has its upsides, but when it comes to loyalty to your bank it often doesn’t pay at all.
While they might offer a free account and a cheap way to pay off your credit card debt with a 0% balance offer, they may not be quite so generous with the rate they pay on your hard-earned savings or the amount they will charge you to borrow cash via a personal loan.
It’s the same with all of our finances, and while we are happy to shop around and switch on to better deals for our car insurance and energy bills, many of us simply go for the easy option and stick with our bank for all our financial needs.
With money tight, every penny counts and the only way to ensure you are getting the best deal on all of your financial products is to spend a bit of time researching the market to find the right ones for you.
We compared how much the loyalty penalty could cost a customer who has three products with their bank – savings, a loan and a credit card balance – at six of the big high street banks: Lloyds, Barclays, NatWest, HSBC, Santander and Nationwide.
We found they all offer some good products, but their rates can often be beaten if you are prepared to put some legwork in and compare rates across the market.
We found it could cost you a hefty £1,400 sticking with the same provider for your current account, credit card, loan and savings compared to taking out the most competitive deals available elsewhere.
While the rates on loans don’t differ too much if you have a good credit rating and can bag the cheapest deals, it’s the interest on savings that can tip the scales in favour of your bank.
Despite the continuing low savings rates on offer, you can easily make over five times as much interest on an easy access account by switching to a newer online bank, such as Marcus, which is paying 1.35%, instead of a typical rate of 0.25% in bank branches.
Sarah Coles, personal finance analyst at investment firm Hargreaves Lansdown, says: “Rate tarts get all the best deals, while loyal customers can get treated like doormats.
“You’re not rewarded for sticking with the same provider, so it could be time to ditch and play the field for the best deals.”
The Financial Conduct Authority found that we tend to turn to our current account provider whenever we need another financial product.
Six out of 10 savers with an easy access account held it with their current account provider, and more than half of people with credit cards have one from their bank. Just under half of those with loans have one with their bank and a third of people with mortgages have stuck with their bank for that too.
Banks rely on the apathy of huge numbers of customers and their lack of appetite to compare products – they know they have a captive audience that they can sell other products to – and as people don’t check the detail, they don’t offer the most competitive deals.
As the old adage goes: Don’t put all your (financial) eggs in one basket. It could be time to share your money love around for harmonious finances.
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