Save $10,000 a year on bills through some simple phone calls
Australians are missing out on huge household savings because they don’t speak regularly with banks and bill providers.
National
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Picking up the phone can deliver cost-crunched consumers more than $10,000 dollars of savings a year.
Finance and budgeting specialists say people have nothing to lose from asking for a better deal, and the rewards can be spectacular. It’s likely that anyone who has not haggled lately is paying more than necessary, they say.
MyBudget director Tammy Barton said rising living costs meant people needed to stretch their incomes further than they were used to, and “you will be surprised just how understanding and accommodating” businesses could be.
“It costs nothing to make a phone call, but the outcome of that call can be life changing,” Ms Barton said.
“Communicating directly with key service providers like lenders, insurance providers, gas and electricity companies, even councils, can literally save you thousands of dollars.”
Tribeca Financial chief executive Ryan Watson said it was a case of challenging lenders and others to give you a better deal “otherwise you will be leaving for another provider”.
“One of the best and most effective things people can do to save money is hold their current mortgage provider and bill providers to account,” Mr Watson said.
“Before calling them, complete some simple internet research to understand what deals other providers have in the market. Then, use this information to drive a better deal with your current provider.”
Ms Barton said researching the competition gave you bargaining power.
“Be clear and upfront that you are shopping and comparing the market, and don’t be afraid to ask questions,” she said.
FIVE CALLS
These five phone calls can deliver huge savings.
1. YOUR BANK
The huge size of home loans means banks and other lenders will often deliver the biggest dollar savings, even with slight changes to your mortgage rate.
Ms Barton said MyBudget clients saved an average $400 a month by refinancing their debt.
Oracle Lending Solutions managing director Angelo Benedetti said borrowers could “save a minimum of $5000 by making just one phone call to your lender”.
“They would rather keep you than lose you as a customer and have to find someone else,” Mr Benedetti said.
“Lenders are very aggressive at the moment because they want market share. I have been doing this for 25 years and there’s probably never been a better time to refinance.”
2. INSURANCE COMPANY
Whether it’s home and contents, car insurance or private health, savings can be significant.
Ms Barton said people could ask their insurers if they could get discounts for being a loyal customer, seek potential savings for combining car and home insurance with the same provider, and whether policies were cheaper if paid for annually in advance.
“There are plenty of product and service comparison sites available online which can help you make an informed decision that suits your lifestyle and your budget,” she said.
Research and comparison groups Canstar and Mozo have recently crunched numbers on insurance, finding:
• The difference between the average and cheapest car insurance policy could be $70 a month, or $840 a year.
• Potential savings on insuring a $550,000 home with $55,000 of contents were almost $700 a year.
• The average monthly premium for typical hospital insurance cost $79 more than the cheapest policy, an annual difference of $948.
3. PHONE AND INTERNET
For a bring-your-own phone plan with 20 to 60 gigabytes of data, the cost varies between $14 and $60, offering more than $550 of annual savings.
Mozo spokesman Tom Godfrey said changing to a cheaper internet provider could save $1017 a year on a NBN 100 plan.
“Now is a great time to save on telecommunications – particularly with broadband there are large savings on offer,” he said.
4. CREDIT CARD COMPANY
Interest rates charged on credit cards can vary by 13 per cent.
Mr Godfrey said switching from a typical card charging more than 20 per cent to a low-rate card at 7.49 per cent could save $47 monthly, or $564 annually, on a typical $4000 debt.
5. ENERGY RETAILER
Free government energy comparison websites show big savings waiting for those who call and switch to cheaper providers.
For capital city electricity, a family can potentially save more than $500 a year on their power bill while, for gas, the savings are potentially $300 to $500.
TIPS FOR YOUR SCRIPTS
Many people find it easier to negotiate when starting from a prepared script. Whether it’s a bank, phone company, insurer or energy provider, here’s what to say.
1. Research your current rates and charges, and examine comparison websites to discover what competitors charge.
2. Armed with this knowledge, phone your current provider and ask to speak with their customer retention team.
3. Threaten to switch to a cheaper provider if they won’t deliver you a discount, and be prepared to walk.
4. The new bill provider, lender or your mortgage broker can help with the switch.
5. Here are some conversation points:
• “I’d like to speak about my home loan interest rate/insurance policy/bill. I’ve been a customer for X years and would like a reduction.
• “I’ve seen through my research that you are offering new customers a better deal, and I do not believe that longstanding loyal customers should have to pay more.”
• “I have never missed a repayment/payment and have remained loyal to you. What can you do for me?”
• “If you cannot give me the same deal you give other customers, why should I stick with you?”
WHAT PUTS SOME PEOPLE OFF HAGGLING
Zofia Krawczyk recently saved money by negotiating a better interest rate and plans to be more proactive with other bills and debts.
“My car broke down and a $200 job turned into a $2000 job,” she said.
It led to Ms Krawczyk refinancing a personal loan: “I think I will do that more going forward”.
She said speaking with lenders and bill providers was something that Australians often did not think about, partly because an image problem among lenders and bill providers such as energy companies.
“Sometimes you can get pushy salespeople who encourage you to change providers and you can end up getting ripped off,” Ms Krawczyk said.
“Those cold callers probably give people a bad idea … but people should do these things themselves,” she said.
Originally published as Save $10,000 a year on bills through some simple phone calls
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