Are you guilty of paying the slack tax?
My friend is selling her current house and wants to upgrade to another. So, naturally, she was talking to her mortgage broker. When she told me what rate she can get on her new mortgage, I was a little put out! But unfortunately, not too surprised.
As a loyal customer to my bank, I am well aware of being guilty of paying the slack tax. The Australian Financial Review reported that the big four banks are gaining an additional $3b annually from their loyal customers, who are paying more than their new customers. Hence, the slack tax. Or loyalty tax. We are paying more because we are too lazy to make the time to find a better deal.
And if you think about it, this applies across the board - mobile phone plans; car & health insurance; broadband; credit cards; even groceries. With recent changes to energy and how it can be charged and billed, we are entitled to find a better deal and not be penalised for changing to a different package or provider.
There’s the adage “look after the pennies, and the pounds will look after themselves”. Whilst time is our most important commodity, if you can save $3k , for example, annually on your mortgage this is well worth the half a day or so it would take to go through the admin to make the switch.
This attitude can be extrapolated to your business expenses too. Large businesses have procurement teams who work on getting the best deal possible for every contract. Whilst this shouldn’t be taken to the extreme, as we all have businesses to run, it is worth keeping an eye on expenses and conducting a regular review. I find, as part of the budgeting process, this is when CEOs take a deep dive into the costs and items bubble up to the surface that people forgot they were paying for.
So, the moral of the story? Pick something – nbn provider, say, and see if you can get a better deal for it! You’ll be spurred on to do a full health check on your key expenses!