So what exactly is loyalty tax? Well, it’s not actually a tax but it’s become the common phrase for companies that exploit your loyalty as a customer. Also referred to as ‘loyalty penalty’ or ‘tease and squeeze’ and officially known as ‘price walking’. It’s where companies entice you with a good deal initially with the aim of charging you higher and higher prices the longer you stay with them.
The hope is that you don’t notice or accept the gradual price increases and you don’t shop around regularly. The main offenders are electricity & gas suppliers, TV & broadband providers, insurance companies and mobile phone networks to a slightly lesser degree.
Whenever you take out a new deal, set a calendar reminder for a month before the deal ends, to start shopping around. Once you’ve seen what competitors are offering either ask your current supplier for a better deal or simply switch to a new one.
