End bad (financial) relationships this Valentine's Day with these top tips

13 February 2023 , 11:01

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Don't put up with a relationship that is costing you money (Image: scu)

I don’t want to ruin anyone’s Valentine’s Day, but have you ever thought about the benefits of ending your relationship and starting a new one?

No, not your actual relationship - it is the season of love, after all! I mean those ongoing relationships we have with businesses that we’re not getting anything out of.

The fact of the matter is many of us are stagnating in relationships that just aren’t going anywhere, from our broadband provider to the businesses that retailers that provide us with regular services.

A lot of the time we don’t move on because it seems easier to stay put, or we’re afraid of trying something new, or you’ve just got used to the way things are.

But you can save money by moving on. So why not take a chance and get ready to try a new start?

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The high price of loyalty

A few years ago, the insurance industry was rocked by the revelation that the regulator, the Financial Conduct Authority (FCA) was banning the loyalty charge for car and home insurance.

The loyalty charge was the industry’s dirty secret for many years.

If you stayed put with your insurer, then every year, chances are your premiums would increase regardless of any rise in risk.

I’ve often written that in the worst case I saw, an elderly lady was found to be paying ten times what her neighbour was paying for home insurance for effectively the same policy, despite them living in the same semi-detached houses.

After years of campaigning, the gravy train was finally stopped, but only for these two policies. So you could be paying way more than you should for other forms of insurance.

If you’ve stuck with the same insurer for years, then go on the comparison sites and shop around for a better deal. It might seem like a drag, but you could massively reduce your overall payments.

Bear in mind though that a quote from a comparison site is based on limited information.

When you click through to the insurer, tell them everything they need to know so you know you are accurately covered if something goes wrong. And if the quote goes up too much, then walk away and try elsewhere.

I’d use an Open Banking app like Little Birdie or even the calendar on your phone to keep track of when your policies come up for renewal.

Broadband blues and mobile misery

Broadband prices are expected to go up by a whopping 14% this year (or more). This is because the broadband firms are allowed to increase prices mid-contract, which I think is outrageous, frankly.

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This practice should be banned, and regulator, Ofcom, has just announced that they will be looking in to mid-contract price hikes. However, we are stuck with them for now.

Sadly, it looks like costs for your mobile might be rising too.

When you enter in to a contract with a mobile phone or broadband provider, you’ll have to pay a fee for leaving early.

Early termination, or exit fees are calculated by working out how long you have left on your contract then billing a fee for the remaining months.

With most providers, you’ll need to pay a monthly charge too, though this will depend on the tariff you’re on and will vary quite a bit.

But there are things you can do to beat the fee. That contract that you signed binds the firm as much as it binds you.

So if the business has changed the way it operates, withdrawn services or introduced significant changes, you can ask to walk away and have the exit fees dropped.

You’ll need to prove that the relationship isn’t working though. So explain why you feel that the firm has changed for the worse.

Sometimes the distance can kill a relationship, so if you’ve moved to another part of the country, you might not have the signal you need from your phone provider.

The fact of the matter is, if your service isn’t available in your new home you shouldn’t have to pay an exit fee.

Yet some firms are still digging their heels in over this. Don’t take no for an answer.

Be polite but firm and ask the business to waive charges if you can’t get the service – and take it further if they don’t listen.

Where service is patchy, it’s a bit more complicated.

If your mobile phone signal is now poor, then tell the firm, take regular signal tests using one of the many free apps there are out there or screenshots of the bars of signal on your phone.

That way you can demonstrate that there’s a problem the firm should let you go without charging you.

A new relationship that treats you better

We all want relationships where we are valued and recognised. So if you’ve stuck with the same bank or savings accounts for years, you might be surprised by the deals available if you’re willing to play the field for a bit.

Some banks, building societies and online accounts are offering up to £200 for new customers for standard bank accounts.

There are always catches though. Some accounts will need you to pay in your wages, or have minimum amounts you must pay in each month.

Others have rules around regular payments or how long you keep cash in the account. Watch out for account fees too.

If you’re not impressed by a new partner flashing the cash, then some accounts offer cashback when you make regular payments through your account.

And finally, some banks are offering saving interest rates that are competitive (but check how long the rate is fixed for).

As for savings rates, when I last wrote about this in the Mirror, I had a huge response from readers.

One of the few advantages of rising inflation is the increase in savings rates. A word of warning though. If inflation comes down, then savings rates will be the first to slip.

So now is the time to take a pragmatic look at your savings and decide what you want to do with your cash.

Have a think about when you are likely to need access to your cash should an emergency or financial necessity arise.

MoneySavingExpert has a great suggestion when it comes to how much money you should ensure you have accessible.

They suggest having three to six months worth of expenses to cover you if lift chucks you a curveball.

Savings rates increase the longer you ‘lock in’ your money. So if you don’t touch your cash for a few years, you’ll get a better rate of interest.

Some of these notice or fixed accounts lock in your cash for just a month or even seven days. Bear in mind though that these rates can change and will drop if inflation stabilises and reduces.

Looking at the latest rates, one-year fixes are going for up to 3.75% and five-year fixes are hitting 4.5%. But remember you may lose out if you take out the cash early.

Trying something new

Relationships with your partner are long-term commitments – and you need to put the work in over time.

But relationships with businesses are fickle and you only benefit if you are prepared to jump ship every year to two years.

So get in to the habit of shopping around for good deals whenever a contract comes up for renewal. Always factor in what the year ahead might hold though, including lifestyle changes like new jobs or homes.

Oh, and if you’re planning on something special for Valentine’s Day, stay in on the 14th and have a romantic meal.

Then go out to celebrate your love on any other day. Valentine’s Day meals in restaurants have huge mark-ups and are often a bit rubbish. So splash the cash on another day instead!