- 5m fewer people switching products and services than in January
- MoneyExpert.com Switching Index Q2 results launched
A new climate of financial caution caused by consistent interest rate increases has led to a slump in switching, according to MoneyExpert.com. The independent financial comparison website believes providers are also getting tougher and withdrawing better deals.
The Q2 results of the independent financial comparison website’s authoritative Switching Index show that as many as 5.4 million fewer consumers have moved to seek out more competitive offers on a range of services than in January.
And as interest rates continue to rise and concern over unfair bank charges builds, MoneyExpert.com believes consumers are less inclined to switch products and services when money is tight.
The new figures from the MoneyExpert.com Switching Index show that 54 per cent of the population did not switch at all in the past six months – up five per cent on the last quarter.
Worst affected are mobile phone and credit card providers. The number of people switching mobile phone operator in a six month period has fallen from 5.06 million to 3.68 million. And 929,000 fewer credit card holders have chosen to switch the plastic.
Sean Gardner, Chief Executive of MoneyExpert.com, said: "The financial squeeze caused by higher interest rates has meant consumers are more inclined to stick with what they know and in any case providers are getting tougher.
"The reality is that consumers are battening down the hatches in preparation for a rough ride as the mortgage becomes more expensive and disposable income reduces. It seems we’re all taking stock of our finances – and perhaps switching is an unwelcome distraction in the current climate.
"However there are still plenty of ways to save money and we would urge consumers to continue to seek out the best deals."
The MoneyExpert.com figures also show that savers have yet to wake up to the reality of rising rates – although switching levels remain constant, with around 2.3 million savers choosing to switch to better deals in a six month period.
Sean Gardner added: "Savers are only just beginning to see the fruits of five base rate rises in the last year. A rate of 10% is not an unrealistic target for a regular saver now, so we anticipate a significant increase in savings account switching next quarter.
"Of course, switching out of a poor deal is always a good thing to do. But people should perhaps be cautious about changing provider just for the sake of it. Choosing the right product for you is just as important as choosing the cheapest one – and never more so when money is tight and long-term financial decisions are more important."
The MoneyExpert.com Switching Index monitors everything from gas and electricity providers to mobile phones, credit cards, broadband and bank account customers. Some 184,000 contracts changed hands every day in the last six months. In total around 33.63 million products and services were ditched by consumers shopping around.
MoneyExpert.com Switching Index – HOUSEHOLD PRODUCTS 2007 Q2
|Type of provider / supplier||% of households that have switched in past six months||No. of households who have switched in past 6 months (approx)||Change on launch results (approx)|
MoneyExpert.com Switching Index – PERSONAL PRODUCTS 2007 Q2
|Type of provider / supplier||% of people that have switched in past six months||No. of people who have switched in past 6 months (approx)||Change on launch results (approx)|
MoneyExpert.com says that regularly reviewing providers for a range of services is good practice but warns consumers that it might not always make financial sense to switch.
Switching Index table – YouGov interviewed 2,374 GB adults (18+) 2nd – 4th April 2007