The Great British Discount Challenge

As we are regularly told, times are hard. With negligible recent GDP growth and increasing threat of unemployment, the sound of belt-tightening is a common one in households across the nation.

In conventional thinking one solution to limitations in domestic cash flow is to earn more. You could sign up for more hours or start a small home business to supplement your income and oil the wheels of your household spending. Alternatively you could opt to forgo luxuries and keep your income the same, leaving a little more in the pot for the essentials.

I propose to you a third option. Recently a number of my yearly renewals have come up on Insurance, breakdown cover, mobile contracts etc. With this combined overhead looming I set myself a challenge, to screw down every supplier and see how much I could save. I have written before about gestures of placation from UK companies in order to keep us customers sweet, and it seems that you just need to know the right buttons to push. Thus far I have saved/reclaimed £650 from 3 phone calls. By no means am I claiming to have a Derren Brown-like talent for suggestion, but spending less is easier than you might think.

An example. Recent call on RAC breakdown cover for 2 drivers:

Me: "The account holder has been a member since 1981, £135 seems too much"

RAC: "Let me see what I can do"

(prepare myself for a 'computer says no moment')

RAC: "How about £70 for the same package"

Me: ".....that will be fine"

It seems retailers and service providers have a 'break glass in case of difficult customer' option, which is to slash their profit margins to close the deal. Mobile phone contracts are the prime example of this behaviour, next time you come up for renewal, look that loosely-suited shop attendant in the eye and ask him to halve the line rental and give you double the cash reward up front. My bet is the result will be at least one or the other.

It is simply about asking more. The Pareto Principle has been used to suggest that 80% of a companies revenues come from 20% of their customers. This is what organisations bank on, cash cow customers who happily accept the first price. 

So why don't you try and join me in the challenge next time your renewals come up. And yes, I will graciously accept a cheque for 5% of everything you save. 

Dont Bank on it.

The UK banking sector has been the seething battleground for a cold war of contempt in the last few years. I have recently changed banks and am joining the yearly migration of students into graduate finances and "the real world" as it is continually referred to by every brow-beaten worker I speak to. This got me thinking about the overall experience of banking in the UK.

From early teens we begin to feel the pressures to lock our money up safe in such an institution and often become lifetime customers. Indeed it would still seem that signing up with a bank is marginally better than stuffing cash into a mattress, although there is a fine line. Special offers, account rewards, AER's and credit limits, the language of the industry. Real question is do they actually give a monkeys or do they just put up with us much akin to a parent humouring a child when "looking after their pocket money"?

Natwest have been attempting to up their game recently with their 'Customer Charter'. From what I can make out they are dragging the organisation and their firmly 1980's styled uniforms kicking and screaming into an age of reasonable consumer expectation. A cursory twitter search for Natwest yields sentiment similar to my own, which is that their charter is superficial at best. Bold claims are made: "We are committed to listening" and "We are committed to helping when you need us", which is nice to know considering they might be sitting on hundreds of thousands of pounds of your money. Personally I had the worst customer service of experience in my entire life with the Navy-clad polyester lovers at Natwest. After putting a fraud stop on my card without telling me, and then fobbing me off with a spotty 18 year old who distracted himself from his Xbox long enough to rise to the lofty position of their Customer service manager, I rapidly made for the exit and closed my account.

HSBC happily transferred over my current account (with all standing orders intact) and have been positively competent ever since. However they do seem to have an alarming desire to sign me up for Business loans and multiple mortgages every time I sneak into a branch to cash a check. I am no financial analyst but it seems a little over zealous in light of the recent lending crisis. Its not all plain sailing though, a friend recently told me that HSBC closed his account without notification because he was a few pounds overdrawn, nice to feel valued isn't it?

So you have chosen your Bank and have your fingers crossed. You want to transfer money I hear you cry? BACS payments between accounts have historically taken 3 days to clear, with the money only actually moving anywhere on the third day. In an age of fast moving Business this is pretty laughable, and as this thread points out, the only justification seems to be profiteering from the banks with Europe suffering no such delay.

On the wider topic of banks and their inescapable role as pillars of our economy, the credit crunch debacle is only now being put to bed with occasional skirmishes cropping up on the assurance that it wont happen again. It amazes me that measures such as 'ring fencing' of core banking services (e.g. preserving the basic infrastructure and assets allowing us to buy beer at Tescos) are still only being debated. Surely any good Business should compartmentalise their operations so that we don't have any more Lehman Brother style house of cards?

Personally I think we as consumers need to be more mercenary. All too often we feel as though the bank is doing us a favour by protecting our hard-earned cash from theft and affray. But when interest rates on borrowed funds spike above 20% and interest on savings struggles to even beat inflation, you could be forgiven for shouting scrooge. At the end of the day its your money so make sure you shop around. 


My tip of the week for those who are looking to put a little aside is Santander's E-saver with a tidy 3% Gross AER and no faffing around if you want to get the cash out. Its no money spinner but it still beats hiding it under your bed and brandishing a baseball bat... Just.