Although many businesses promise multiple rewards and benefits for their customers, the clients pay for loyalty. This is called loyalty tax. The companies take advantage of the loyalty of their existing customers and gradually increase their premiums. Thus, this practice is also condemned by many as manipulative and exploitative of existing customers. You can avoid paying loyalty tax using some methods. A finance broker in Sydney can help you avoid paying loyalty tax and get a better deal or provide better refinancing options. 

What Is Loyalty Tax?

The tax in the term loyalty tax does not mean it is a tax. It refers to companies charging high prices from their existing customers compared to new customers for the goods or services they provide. To attract new customers, the companies lure them with various advantages. When the customers fall for their trap and end up buying their services, the company gradually increases their pay or charges, referred to as ‘Loyalty Tax’. It is done in all industries, such as telecommunication, banks, insurance, and utilities. 

The idea behind this approach is that the existing customers are less likely to shop around for better deals. Existing clients are likely to avoid the hassle of searching for a new company or provider and will stick to the same business. As a result, they end up paying more. Although businesses argue that they pay loyalty rewards and benefits to their loyal customers, finance brokers in Sydney and other critics view it as an unfair practice and exploitative. It can cause client dissatisfaction and reduce client’s trust in the company. 

How To Avoid Paying Loyalty Tax?

• Compare policies and prices of competitors – To ascertain that you are not paying more, you have to compare the prices of different competitors. It will help you gain insight into the prevalent rates and services and the cost at which they are offered. Accordingly, you can cross-check it with the prices you are paying and ensure you are not being exploited.
• Negotiate with your service provider – Another effective method to avoid paying loyalty tax is to consult with your service provider directly. Ask them to offer you better interest for your home loan in Sydney. Consult with them about the extra cost you are paying as an existing customer. Mention your loyalty to them, and you can also threaten to switch to a new provider if you are not offered any relief or discount. 
• Be prepared to switch your provider – Do not hesitate to change your provider if they do not offer you a better deal. It is because of this reluctant behaviour of the clients that they end up paying more than new customers despite being loyal for years. Hence, if you get substantial benefits from an existing provider, switch to a new company that offers you a lucrative deal. 

Conclusion

As a result, a loyal customer pays more than a new customer. To avoid paying more, you must continuously check on and compare different deals and offers by your company and competitors. Negotiate with your service provider and ask for a better deal. Also, you can consult a finance broker in Sydney to help you grab lucrative offers and avoid paying more as a loyal customer.