Avoid getting hit with lazy tax this year
17 January 22
Reading time: 4 minutes
Sometimes doing nothing can save you money, other times it costs. Have you heard of a ‘lazy tax’? I hadn’t either, so I’ve probably ended up paying too much of it way too many times.
A ‘lazy tax’ is when you overpay for services like power, mobile plans, insurance and other utilities that are available at cheaper prices because you haven’t shopped around or negotiated a better deal. Prices creep up over time, so you might not notice you’re getting taxed this way.
There’s money to be saved
I had been with the same broadband company for over a year when I rechecked their prices online. My costs had gotten seriously out of whack with what they were now charging (and not just those early month teaser rates) and compared to what competitors were offering.
I really wasn’t keen on going through the whole process of changing routers and all that hassle that comes with it. But what I can say now is: even if on the face of it the savings seems small to be worth the work, it all adds up. Multiply what you could save by 10 years to see how much difference it makes in the long term. Those creeping costs are worth paying attention to!
Here are some costs worth shopping around for:
- Mobile plans
- Car and contents insurance
- Income protection insurance
- Car loans
- Personal loans
- KiwiSaver funds
Have a look through your regular outgoings. Are you getting the best value for your money with these? When’s the last time you had a look at what’s on offer?
You will hear a lot about inflation these days, and it’s true, there are price jumps happening all around us. Money has less buying power as a result. But even if that were not the case, when’s the last time you heard of price decreases? Rarely happens.
Shop around for the best deal
It’s never been easier to shop around online and switch providers. There’s so much data and information online, and those companies looking for customers are prepared to offer rock-bottom deals to onboard you.
While many comparison websites offer helpful information, be aware that many act as ‘sales funnels’ – they are there to sell you on a deal and funnel you towards a given provider. They get paid as a result.
(That’s always been our advantage at Sorted: we’re independent, impartial and not selling anything.)
But even if they are there to sell to you, they still make it easy to compare what’s out there with the latest data. As always, knowledge is power.
Here are some key comparison sites to know about:
- Powerswitch (power, gas)
- Switchme (power)
- MoneyHub (mobile plans, life insurance, car loans, car insurance)
- Glimp (broadband, car loans)
- NZ Compare (broadband)
- Interest.co.nz (credit cards, mortgages, personal loans)
- Finder (personal loans)
- Consumer (house and contents insurance)
- Lifedirect (insurance: life, trauma, health, income, mortgage)
- Compareincomeprotection.co.nz (income protection)
- Sorted (KiwiSaver)
Don’t feel obligated to stay loyal to the provider you’ve been with for years. Service providers handle switches all the time, and they’re used to customers moving on or asking for a better deal.
Discounts for the asking
Asking for lower advertised rates once a year (at least) can lead to big discounts. So, before you switch, see what your present company can do for you first.
The conversation might go something like this:
“I see you’re advertising a much lower rate than the one I’m paying – is that available for me?”
The worst they can say is no, but in a competitive market they will want to keep you as a customer, so typically they’ll have something to offer, especially if they haven’t given you anything lately. Remember it costs them a fair bit to gain new customers, so they’d rather spend money on keeping you.
“I can see you haven’t had a customer credit in quite some time,” the customer rep might say, giving you something to stick around. “Here’s what I can do…”
And just like that, you’ve got a better deal and skipped paying some lazy tax this year.