The typical British household is throwing away £550 a year because they stick with the same insurance, energy and bank or building society year after year, according to research by consumer organisation Which? that found that "loyalty never pays".

Some individuals could save more than £1,000 with just a simple phone call, after Which? found instances of home insurers hiking premiums for loyal customers to levels that are five or six times above the best rates available in the market.

In one instance (see below) it found a Direct Line customer who was being asked for nearly £1,400 for his home insurance – after 16 years as a loyal customer – when the premium offered by a rival was just £287.

The consumer group is campaigning for clearer information, as well as encouraging individuals to spend just a few minutes shopping around. It said that 62% of people say they have never switched energy supplier, according to Ofgem, and just 3% of savings accounts were switched to a different provider last year.

Richard Lloyd, Which? executive director, says: "Some people could be saving hundreds of pounds, yet millions of us stick with the same old providers.

"We want providers to give clearer information … in the meantime, the message is clear: beware, as loyalty often doesn't pay."

Some of the worst losses come not from pricey insurance or energy bills, but from failing to move savings account regularly. Which? estimates that savers are losing out on £4.3bn each year by sticking to poor value accounts, and is calling on providers to state the rate account holders receive on all their communications.

Home insurance



Paul and Melanie Fisher from Lincolnshire were loyal Direct Line home insurance customers for 16 years. Recently, Paul received a renewal letter and realised his annual premium was to rise by £225 to nearly £1,400.

This seemed steep, so he checked on a comparison site and was shocked to find other insurers' quotes starting at just £196. He says: "The price they quoted was unbelievable. In the past 16 years my premium has increased to almost £1,400, and I could have insured my property for less than the amount it went up by last year."

The Fishers decided to switch to a policy that they believe offers similar cover, from Admiral insurance, for £287 – a saving of £1,112. Paul said that over the years he had just assumed he would be quoted a competitive premium that reflected his risk, and that he had "never expected it to increase by so much".

What other Which members found: No matter how long a customer has been with their provider, they are likely to save by switching. Figures from 256 members who switched suggest that the average saving was £100.

Car insurance

Wayne Lawrence's car insurance premium with Mercedes-Benz was £1,000, but when he switched to the AA it fell to £332. Photograph: Jason Bye

Wayne Lawrence, from Norfolk bought a Mercedes in 2003 and insured it through Mercedes-Benz. When he added his Lotus to the policy he used the same provider. Since then, he found his premiums crept up every year: from around £300 initially, this year he was quoted more than £1,000 for the two cars.

However, Lawrence bought cover for both from the AA for £332. He says: "I'd suspected that I may have been able to save a bit by switching, but I had no idea it would be so much. I now realise I've probably been overpaying for years."

Mercedes-Benz points out the benefits include breakdown cover and access to specialist technicians. But Lawrence does not think the price difference was justified. "Even after arranging separate breakdown cover, I still made a significant saving."

What other Which? members found: Regardless of the time spent with a previous insurer, they were able to save by switching. This included some who haggled with their existing insurer first; 367 members switched to a different insurer and saved around £104 on average. Of that group, 103 switched after one year or less, saving £96 on average.

"Even if you're happy with your provider, check what quotes you could get as a new customer and elsewhere, and then use this information to haggle for a better deal," says Which? – it has also produced "haggling scripts" at which.co.uk/haggling

Savings accounts

Billy Knight has been loyal to two banks over the past 25 years and feels both have treated him poorly. Photograph: Neil O'Connor

Billy Knight from Cheshire has been loyal to two banks over the past 25 years and feels both have treated him poorly. He opened a savings account with Abbey National in 1989, and kept it open until 2010. While he feels he was paid a decent rate for most of that time, by 2010 (by which time Abbey had become part of Santander) it dropped to just 0.1%. Unhappy, Knight moved to Lloyds, only to find last year that his interest rate had fallen about 3% to 0.1%.

"I don't understand how banks can justify paying such low rates," he told Which?. Although he was helped to find an account paying more, Knight feels he now has to jump through too many hoops, such as maintaining a minimum balance in his account. "It shouldn't be so difficult," he says.

What other Which? members found: The consumer organisation says that if someone had opened the top-paying instant access savings account available in the first week of July 2010, and left £10,000 in it until the first week of July this year, they would have lost out on interest of £648 compared with someone switching to the top-paying account each year. Many of these accounts included an introductory bonus rate.

It recommends that savers should check their account every few months, and note down when introductory bonuses or fixed-rate periods end.

It has a daily updated list of rates at which.co.uk/savingsaccounts. The Guardian also has a comparison service at money-deals.co.uk

Gas and electricity

Which? analysed a typical person in the Midlands with medium energy usage (according to Ofgem figures) on a standard variable dual-fuel tariff, with an online account and paying by direct debit. Sticking with the dearest of the Big Six energy suppliers since July 2010, they would have paid about £850 more than someone switching to the cheapest one-year fixed-rate deal each year.

Although recent reforms in the energy market mean companies can now offer only four core tariffs for gas, and four for electricity, there are still a wide range of options; if you're not on a fixed-rate tariff you are vulnerable to price hikes at any time. If you are on a fixed-rate, you might have to pay an exit fee if you leave a fixed deal early. Otherwise, review your tariff once a year.

The best value tariff will typically be a fixed-rate, online dual-fuel tariff paid for by direct debit. Compare the cheapest deals at which.co.uk/switch or go to The Guardian's comparison service at guardianenergycomparison.co.uk.