Millions 'pay invisible tax' by failing to switch to better deals

Their lack of action is akin to 'an invisible tax on inertia'

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About two-thirds of Britons are paying an "invisible" tax by failing to seek out the best financial deals, a report suggests.

As many as 35 million people may not be regularly switching financial products and utility plans, credit checking company Experian estimates.

Their lack of action is akin to "an invisible tax on inertia", with the cost of paying more than is necessary for bills mounting up over the course of their lives, it says.

Experian asked 200,000 people whether they had switched providers for financial services or utilities products during the past two years.

It found 69.5% of people had failed to switch and identified hotspots where people were most and least likely to be switchers.

London and St Albans were found to be the places where people were most likely to shop around, while Skegness and Great Yarmouth were identified as the areas where people were least likely to switch.

Richard Jenkings, lead analytics consultant at Experian, said people often chose the most expensive ways to borrow money, whether it was due to a lack of information or a lack of choice.

He said: "It's clear from our research that those who stick to old financial behaviours are likely to fare worse in the future than those who change."

Here are some tips from Experian for taking financial control:

- Make time to review your insurance, energy, broadband, mobile and credit providers to ensure you are getting the best rates. Some free comparison services will indicate which credit products you are likely to be accepted for.

- Look for ways to strengthen your credit report, such as registering on the electoral roll, removing a link to an ex-partner or asking for any discrepancies to be fixed.

- Make a list of all your outgoings and everything coming in so you can fully understand where your money is going.

- While it is wise to keep a rainy day savings buffer for emergencies, with interest rates giving low returns on savings consider whether it would be worth using any spare cash to pay down debts.

Here are the top five switching areas according to Experian:

1. London

2. St Albans

3. Bracknell

4. Windsor

5. Watford

And here are the bottom five switching areas:

1. Skegness

2. Great Yarmouth

3. Birmingham

4. Manchester

5. King's Lynn

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