What you don’t know about “Out of Contract”

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These days, broadband is a basic necessity, like gas and electricity. Unfortunately, some of the sharp charging practices that were discovered in those industries, are now being used in the broadband business. Consumers can find themselves paying hundreds of pounds more than they should do, due to costs called “out of contract” charges. Read on to avoid being overcharged…
I’ll explain in a moment what these are and how to avoid them. But to give you some idea of the number of people being overcharged, First Utility carried out a survey and found out that nearly 15 million people are overpaying for broadband in the UK. Yes, you read that right. 15 million people being overcharged. Read on to find out how to avoid being one of them.

What are “out of contract “charges?

When you change broadband supplier, you have to sign a contract. The length of the contract varies but it’s usually 12-24 months. Now, unless you’re super-organised, you are not going to remember the date when your contract runs out. But as soon as it does, many suppliers will put up the price of the service, without telling you. Why? Because they can. Legally, they don’t have to tell you, so they don’t. And while we should log on each month and go through every item on our bank statement, how many of us actually do? Very few. So we’re unlikely to notice these charges going up.

Broadband suppliers hope you won’t notice

This is even more the case if you don’t get paper statements. In fact, some people who’ve fallen prey to this overcharging have now gone back to paper statements. And of course, with your contract at an end, you’re also now free to switch and get a cheaper deal elsewhere – another reason for the broadband suppliers to stay quiet and hope you won’t notice the contract has run out. And the amounts you could save are significant – the First Utility research shows that the average is £113 a year. They’ve actually written to Ofcom to demand that the broadband companies tell people when their contracts have ended and charges are going up. Luckily I have a really good deal with Sky Broadband and they look after me in terms of my contract. Great communication and the best customer service I have received from a broadband provider.

Catches buried in the small print

This is Money, the finance website, pointed out last year that if you went for BT’s basic broadband deal, when the 12 month contract ran out, you would end up paying 33% more for the same deal. The Citizens’ Advice Bureau found that prices tended to go up by even more – about 50% – after the end of a deal, with BT raising prices the most. Don’t forget that if a provider puts up its prices during your contract – as some have done, that negates the contract. You’re free to go elsewhere.

Lower income households and older people exploited

Annoyingly enough, the people who can least afford the money – low earners – are the most likely to be loyal customers, whereas people earning more tend to switch broadband providers more. The same goes for older people, who tend to stick with their provider far longer than younger age groups. Families with children, who are short of time, may also be a group that are staying with an expensive provider after they’re out of contract. All of these groups may be tempted by the broadband, TV and mobile bundles that companies are now pushing – but they may find themselves overpaying for each service if the companies continue their current pricing policies. 

Switching broadband provider – simpler than you think

First Utility has a great graphic to show exactly which regions of the country are paying most. There’s no need to put up with exploitation from a big company. Broadband switching is usually much simpler than most people expect, and you could save yourself significant amounts of money.

Savings pot image by ShutterStock.

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