Being poor comes at a cost. The best bank accounts, borrowing rates and energy tariffs are all reserved for people who are in a position to shop around. And if you do not have a clean credit file or access to up-to-date technology you can expect to pay more for almost everything you buy.
In the summer, Citizens Advice Scotland reported that people living in poverty were paying roughly 10% more for essential goods and services, while according to a report from 2014 by the east London charity Toynbee Hall, residents of Tower Hamlets pay a “poverty premium” of up to £1,014 a year, consisting mostly of higher energy costs, car insurance and loans.
This isn’t a matter of not being a savvy shopper or failing to compare prices before you buy. It is a matter of not having access to the best deals. When every penny counts, being charged more than the next person for the same goods and services can cause bigger problems further down the line.
The cost of being poor
Higher energy costs can be the hardest to avoid. Energy bought through prepayment meters is still more expensive than that bought on a standard tariff paid for by direct debit, and the premium over online accounts is even bigger. In July, Citizens Advice said prepayment customers were paying on average £226 a year more for their energy than those on the cheapest online deals.
Householders can switch between prepayment tariffs, but there is little competition so the choice – and saving – is limited. To get the best deals, as well as internet access, you need a good credit record. Even with these, private renters can find it hard to switch payment types. While the regulator Ofgem says a landlord cannot prevent you switching meters, you may have to switch back at the end of the tenancy, and the associated costs could be off-putting…
Source – The Guardian