Broadband customers pay £113 annual 'loyalty penalty' for sticking with provider

The consumer help charity analysed the cheapest basic broadband deals from the five largest broadband providers - BT, Virgin Media, TalkTalk, Sky and EE - and found customers' bills soared by 43% on average at the end of their minimum term.

The cost of remaining loyal after your cheap deal has ended is an average of £9.45 extra on your monthly bill, though BT's contract sees a jump of £16.50/month. Virgin Media was the only provider which had no monthly increase when customers' initial deals ended.

As customers remain with their broadband provider for an average of four years they can end up overpaying by huge sums, with BT customers forking out a loyalty penalty of almost £600 during this timeframe and Sky customers paying an extra £360.

The length of introductory deals also varied widely, with BT, Virgin and Sky customers locked in for 12 months, EE customers for 18 months and TalkTalk customers for 24 months.

Check out our Cheap Broadband Deals round-up and you could shave £100s off your annual bill.

Customers unaware of price hikes

In a survey of consumers Citizens Advice also found that 35% of broadband customers don’t realise they could face price hikes by staying on the same contract with their provider after their initial deal ends.  

The charity is now calling for providers to include up-front information in their advertising and when people take out contracts, and wants them to text customers to inform them when their fixed price come to an end.

It's also demanding extra protections for vulnerable customers  after it found that older and poorer customers are more likely to face a loyalty penalty because they stay with the same supplier for longer.  

'Loyalty penalty could reach over £1,000'

Citizens Advice Chief Executive Gillian Guy said: “Loyal broadband customers are being stung by big price rises once their fixed deal ends.

“People often choose their broadband deals based on the price that works for them - but our evidence shows that many do not realise the price will rise after the end of the fixed deal. With people staying with their supplier for an average of 4 years, these extra costs can run into hundreds of pounds.

“Older customers and those who have less money are more likely to stay with their supplier for longer meaning their loyalty penalty could reach over a thousand pounds.

“The government has rightly put energy firms on warning for how they treat loyal customers - the actions of broadband firms warrant similar scrutiny. Extra protections for vulnerable consumers are also a must.”