Paying Less Isn’t Always Smart

customer-service-1Technology has made it much simpler to compare rates and find the cheapest prices for services and products. Why pull out the phone book to call several insurance agents to find the best price when you can visit one website to instantly get the most competitive price quotes? Why settle for paltry interest rates at your local bank when you can take advantage of high rates at banks that operate exclusively online?

I say there is good reason.

In many situations, price should not be the deciding factor when buying a service or product. Rather, creating relationships with those offering the product or service can reap rewards down the road, even if it means paying a higher price.

My wife and her family are mostly responsible for introducing me to this concept, and, while I was skeptical at first, I quickly warmed up to the idea.

I had my checking, savings, credit card and brokerage account at a large national bank. I loved the convenience their online interface gave me to track and manage all of these accounts in the same place. And the company had branches and ATMs anywhere I went.

My wife, along with everyone in her large family, did all of their banking at a small, local bank. They have very few branches and ATMs, and their online banking is just OK. I was tempted to try to get her to switch to my bank just to maintain the convenience of my consolidated accounts and slick online banking features. But I knew how much faith my wife had in her bank and that she would be more comfortable if we consolidated our accounts there. Despite all the fuss we make about never being able to speak to a human on the phone when calling a company, I was equally hesitant of the thought of dealing with a human while doing my actual banking.

So, ditching the online forms I would have usually turned to, my wife dragged me into her bank to get added to her account. Very unexpectedly, we were greeted as soon as we walked in by someone who knew my wife’s first name! Had she put on a name tag before we walked in without me noticing? No, in fact, almost everyone there knew who she was. Several more people came up and asked her how various people in her family were doing.

Pretty soon, they started to recognize me on my weekly visits to the bank. There I was, with everyone in the bank gathered around, showing pictures of our newborn daughter from my phone. But it’s not just about being noticed.

When the bank needed to update some of our information, we received a personal letter describing exactly what they needed and who to contact. On another occasion, my wife happened to go into the bank one day when some customers’ ATM cards had been compromised (a retailer’s fault, not the bank’s), and since the teller recognized her as someone on a list to notify, she told her in person and began the process of getting a new card.

I have had the same experience with our insurance agent. We have his direct email address, which we have used several times for help and to update information. My brother-in-law has a truck he uses only occasionally if he has something to haul, so there is no need to have it insured at all times. If he knows he is going to use it, he can call or email our agent to ask him to insure it for the day or weekend.

We get the same friendly and attentive service at our dentist, where my wife’s family has been going forever. When I had a problem with a crown I had fitted, it was fixed with no questions asked, at no charge and I received a handwritten note and a gift card to a restaurant for my inconvenience.

I am sure that we could find cheaper insurance if we shopped around and compared prices, and I know I could do my banking with a company that has more ATMs. However, it’s worth it to know that if I ever had a problem with anything, I know exactly who I need to speak with and how to get in touch with them. How many of you have your insurance agent’s direct contact information in your cell phone?

I believe that anyone can foster these relationships with everyone from their local barista to their banker. It may take a little more upfront work on your part, and you may pay a little more in the long run. Peace of mind and convenience are also worth something, and the time may come that these relationships pay off if you have an emergency or a problem.

Here’s some tips to get started:

Be consistent. Don’t go to the place with the best deal today.

Always get your coffee at the same place. A small tip every now and then may help you get noticed and ensure your drink is made exactly the way you like it. You may pay less at the new stand with a grand opening special, but will they know how to make your drink exactly the way you like it? You know you will get what you are paying for.

Get your oil changed at the same place every time. There is nothing better than having a mechanic you can trust. They may diagnose a problem or do very minor things for free, and discounts may be offered for larger repairs.

Ask what you can expect.

Before signing up for new auto insurance, ask how you can contact them in an emergency. If they give you their cell phone number or email address, you know you are on the right track. Steer clear if they refer to the company’s 1-800 number.

Get a referral.

There is no better way to know what you are getting into and jump start a relationship than getting a referral from a trusted friend, family member or other professional. Make sure that you mention you were referred and who told you about them. You can ask someone who may be in a related field for advice, but make sure a monetary incentive is not the only reason for the referral. That’s not to say a mortgage broker couldn’t offer good advice on a real estate agent, but a friend who was very happy with the sale of their home may be a less biased source.

Chasing rates, prices and deals can be great ways to cut month-to-month costs, but building a relationship with those providing essential and sometimes lifesaving services can prove priceless.

Image courtesy of striatic

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2 Responses to Paying Less Isn’t Always Smart

  1. Shane says:

    I can see where you’re coming from but I disagree.

    For me – a banking service is just a banking service, insurance is just insureance and I habitually go with whoever charges me less. For example I am pretty happy with my current bank – especially the staff in the branch – they are very helpful and some of them even know my name. They all happen to be good-looking girls in their 20s. Is this a ploy on the Bank’s part to attract in young males like me who could be future mortgage customers !!! lol

    Anyway the Bank across the road pays 4% credit interest on checking accounts while my current Bank pays 0%. So I am in the process of switching. I doubt the service in the brance will be as good as current branch but to me, banking is banking, – they both do the same job.

    I know it is nice to be recognised – if you are happy to pay more for this perk – then fine but I value relationships that aren’t with people who make money out of me…..

    Every financial company sees you as a Target to get money out of…. it’s just that some think it may be easier to milk you if they pretend to be your friend.

  2. damon says:


    I don’t mean to get all ‘old’ on you, but I think as time goes on you’ll change your mind. And

    I’m not really that old, I’m just a bit biased. I have owned a business, I will again, and my parents do as well, and because of that I’m more likely to seek local businesses. I do it simply because it keeps more of my dollars local, encourages the entrepreneurial spirit, and as Shane mentioned, you get personal service. I know first hand that a lot of people came to me for that reason as well, and I personally felt responsible for the services I provided.

    In your example you bring up 4% vs 0%. I can definitely understand your reasoning for shopping that. But don’t under-value the service that you receive from your local vendors. You mention they pretend to be your friends, but the honest part of it is that a large percent of them do develop a relationship with you; they leverage that relationship to keep you as a patron, you leverage it when something’s not quite right, and the point is that the value in that varies depending on the service (and whether or not you choose to look at it that way, since value is a personal perception.)

    I could make up some percentage here and call it a study, but the point is that your local businesses actually do care, and eventually, you’ll realize that your time really is worth money. Call AT&T and sit on hold to complain about your phone or internet service for an hour or two when you barely have 5 minutes to spare…

    For a real life story from the consumer’s POV, I earn a measly 2.5% average on my account with my credit union. In the long run, yeah, that’s cost me a few dollars. But a few years ago when they held an electronic deposit for a couple days but cleared some electronic transactions the next day, it resulted in around $200 in fees. I spoke with the branch manager (who was new at that time) and they explained that under the terms of agreement blah blah blah they were entitled to do that, but they would look into it. Less than an hour after I left there, she called me to inform me that they reversed all of the charges and they appreciate my continued business. I promise you, it wasn’t because of an impressive sum of money that I had in the bank, it was because the employees there have known me since I was 7.

    I’m rambling a bit and the chances of you reading this are slim, but the point is, you don’t have to overhaul your life, but try Shane’s suggestion in one aspect, insurance is probably a great suggestion… you’ll realize that the peace of mind is truly worth a lot.

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