Plusnet (and others) Annual charges to be 3.9% + CPI

Starting this year and for every following year Plusnet state:
"On or after 1st June 2021 we’ll take the CPI percentage rate published by the Office for National Statistics in April of that year and add an extra 3.9% to the rate.
On or after 1st March every year from March 2022, we’ll take the CPI percentage rate published by the Office for National Statistics in January of that year and add an extra 3.9% to the rate."

Isn't this classic compound interest that will tend rapidly to infinity?

Even if the CPI is zero, you pay 3.9% this year.
Then 3.9% Plus 3.9% of the previous years 3.9% i.e 4.1%
4.22% the following year...
and that's without +CPI part.

Perhaps that's where the 'plus' in Plusnet comes from?

Edited by deleted (Wed 07-Apr-21 16:14:09)

In reply to a post by Carbis:

Starting this year and for every following year Plusnet state:
"On or after 1st June 2021 we’ll take the CPI percentage rate published by the Office for National Statistics in April of that year and add an extra 3.9% to the rate.
On or after 1st March every year from March 2022, we’ll take the CPI percentage rate published by the Office for National Statistics in January of that year and add an extra 3.9% to the rate."

Isn't this classic compound interest that will tend rapidly to infinity?

Even if the CPI is zero, you pay 3.9% this year.
Then 3.9% Plus 3.9% of the previous years 3.9% i.e 4.1%
4.22% the following year...
and that's without +CPI part.

Perhaps that's where the 'plus' in Plusnet comes from?

Other providers are also doing the same thing with there new contracts.

No, it isn't going to go to infinity any time soon but it is compound interest.

At 3.9% per annum a £20 bill this year in 20 years would be £41.37. In 100 years it would be £883.02.

Inflation has often times in the past been higher than 3.9% but we don't all have infinite costs for food/services. It is a higher than inflation rise (by definition) but the chances are that every time your contract comes up for renewal that you will be able to negotiate a deal with them.

There is really no reward for loyalty.

[I have to remind myself of that when I get my renewal premium for my (insert car/bike/home/business) insurance each year!]

Edited by Pheasant (Wed 07-Apr-21 17:37:48)

True. Always use the "I'm thinking of leaving" phone option, you get answered quickly and politely and renewed at a discount...

Agreed, although occasionally an agent might have used his allocation of discounts for the month in which case leaving it for a day and trying again has always worked for me.

Take read of this guide , yes about Virgin Media but same issue might apply here. So thought might like to know. Now I dont know if you can use this get out jail card because I don't have copy of Plusnet TC's.

https://www.uswitch.com/broadband/guides/virgin-medi...

A very useful tip. Thanks

I haven't looked in depth through Plusnet's T & Cs pages, but when I used to a lot they always covered all the historical ones as well if you followed the correct links.

Messy, but comprehensive.

It makes me relieved that my ISP (Zen) commits to no price rises at all while I remain a customer.

I do wonder how Plusnet and others can justify such enormous and regular increases (other than exploiting presumed customer lethargy), especially as the cost of providing telecom services generally declines over time.

I remember the days when making a telephone call to the other end of the country was something to be considered very carefully indeed....