Can a fixed energy tariff save you cash?Posted on: 07 May 2010 by Mark O'haire
With yet more fuel bill hikes on the horizon, we look at what tariff may be right for you.
Households are facing yet more fuel bill hikes following a surge in wholesale energy prices.
Energy supplier Ovo has already increased its tariff for new customers by 8% or £72 per year and many believe it's only a matter of time before others follow suit.
So, with rising gas prices on the way, is it time for you to consider a fixed-rate tariff?
How does it work?
With a fixed-rate tariff, you pay a slightly higher rate and in return you are protected from any future price hikes from your supplier over a set period, usually one to two years.
That sounds good, but they can be up to 20% more expensive than non-fixed deals, so you need to be confident prices are going to rise significantly for it to pay off - and in such volatile times, no one can accurately predict where prices will go.
Worse, some providers also charge an exit fee if you choose to leave before the fixed period expires.
A middle ground option
Another option available to you is the capped tariff. As the name implies, you will be subject to fluctuations in energy prices but only up to a certain point (essentially it works just liked a capped mortgage).
If you are worried or want some security as to the cost of your energy in the coming months you should look to a fixed or capped deal.
But, as mentioned earlier, there is always going to be a risk that you'll end up overpaying if gas prices don't rise sharply.
Click to save?
Alternatively, there are still big savings to be made by moving to an online plan, which can work out up to 25% cheaper than the standard tariff.
To encourage customer loyalty, every major supplier offers a dual fuel tariff with discounts available to you if you take both gas and electricity from the same company.
The discounts offered mean that they're the best deal to be had. So if you're looking for the cheapest gas and electricity around, an online only dual fuel tariff may be right for you.
Online dual fuel deals paid by direct debit remain the cheapest available, with the average family saving up to £300 a year by moving to the best online tariff.
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