Should I Switch To a Fixed Rate Energy Plan?
What is a Fixed Rate Energy Plan?
A fixed rate energy plan is simply a type of energy tariff. In a fixed rate energy plan, the unit rate that you pay for your gas and/or electricity is fixed at the same price for a given length of time. Usually, the length of such contracts is set at a year, or two years.
If you have a fixed rate plan from your energy supplier, your rate will remain the same even if they announce an energy price increase. These deals can offer cost security, and are some of the cheapest options for an energy tariff. Compare with Money Pug today to find out what fixed rate tariff options are available for you.
What Are the Benefits of a Fixed Rate Energy Plan?
Fixed price energy deals have a range of different benefits. For example:
- You can save money long term, since these deals are often the cheapest around.
- You gain peace of mind, since any price rises that may come along won’t affect your energy prices and your household’s energy bills.
- There are plenty of options out there – you will have a wide range of different fixed rate energy plans to choose from. You can find the cheapest, the one that will be fixed for longest, and options with or without an early exit fee when you compare with Money Pug.
What Down Sides Are There To A Fixed Rate Energy Plan?
While the benefits of fixed rate energy plans are clear to see, there are also a number of cons to consider when deciding whether or not one of these deals is right for you.
- With some fixed rate energy deals, you will have to pay an early exit fee if you want to leave before the end of your plan. You can often find yourself paying £25-£50 for switching before your tariff ends. (However, you can find fixed plans that do not have an early exit fee, so you are free to switch whenever it is a good move to do so.)
- If you are tied into a deal, and energy prices drop, you may find yourself paying over the odds for your energy. (Again, however, you may not have to pay an exit fee and so may be able to switch freely when it makes economic sense for you to do so.)
Should I Switch To A Fixed Rate Energy Plan?
Whether or not you should switch to a fixed rate energy plan will often depend on your current financial situation, and your current energy deal. It may come down to how comfortable you feel about checking the market regularly to compare your options, and how often you anticipate being able and willing to do so.
If you feel comfortable, paying a slight premium on your energy how for protection in the future may be a sound idea. It is certainly worthwhile checking your fixed rate energy deal options to see whether or not they could be a good idea for you. When making your decision on energy supplier, and energy plans, one of the important questions to answer is whether you will go for a fixed rate or variable rate option. On average, people save around £292 by switching to a better energy deal.
It is an especially good idea to switch to a fixed rate deal if you are currently on your suppliers standard tariff. Customers stuck on variable rate standard tariffs are often paying more than they need to pay for their energy. 60% of energy consumers are on standard variable rate tariffs, even though these are the most costly option. If you are one of them – it is definitely time to shop around, check out your options, and consider switching your energy supplier.
What Should I Do When My Fixed Rate Plan Is Coming To An End?
If you are currently on a fixed rate tariff, it is very important to make a note on your calendar so you do not forget when it is coming to an end. It is very important to know when your fixed rate plan is coming to an end and that you do not forget about it. If you inadvertently remain with a company without arranging another fixed rate deal, you will automatically be rolled onto their standard tariff. This is usually the most expensive option they offer!
In order to avoid your energy costs rising, and your bills increasing, make sure you take the time, before the contract ends, to do your research and compare energy deals. When you use Money Pug’s handy comparison service and find the right deal for you, you can switch up to 49 days before the end of your contract, without paying a feee. This is true even if your plan has an early exit fee.
42-49 days before the end of your plan, your supplier must notify you about your plan’s upcoming end date. This gives you the time you need to shop around and switch supplier if necessary. The letter from your current supplier will likely tell you about any cheaper plans you could consider. However, it is important to remember that these are only the plans available from your current supplier. Money Pug’s listings will help you compare not only the plans from that one energy company, but also the other offerings that are out there for your energy.
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