Understanding your energy usage
With the new price cap due to kick in on October 1, now is the time to review your energy tariff – and to give some serious thought to moving to a fix.
The aim of the price cap, set by regulator Ofgem, was to give some protection to customers who do not regularly switch and who are on standard or default tariffs – typically a provider’s most expensive tariff.
While there is no requirement on suppliers to raise the price of their standard gas and electricity to the highest level possible, we are already seeing some firms confirming they will increase tariffs to the maximum limit for the coming winter. So, if you rely on this cap, you’ll end up overpaying.
For those affected, average energy bills will go up from the current £1,138 to £1,277 from next month. The £139 rise is the largest since the cap was introduced by Ofgem back in 2019.
If you’re on your provider’s standard tariff, you should be able to make greater savings by shopping around and switching to a fix. You could save up to £200* on your bills by comparing tariffs with MoneySuperMarket.
At the same time, moving to a fix will give you the security of knowing how much you’ll be paying for a specific time. You will also be protected from volatile energy markets and future rate rises.
Read more about the price cap here.
*Based on savings made by 30% of consumers that applied to switch via MoneySuperMarket, August 2020 – July 2021, with the estimated annual cost adjusted for the October 2021 Ofgem price cap. GB only.
If you’re about to take out a mortgage, you may be tempted to lock into a cheap fixed rate, as deals are at record lows.
Right now, there are now tens of mortgages sub 1% – compared to zero deals at this level this time last year. This indicates an appetite from banks and building societies to lend, and to price low while we’re in a low interest-rate environment.
Locking into a fix gives you the peace of mind of knowing exactly what your monthly mortgage payments will be for a period of two, five – or maybe even 10 – years, making budgeting a lot easier. Fixing also means you will be immune from future rate rises for that time.
If you’ve got sufficient money squirreled away in an easy-access emergency fund, and can afford to tie up some of your cash for a period of time, now could be the time to think about a fixed-rate savings bond.
As banks are jostling for top spot, rates have risen, and a gap has opened up between easy-access and fixed-rates. There are currently some great deals for savers, and you may be able to get around 1.5% if you fix for a year, and 1.75% if you fix for two.
With a fixed-rate savings bond, you get the certainty of knowing how much interest your savings will earn you.
The key when thinking about locking money away is to shop around. That will ensure your cash is working as hard as it possibly can.
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