Should you fix your energy tariff?

If you have invested in high quality, modern electric radiators for your home then you will already be reaping the efficiency gains and enjoying your cosy interior! But how else can you save money on your energy bill?

Switching suppliers is an obvious route and a recommended one – but you may also be wondering whether or not to fix your energy tariff. There are pros and cons to weigh up.

The benefits of a fixed energy tariff

The primary benefit of a fixed energy tariff is the certainty. For a price premium, your energy bill rate will be locked in for a defined period of time – usually 1-2 years, but sometimes longer. This acts as a hedging mechanism against price rises. So, if you think that prices are likely to rise – or you would prefer to lock in your price for certainty and to help your household budgeting – you may well prefer the security of a fixed tariff. Remember that you can still search for the best fixed tariff and may well find that it works out cheaper than your existing variable tariff if you haven’t switched for some time. (And if you have never switched at all, you could save around £300 per switch according to research by the energy regulator!)

The benefits of a variable tariff

You may prefer to stay on a cheaper tariff and take the risk that the unit price will rise in future. This is the better route for many if you can afford to meet any fluctuations in price, and if you think that prices may actually fall or remain low into the future. These tariffs also tend to be exempt from exit fees. Fixed tariffs will almost always have an exit fee which can be around £50 per energy source, which means that you will need to pay a penalty if you saw a cheaper deal later on and wanted to switch to it. This can happen if energy market prices drop and your fix suddenly becomes uncompetitive.

Ultimately, the choice will depend on your appetite for risk and financial situation. So why not start by carrying out a price comparison to see what effect a change in tariff would have on your existing bills?

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