Is it time to fix your energy deal? Things to think about before signing up to a fixed-rate tariff

The energy price cap is expected to rise again in October, with the regulator Ofgem predicting the average annual bill could soar from £1,971 to as much as £2,800. 

Some households may be considering whether to take out a fixed deal now to lock in their prices before the cap rises. 

Uswitch.com, the comparison and switching service, has the following advice: 

1. DO consider exit fees: You may change your mind about your fixed deal and want to switch. If this happens you might have to pay an exit fee. Not all tariffs have them but some do so make sure you know what yours is.

2. DO consider the length of the deal: Most deals are for 12 or 24 months. During this time the price cap could go higher or lower depending on market conditions, so consider how long you would like to stay locked in for.

3. DO stay informed: It’s important to keep a close eye on the market and run regular comparisons to see what deals are on offer. By signing up to alerts, you will be able to stay close to what’s happening in the energy market and be informed when a good deal comes along. 

4. DON’T just go for the first deal you’re offered: Just because a deal is available doesn’t mean it is a good one or the right one for you. Consider the price of the deal, how long it is for and how important stability is for you right now.

5. DON’T get a deal you cannot afford: make sure you can afford the deal you choose to take and do not feel pressured into taking a one that you will struggle to pay.

6. DON’T just look at the direct debit amount: The price you pay through direct debit each month is usually based on the estimated amount you will use over a year and may not be the actual cost. Make sure you look at the unit price and standing charge so you can understand how much you will be charged for your energy usage and how it differs from what you are currently paying.

Energy saving expert at Uswitch.com says: “The truth is that unfortunately no one is completely sure whether sticking with the price cap or opting for a fixed deal will turn out to be better value.

“Based on the current predictions for the October price hike, if you find a fixed deal that is up to 35% more than what you currently pay, it might be worth considering it. However, prices remain volatile and the exact price increase is still unknown, so this figure may change.

“Some households may prefer to pay over the odds to have the stability of a fixed deal that will cover next winter when their energy use will be higher but it’s crucial that you don’t feel pressured into taking out an expensive fixed tariff if you will struggle to manage the cost.

“It’s important to keep a close eye on the energy market and run regular comparisons to see what deals are on offer. By signing up to alerts, you will be able to stay close to what’s happening and be informed when a good deal comes along.”