Consumer champion Martin Lewis has reminded energy bill payers about an important timeframe to be aware of, saying it is "worth putting in your diary" to avoid needlessly paying an extra £100. The advice came during an episode of his BBC podcast, where a listener asked when it is best to fix their energy tariff.
The fan said their fixed deal was due to end in December, and with fixed deals set to rise, they wanted to know whether to secure another fixed deal early. The Ofgem price cap is due to go up in October, and current predictions suggest it will rise by 24 per cent in January.
Stick with current fix for now
Mr Lewis recommended that, in this particular case, the questioner stick with their fix for now, as it was cheaper than any other deals currently available on the market. He encouraged them to be "waiting to pounce" if any cheap fixes come up between now and when their deal ends.
However, he added a proviso about getting a new deal early. In this person's case, they said they had no early exit penalties with their current provider. But Mr Lewis warned this may not be the case for many people.
49-day rule explained
Mr Lewis said: "There will be many people listening whose tariff does have early exit penalties. Now, the first thing they need to understand is you don't pay early exit penalties within the last 49 days of the tariff."
He added: "Under 50 days is how I phrase it, but it's day 49 to the tariff ending onwards, they're not allowed to charge you early exit penalties. So, if you're looking to fix before that, you also have to factor in the early exit penalties."
He said these vary, but sometimes the penalty is £50 for each fuel type, so if you have a dual fuel deal with gas and electricity from the same provider, you may have to pay an extra £100 in penalties.
Put the date in your diary
Mr Lewis said, given this rule, the time to start thinking about whether it is time to move "is 49 days before your fix ends, and it's worth putting that in your diary".
He told listeners to compare the potential penalties for their current deal with their current bill, to see if it is worth the extra costs of switching before the 50-day countdown begins. He explained: "The more you pay, the less the impact of the early exit penalties."
"If you're paying £5,000 a year, £100 early exit penalties is only 2 per cent. But if you're paying £1,000 per year, £100 is 10 per cent and is absolutely not worth doing in any circumstances," he added.
