Choosing between a variable or fixed energy tariff can be a bit of a minefield when looking to cut down on household costs.
A fixed energy tariff means that you are locked into a rate for kilowatt per hour of energy used for a designated term. While variable tariffs have a defined price for the use of energy, however, this can go up or down depending on the wholesale market, but you aren’t tied into a contract. Confusing right?
Luckily Martin Lewis has cleared the waters a little bit on what tariff you should be opting for to get more bang for your buck.
Should you go for a fixed energy tariff or a variable energy tariff?
On the Martin Lewis Money Show Live, a viewer asked the question we’d all been wondering – should they be on a fixed or variable tariff?
‘It depends what you want,’ explained the money guru. ‘At the moment variable tariffs – those that go up and down – are the cheapest on the market.
‘The price cap is coming down from 1st October from £1,254 to £1,179, but the cheapest tariffs on the market for someone with typical use are in the £850 range – they’re variable,’ the Money Saving Expert adds.
While variables are cheaper at the moment due to current international gas supply circumstances, you could be getting a better deal on a fixed tariff.
‘We have seen in the last week a Saudi oil fire, French nuclear plant supply issues and Russian gas pipe issues,’ says Martin, who explains that because of these incidents, some wholesale prices have gone up and some of the cheapest prices have been withdrawn.
‘It is not a bad time to fix your energy price, because the mood music is going upwards,’ advises Martin.
So, while it might seem more expensive at the moment, locking yourself into a fixed energy deal before energy costs continue to go up could be a money-savvy move.
Martin’s final advice was to get onto a comparison site to see if it is worth switching. ‘Find yourself a good deal – do not sit on a standard tariff,’ he says.
So get yourself onto Moneysupermarket.com or something similar and see if you could end up saving on a fixed tariff.