A finance expert is urging Brits to make a note of an important date in their diary to avoid being stung by a costly £200 fee. Martin Lewis warned that this is an important step to take when trying to find the cheapest energy bills this winter.
Speaking on the latest episode of his BBC podcast, Martin advised listeners how to avoid the predicted average energy price cap increase of 10 percent, which will go up on October 1.
With this change, it is estimated that the typical annual dual-fuel bill paid by direct debit in England, Scotland and Wales will be £1,717 per year.
But Martin has previously stated that some providers will be offering prices at just a three percent rise from what they are now – making them significantly cheaper than the average.
For some people he advised it is therefore worth making a switch now to a different tariff to avoid a large price hike come October.
However, making a switch can come at an expensive cost. “If you’re on a fixed tariff, many fixed tariffs have early exit penalties, which it means, if you leave before the fix ends, you could pay a penalty,” Martin explained on the podcast.
This fee will vary depending on who you are with but could be as much as £200. He continued: “Now that may be as low as £25 pounds per fuel, so £25 pounds for gas, £25 pounds of electricity in some cases. Over the last year, we show them dropping up to £200-odd fuel, across the market.”
To avoid getting caught by this fee he urged people to make a note of when they reach 49 days before their fixed tariff ends. Legally they cannot charge you an exit fee if you leave at this point.
Martin said: “Here’s the rule If you are within the last 50 days. So just to be clear, that is 49 days or less of your fix. They cannot charge you an early exit penalty.
“So if you’re within the last 50 days, there are no early exit penalties.” He added that many provider websites will not make this clear.
“But they are not legally allowed to charge early exit penalties within the last 50 days. If you have a fixed out there, put a note in your diary 49 days before it ends, because that’s the point you can start to think about shifting.”
Sometimes it might still be cheaper to pay the penalty in order to switch, he added. Martin said: “If you have got a penalty, well then you just have to factor that into the maths of whether it is worth switching or not. I mean, if it’s a £50 penalty and you’ve got paying a bill of £5,000 pounds a year and you can cut your bills quite substantially by locking in a fix now then £50 is neither hither nor thither. So the early exit penalty needs to be looked at in the scheme of how much you’re paying on energy.”
To find out more and compare different energy rates you can join Martin Lewis’ Money Saving Expert cheap energy club here.
