Fixed Rate Tariffs

Understanding Fixed Rate Tariffs

Fixed rate tariffs are an excellent way to ensure that you shield yourself from future price rises with the number of people utilising them increasing every year. But what are they and will they save you money? Though fixed rate tariffs have soared in popularity in recent times, they are not necessarily well suited to all people. Our guide below will display the best energy deals on the market at the moment as well as giving you an idea of whether it’s the right tariff for you.

What is a Fixed Rate tariff?

Fixed rate energy tariffs are when a consumer and supplier agree to a set price for energy over a pre-determined period. The amount you have to pay and the sum that your energy provider can charge you per unit remain the same for the duration of the fixed period, and your plan is left unaffected if the base rate of the Bank of England rises.

What are the advantages of a Fixed Rate tariff?

• You will be shielded from any price hikes your energy supplier chooses to implement over the duration of your arrangement, so the amount you pay never goes up
• Budgeting is made easier as you know exactly how much you pay for your energy
• Though prices are often higher in the short term, you could make a high level of savings over a number of years

What are the disadvantages of a Fixed Rate tariff?

• Starting rates are often more expensive that variable deals as you pay for price hike protection
• Early cancellation fees of between £25 and £60 are usually applicable which often makes it expensive and difficult to switch energy deal.
• If there are any decreases in gas and electricity prices, you will not enjoy a reduction on your bill

What to do when your fixed rate deal expires?

Once your fixed rate deal has run its course, you will be able to move to a new provide or energy package without any charge. It is essential that you firstly get into contact with your existing provider and see which deal they intend to transfer you to as providers move customers to a default standard plan on completion of any fixed rate deal.

This is typically far more expensive than any normal plans that are offered, so it is worth asking if they can move you to a new fixed rate deal. If they can, then you can move on to it straight away. If however you wish to change your electricity or gas supplier, then alert them and start looking for a new supplier straight away.

In order to determine what the best deal on the market is, use our energy comparison tool and you will be presented with a vast array of tariffs being offered. You can then switch to your new supplier within days and we’ll facilitate a swift and seamless transfer on your behalf.

Is a Fixed Rate tariff the right plan for me?

Ultimately, fixed rate deals are beneficial for those who anticipate price rises sooner rather than late and who enjoy knowing exactly how much they are paying for their energy each month. If you believe that energy prices will rise steeply in the near future, then it would be beneficial to fix your price in order make long term savings on your bills. Conversely, if it widely believed that prices will remain stable for at least two years, then a variable package may be better due to its superior flexibility.

Furthermore, you will usually never receive a bill that is significantly higher than you anticipate, and will be able to plan your finances ahead of time as you know the rate you are paying.