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Loyalty is something that most of us prize in other human beings. However, when it comes to the products and services that we regularly rely on it seems that it really doesn’t pay to be loyal. In particular, the cost of energy is leaving those who stay loyal to their energy providers seriously out of pocket. So, how do you know if you’re paying too much for your home energy and – if you are – what should you do about it?
A study published earlier this year identified that 40% of customers don’t change energy suppliers because they believe that it is “too much hassle.” Many people simply don’t have time to keep track of the tariff they are on because they are too busy and, as a result, 20% don’t actually know which tariff they are paying for. As it turns out, this is a costly way to approach energy bills – customers who are trapped in poor value deals are paying a total of £4 billion too much for their annual energy supply. There are some substantial savings to be made by switching energy suppliers and yet 32% of people haven’t changed energy supplier for at least five years. Most of these people are likely to be on Standard Value Tariffs – the energy supplier’s standard rate, which kicks in after any discounts or sign up deals expire. SVTs are usually much more expensive than the new deals that are offered to switching customers so staying on them can push the cost of energy right up.
If you’re one of those customers who hasn’t changed energy supplier for some time then you could be paying far too much. The first step to start making savings is to switch to another provider. Savings of approximately £275 a year are available to those who choose to switch so the benefits of doing so are very tangible. Plus, there are many more options for managing the process today so that switching energy supplier doesn’t have to be time consuming or a hassle. Most switching services make it very simple – and there are also options like weflip, which will do all the work researching the market and automatically switch you to the cheapest deal.
Recent research established that more than half of UK households have overpaid energy bills by an average of £84.80. Because energy use can shift seasonally, or when personal circumstances change, providers often end up taking larger payments than are necessary. Although they are legally obliged to refund a surplus this often only happens when the contract comes up for renewal or when a meter reading is provided. Keep an eye on any surplus on your account – if you want to ask for a refund you can do so at any time.
Here’s a plan to reduce the volume of energy you consume:
If your energy bills have started to feel onerous there are solutions available – from switching your energy provider to avoid an expensive tariff, to taking steps to reduce your energy consumption, there is a lot you can do to make a difference. Given that most of your energy use is in the winter, and as it takes time to implement this plan, you should start right now!
Alex Hartley is a keen advocate of improving personal finance skills. She's worked at Solution Loans since 2014 and written hundreds of articles about how people can manage their money better. Her interest in personal finance goes way back to...Read about Alex Hartley
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