If you’re working to get a better handle on your finances, you’ve probably spent some time trying to figure out ways you can cut costs. Although evaluating (and reining in) spending on non-necessary items is crucial, it would be a mistake to stop there. If you’re really serious about cost cutting you should also take time to assess every one of your necessary expenses, and your energy bill should be one of the first to be scrutinised.
For several years energy costs in the UK have either been cut or frozen for many people, but even so there are thousands of people who have trouble keeping the heat on during the cold season. The problem is bound to get worse, as energy costs are slated to rise this winter. Several smaller suppliers have already hiked their prices and the larger suppliers are expected to follow suit.
But the good news is that with a little shopping around you may be able to find a better deal that will not only save you money but may also allow you to choose green energy.
Take advantage of a competitive market
A recent report from the Competition and Markets Authority indicates that too many customers are on standard variable tariffs, resulting in a collective squandering of £1.7 billion a year. Even with costs set to rise, energy companies are still in competition with each other, and you can and should take advantage of this fact and try find a better deal. In particular, people who have never switched before may be pleasantly surprised to find they can save several hundred pounds a year on their energy bills.
You will probably find that you have numerous choices, whether you’re looking for a long-term fixed-rate, a variable rate, or a tariff from a smaller or green supplier. At present, online plans paid by direct debit remain the most competitively priced. If you have never switched before, choosing one of these plans will probably save you the most money.
The energy regulator Ofgem’s Be An Energy Shopper web site can help you find the best deal for your gas and electricity. It contains easy-to-follow guides that can help you understand your bills and become more informed about energy tariffs and deals. And perhaps most important of all, it has a step-by-step guide to switching energy suppliers.
Are smart meters really a smart idea?
If you’ve been exploring ways to save energy costs there’s a good possibility that you have considered getting a “smart meter”, which uses wireless technology to allow energy companies to remotely read meters. Perhaps you already have one. But while smart meters promise to revolutionise energy consumption and billing, whilst eliminating the need for most meter readers, that promise is a long way from being fully realised.
The government is committed to offering a smart meter for every home and business in the country, although at this time you aren’t required to have one. The introduction of the first wave of smart meters is expected to cost consumers £11 billion, but studies have shown that the meters only cut energy use by 3 percent or less. It is hoped that this will improve in the future, but there are still a few caveats. For one, there are security concerns and the potential threat of hacking, with the big fear being that an outsider can take over the system and hold it to ransom. As well, if you already have a smart meter and you subsequently switch suppliers, the meter could lose all of its data – its “smartness” – and become just another “dumb” meter. The government is hard at work on the behind-the-scenes infrastructure to fix this problem.
And indeed, once the bugs are worked out of the system, smart meters may very well prove to be a boon to British consumers as well as energy providers. In the meantime, regardless of whether you have a smart meter, there’s a very good possibility that you can cut your energy costs with a little bit of smart shopping.
What if you still have trouble paying your bill?
Even if you secure the best energy deal possible, and you are otherwise careful with your money, emergencies can still arise. At some point you may be tempted to take out a loan to cover a necessary expense such as your gas or electric bill. The Money Advice Service recommends that if you are regularly behind with gas, electric or other utility bills, taking out a loan, particularly a high-interest one, may not be the best option. Instead, try negotiating directly with your energy supplier. Help may also be available online; the gov.uk site has a section on heating and housing benefits, and charities such as Citizens Advice offer tips for those who are struggling to pay their energy bills.
But if it’s just a one-off situation and you are confident that you will be able to repay a loan on time – and that you will not make a regular habit of borrowing – several different types of loans are available, even if your credit leaves something to be desired. Taking out a small short-term loan, even a high-interest one, is better than the prospect of sitting in the dark or going without heat in the dead of winter. As is the case when searching for the best energy provider, however, you should shop carefully for the best lender. Some lenders have less than stellar customer service, and some will hit you with hidden fees and charges. A little online research can help you avoid missteps and choose a lender that will treat you fairly.
We’ve said this before, but it’s another one of those points that bears repeating: when striving to improve your financial picture, take nothing for granted. Every aspect of your personal finances – from your expenditures to your savings and investments to your income sources – should be reviewed on a regular basis. If there’s a better deal available and your current provider won’t work with you, there’s no reason to let loyalty or habit keep you from switching. After all, it’s your money.