New rules make it easier to switch energy supplier

Gas ringsThe rules are changing on how and when customers on pre-payment meters can switch their energy suppliers.

From 1st November energy customers who pay their bills by pre-payment will be able to switch to cheaper deals with other suppliers - even if they have debts of up to £500.

This is to help people deal with rising utility bills and also to encourage more people to switch providers.%VIRTUAL-SkimlinksPromo%
What's changed?
At the moment customers with any of the big six energy providers are allowed to switch suppliers only if their existing debts aren't more than £200.

The six suppliers involved in the Ofgem agreement are: British Gas, EDF, E:On, Scottish Power, SSE and npower.

By increasing the debt threshold it's hoped thousands more people will now be able to switch their energy suppliers who previously weren't able to. Providers will also have to actively contact customers and let them know about how to switch and deals available to them.
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Energy debt
Energy debt is a massive problem for many people across the UK and for those on these kind of plans, more than 315,000 electricity customers and 320,000 gas owe money to their supplier.

The average amount owed is £357 for electricity, a fall from £360 in 2010, and £371 for gas, an increase from £339.

One of the reasons Ofgem is introducing these new rules is to encourage providers to proactively help customer who are in debt and to only use disconnection as a last resort.

In the past year disconnection figures have fallen with a 54% drop for electricity and 59% for gas in 2011. Customers are also now being given longer to pay off energy debts and the number on repayment plans has also gone down.

Pre-payment plans
If you're on a pre-payment plan this means you pay for all your energy costs up front. When you pay for the gas and electricity you can either do this via an energy card, a token or a key or even though a local shop.

These pre-payment meters are often installed by suppliers when a customer has fallen into debt, while landlords also use them regularly in rented houses.

However, with one of these, meters customers are generally paying over the odds for the energy they use and also priced out of the best energy deals on the market which aren't available on a pre-paid tariff.

They're also a lot of hassle as the energy isn't automatically available.

Switching providers
Switching providers, be it for gas or electricity or both, is something we as a nation are not keen on.

However, there are many ways to save money on your energy bills and switching is one of the most important. It's a quick and easy process and our step-by-step guide will show you how.

Although pre-payment customers aren't able to get the best deals on the market, and the savings made from switching won't be as noticeable as those switching on a standard contract, there are still savings to be made.

However, before you do anything check with your supplier as there may be fees involved for having a meter installed or removed.

You can compare the whole gas and electricity market through our comparison tables. Here I've listed the five cheapest pre-payment plans.

The top five pre-payment plans

Provider*

Tariff

Average yearly price

Saving compared to the average deal

EDF Energy

Standard (variable) pre-payment meter

£1,205

£81

E:On

Age UK pre-payment plan

£1,227

£59

Scottish Power

Standard pre-payment meter

£1,227

£58

Utilita

Get Smart pre-payment meter

£1,230

£56

Npower

Juice prepayment plan

£1,237

£49

*source: energyhelpline. Savings are worked out by taking an average household on 16500 kwh gas and 3,300 kwh of electricity switching to one of the included plans.

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New rules make it easier to switch energy supplier

Consumers are often tempted to use appliances such as washing machines and dryers late at night when energy tariffs are typically lower. However a Fire Service representative said it was not advisable to leave a washing machine, tumble dryer or dishwasher running overnight since they are a fire risk because of their high wattage, friction and motors.

"The practice of leaving these appliances on after you have gone to bed, means if anything goes wrong, you are not in a position to do anything about it. Electrical faults have frequently caused fires that have proved fatal to those sleeping upstairs," the source said.
But it is not just fire hazards a burst hose could mean the whole downstairs of your house is flooded resulting in a hefty insurance claim and undoubtedly increased premiums as a consequence.

There is nothing wrong in itself in switching utility suppliers as if you do it properly you can reduce your bills. However if you are not careful you might actually increase your outgoings. 

If you don't establish the type of tariff that best suits your needs you could be throwing money down the drain. With some suppliers, for instance, you pay less for the energy you use during the night than the energy used during the day. However, you'll need to use about 20% of your energy consumption at night to really make a saving (cheaper tariff starts at 1a.m. and finishes at 8a.m.). For those on shift work this might be very useful but for others there may be little benefit and we have already talked of the dangers of running appliances when you have gone to bed.
Fixed or capped price plans offer a set price for a period of time (usually 18 months to 2 years) but sometimes this includes a premium on the supplier's standard unit rate.
Finally, be wary of sales people who call at the door and try to talk you into switching to their company. It is just as easy to switch online yourself when you have time to make a considered and non-pressurised decision.

When stock markets go into freefall – and we have seen plenty of that over the last 12 months – there is always a tendency to try and save money by selling shares quickly or just trying to move investments to another provider. But some times all you are doing is incurring extra trading costs or charges on fund switches. Unless you are totally convinced that the only way is down, it is usually best not to sell shares when they have hit rock bottom – all you are doing then is crystallizing a loss. It makes sense to plan a less knee-jerk exit strategy.

And as far as funds go, investors have a habit of chasing the latest theme and piling in at the height of the market only to see their investments fall as sanity returns to proceedings 
Glasgow-based IFA Alan Dick believes investors are getting severely short changed by active fund managers and he insists investors are far better off in low-cost Index tracker funds.
"This idea that fund managers can beat the market and pick out the winners just doesn't stand up to close scrutiny. Constantly switching fund providers only piles up extra charges and costs and offers no added value."

Anyone who has ever bought electrical goods at a major retailer will have been subjected to the hard sell of 'have you considered taking out an extended warranty?' Then follows the spiel about how you will have piece of mind if anything goes wrong blah, blah, blah….

In theory it sounds like a way of saving you hefty repair bills in the futuer but in the vast majority of cases extended warranties are overly expensive and not necessary. With most electrical goods you have a legal right under guarantee for the retailer to repair or replace faulty goods within a specified amount of time – typically 12 months. The only conceivable reason for buying an extended warranty would be for something like accidental damage cover - but in most instances that would be covered under a typical home contents insurance anyway.
Extended warranties are of course designed to cover goods for a longer period than the 12-month guarantee the product is sold with. They normally cover the three or five years, after the guarantee has run out. But you are not obliged to take out this insurance when you buy the goods nor do you have to buy the policy from the retailer selling you the item. You can pretty much bank on the fact that the in-store policy will be more expensive than any stand-alone policy as the retailer will take a commission charge. If you really feel you need an extended warranty at least shop around for it.

You might be paying lower premiums on your health insurance but that's not much good if the policy exclusions mean you are denied the treatment you suddenly find you need. Going for a policy based on budget alone rather than specific levels of cover could prove a false economy. One of the most common exclusions is home care or private nursing – you may think you are covered but the small print says otherwise. If you have to economise on personal health plans, make sure you understand exactly what you are giving up under the terms of your policy.

If you are unhappy with the response or would just like to explain a missed payment on your file you can send a Notice of Correction. This is a statement of up to 200 words that will be added to your file. Although lenders don't have to take this information into account, it at least gives you the chance to tell your side of the story.

Experian states that agencies will also help you escalate the dispute to a third party arbitrator if necessary, such as the Information Commissioner's Office.

With interest rates at record lows, it seems like a no brainer to move your savings to the best rates currently offered on the market. But moving money in this way will often only have short term benefits unless you are prepared to continue this process on a regular basis.

For instance the ING Direct Savings account is currently one of the best instant access deals on the market offering a variable rate of 2.75% for new customers including a 2.22% gross pa bonus fixed for 12 months. But after the 12 month period customers go onto the standard variable rate currently 0.5%. If you don't then move on to another provider returns on savings will come down pretty sharply. 
One obvious plus with this account is that you can move your money when you like with no penalties or restrictions. 
However the trade off for the decent introductory headline rate is that you have to bank entirely online or by phone there is no branch or post facility available. 
There is absolutely nothing wrong with this account but the restrictions on access (no branch or post) may mean you don't use the account efficiently. And apathy to switch to another account provider after the introductory period has ended might mean your money gets little in the way of improved returns going forward. The onus is on you the saver to keep moving your money around to get the best rates.

It might seem like a way of dealing with an immediate cash flow problem but loading up on your credit card to pay your way out of recession-related problems could prove a very bad call in the longer term.
Debt counselors frequently hear cases of people paying for their mortgage on their credit card – possibly because they have lost their jobs so there is briefly no income coming into the house. It might seem like a simple solution to a short-term cash flow problem but what if the cash flow problem is not quite as short term as you imagine?
Using credit cards in this way is one sure way to rack up debts fast and accumulate interest on what you owe. If you have problems paying a mortgage or any other regular outgoings, contact your mortgage lender immediately and talk through the problem with them.
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