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If you switch in this part of the year, you could potentially bag a big “cash bonus”

03-10-2017 Posted by:Victoria Arrington

If you switch in this part of the year, you could potentially bag a big “cash bonus”

Here’s why Autumn is a great time to switch energy (if you pay by direct debit)

Autumn is a great time to switch energy (If you pay by direct debit)

There’s never a bad time to save money.

But if you switch in the Autumn, you may find more money arriving in your wallet than if you waited until winter – possibly hundreds more.

Do you qualify for extra cash?

 

Though that may sound great, there are a few things to consider – the most important being that this method would only typically apply to those who pay via direct debit.

Why?  Because if you pay by direct debit, it’s likely that you pay the same amount every month. The idea is that in months of lower consumption (for instance warmer months, when the heating is off), you’d theoretically have a lower energy cost. In winter, when you are in more and the thermostat is turned up, you have a higher cost. Over the course of the year, the lower and higher usage costs will generally balance out.

Here’s an example to show how it could work in action:

For this article, we will do a pretend scenario, where the theoretical “you” pays £100 a month for your energy, via direct debit.

In this pretend scenario, you consume £80 worth of energy in the warmest 6 months of the year. But in the coldest 6 months, you consume £120 worth of energy.

  • – Usage in warmer months: £80 x 6 months = £480
  • – Usage in colder months: £120 x 6 months = £720
  • – How it averages out: £480 ( warmer months) + £720 (colder months) = £1200 of usage
  • – Paying a stable £100 a month x 12 months in a year = £1200 of payments

 

So it averages out, making bills predictable.

And it’s that overpaying in summer that gives you the advantage. Remember how in those warmer summer months, you’ve only used £480 worth of energy in the scenario?

  • – £80 of usage x 6 months = £480

 

But you’ve paid £100 a month on your bill (£600 total), despite your usage being only £480. That puts you in a position of credit – meaning you have £120 of padding in your account.

So if this theoretical “you” then switched to a lower tariff – especially from a Standard Variable Tariff to a bargain tariff, you could potentially save £300+. That’s fantastic to begin with – but even better is if that theoretical extra £120 from overpaying in summer was credited back after you left your old supplier. That means a bit of a “bonus” where one could in this scenario bag an £420 in total.

Do keep in mind that you’d restart the cycle of credit building on your new tariff, meaning you may go into debit in the colder months; however this would in theory be balanced out by paying a bit more when summer rolled around again.

How to switch to a cheaper energy tariff, and grab any credit due

 

First off, be sure to compare prices to find the best deal that suits your needs. You can do this online or over the phone.

After the switching process is finished, get in touch with your former supplier and request that any account credit be issued to you.

Be aware that some suppliers operate a rather sneaky don’t ask don’t pay policy so they only give you credit back if you ask for it.

And that’s it! So if you’re thinking of switching, consider taking advantage now – and see If you could potentially bag a bit of extra cash too.

 


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